Convenience stores will struggle to keep up if the government continues increasing minimum wage on P.E.I., says a spokesman for the industry in Atlantic Canada.
Mike Hammoud, president of the Atlantic Convenience Stores Association, said the New Brunswick government has halted a planned minimum wage increase and P.E.I. should too.
“We’d love to see them do the same thing,” he said.
The P.E.I. government is gradually increasing minimum wage in three phases with an eventual goal of $10 per hour by April 1, 2012.
In June the wage went up to $9.30 per hour and the next increase is set for Oct. 1 when it goes up to $9.60.
New Brunswick’s minimum wage was supposed to increase from $9.50 to $10 per hour on Sept. 1, but last week Premier David Alward chose to delay it because of concerns over rising unemployment.
Hammoud said there are a lot of disadvantages to sudden increases in minimum wage and although retailers do think workers need a reasonable wage, the cost of doing business makes it unprofitable.
That can lead to staff cuts or fewer hours for workers with the business owners working more, he said.
“They end up working extremely long hours and some of them are even forced into closure.”
Hammoud said gasoline, tobacco and lottery tickets, which are the top three sellers in convenience stores, are regulated by government so the same group that sets the wages also sets the prices for those items.
“They become the three biggest revenue generators in our business but they become the three smallest profit generators in our business.”
Although the plan is to gradually increase minimum wage, Hammoud said it has already increased a lot and wages used to represent a much smaller portion of a business’s costs.
“Now your wages are your number one cost of doing business.”
Hammoud said the price of products will increase as minimum wage goes up, which means their cost of living will also go up.
“It’s like a vicious cycle that we have.”
While he said the $0.30 increase is fair, Hammoud would like to see minimum wage stay at $9.60 per hour.
“I don’t know too many businesses that see two profit increases in one year.”
Labour Minister Janice Sherry is the minister responsible for the wage increases and attempts were made to contact her but she was unavailable, although she did issue a statement.
Sherry said the Employment Standards Board is required to review P.E.I.’s minimum wage rate at least once a year.
“This process is completed at an arms-length and public input is received during the review.”
It was the board that recommended increasing minimum wage by $1 per hour, she said.
In her statement Sherry also said the board considered the social and economic effects of minimum wage rates in P.E.I., cost of living increases, current economic conditions and minimum wage rates in the other Atlantic Provinces.
“Gradually raising the minimum wage to $10 per hour helps to bring Prince Edward Island in line with the other Atlantic provinces, while ensuring employers have time to adjust to the changes.”