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Chamber concerned P.E.I. minimum wage hikes will have unintended consequences

Penny Walsh McGuire, executive director of the Greater Charlottetown Area Chamber of Commerce, was advocating for small business tax cuts to 2.5 per cent in 2018 and to two per cent in 2019.
CEO of the Greater Charlottetown Area Chamber of Commerce Penny Walsh-McGuire. - Guardian file photo

CHARLOTTETOWN, P.E.I. – The Greater Charlottetown Area Chamber of Commerce is raising concerns about the impact a six per cent minimum wage hike will have on Island workers.

Earlier today, the province announced that minimum wage will be raised by 70 cents on April 1.

In a press release, Chamber CEO Penny Walsh-McGuire said the Chamber agrees that modest increases in minimum wage can be done without disrupting labour markets, but said government has to be cautious about hurting competitiveness.

“We’re uncertain how some businesses, particularly those in retail and food service, will be able to respond when margins are already razor-thin.”

The announced increase will be double that of the current rate of inflation when it takes effect in the spring and will mark an almost 53 per cent increase in minimum wage over the past 10 years, with a cost of living increase of 16 per cent for the same time period.

Walsh-McGuire said when a business owner is faced with rising costs they can either absorb costs out of the profit margin or raise prices for consumers.

“If neither is an option, they may reduce employee hours, and be forced to work more hours themselves,” she said. “It’s a matter of businesses having to make decisions about how they will react to rising costs.”

In its annual submission to the Employment Standards Board, the Chamber lobbied for government to implement a long-term minimum wage strategy as a way to create a process that is open and transparent.

The Chamber welcomed the government’s commitment to provide businesses almost six months’ notice of changes to minimum wage. The submission noted that decisions around minimum wage should consider financial realities that are already being faced by employers, and should not discourage job creation, investment and economic growth.

The Chamber said there are other proven mechanisms for supporting the workforce and that P.E.I. has the second lowest basic personal tax exemption in the country.

This is the amount of earnings that is exempt from provincial income tax.

The Chamber recommends that this exemption be increased to the Canadian average and indexed to the rate of inflation going forward. This would remove the hidden tax hike that the Island’s minimum wage workers experience every year due to the low basic personal exemption amount.

The economy is doing well, Walsh-McGuire said.

“With that, there needs to be a balance where both government and business are supporting our most vulnerable workers and keeping our businesses competitive,” she said. “That means looking at all the tools in the toolbox and ensuring this shared responsibility is just that- shared.”

RELATED: P.E.I. minimum wage to increase in April

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