How are Canadian companies coping with rising minimum wages?

Most Canadian provinces have mandatory minimum wage increases tied to inflation.  

According to a new Express Employment Professionals-Harris Poll survey, these wage increases are putting pressure on many Canadian companies. They are considering significant changes if wages continue to rise, as reported by The Globe and Mail.   

One in three Canadian companies (32 percent) report that mandatory minimum wage hikes lead to increased salaries across the entire company, not just for minimum wage workers.  

Most job seekers (59 percent) say they would quit if an entry-level employee earned the same pay as a more senior-level employee after a minimum wage increase.   

Despite the challenges, the majority of companies (85 percent) and job seekers (90 percent) agree that minimum wage should keep up with inflation. Additionally, most job seekers (85 percent) believe that minimum wage hikes benefit the personal finances of minimum wage workers in the long run. 

However, automatic minimum wage increases come with consequences. One in five businesses say upcoming minimum wage hikes will result in more automation/AI (19 percent), decreased employee hours (17 percent), reduced workforce (14 percent), and/or increased outsourcing (14 percent).   

As a result, two-thirds of job seekers (66 percent) worry about job security for minimum wage workers due to automatic wage increases.   

Brent Pollington, an Express franchise owner in Vancouver, British Columbia, explains that while companies have adjusted to automatic minimum wage increases tied to inflation—many already paying above the minimum—wage hikes also negatively affect job seekers. 

He states, “While minimum wage is increased to account for inflation, these increases actually further contribute to inflation, making it even more expensive to do business.”   

Michael Cabral, an Express franchise owner in Winnipeg, Manitoba, adds that minimum wage increases impact small businesses the hardest.  

He says most companies in his area already pay above minimum wage to attract skilled workers but suggests companies use wage increases to review efficiency and training.   

Cabral advises companies to:   

• Review current operations and projected labour requirements. 

• Consider the compression impact on current employee wages. 

• Develop a staffing plan that adapts to business activity levels. 

• Analyze the financial impact of the new minimum wage on the organization. 

Proactively addressing these areas can help companies manage the challenges posed by mandatory wage increases.