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Jobs will be lost if minimum wage is hiked, warns business federation.

Jobs will be lost if minimum wage is hiked, warns business federation

Ontario's Labour Minister Bob Mackenzie is "dangerously ignorant of the realities of the marketplace," charges a spokesman for the Canadian Federation of Independent Business.

Linda Ganong, who heads up the federation's Ontario office, makes the remark with regard to the minister's proposal to increase the minimum wage in Ontario

"There is documented evidence that even a one-per-cent increase equals job losses," insists Ganong.

Mackenzie has announced that the provincial government intends to increase Ontario's minimum wage to 60 per cent of the industrial average wage by 1995, starting with an increase from $5.40 per hour to $6 per hour on Nov. 1. The minimum wage would be $7 per hour in 1995 under the proposal.

An estimated 160,000 Ontarians earn the minimum wage.

The last increase of the minimum wage occurred in October 1990, when the province raised it from $5 to the current level of $5.40 per hour.

Pat Phillips, a spokesman for the Ministry of Labour, admitted that increases in the minimum wage usually do result in some job loss, but the losses are not expected to be as drastic as claimed by the federation and other business groups.

"In the past when there was an increase, there was a certain dip in employment, but that usually corrected itself," she says.

Phillips says the intent of the proposed increases is to increase the buying power of low-income earners.

"Since 1975 the buying power of minimum wage earners has slipped. The actual value related to the consumer price index has fallen. You have to pay people a living wage," she comments.

Phillips claims the proposed increases will also bring Ontario's minimum wage more in line with the minimum wage of the two neighboring provinces. Quebec and Manitoba have both recently increased their minimum wage levels.

However, Ganong insists that Ontario's tourism and retail sectors will severely affected.

"They are price-sensitive industries which are getting creamed right now," she says. "The government sees it (raising the minimum wage) as a tool for fighting the recession, and that is counter-productive."

Ganong would rather see government reduce taxes.

"If the government brings taxes down, then the extra will automatically go into the employees' pockets, not the business owner's pockets."

Ganong is also critical of the government's plan to remove the difference between the minimum wage for students, currently at $4.55 per hour, and the general minimum wage.

"Why should an employer hire a student when he can get an already qualified worker for the same rate?" she asks.

"They (students) are doing the same work, so why shouldn't they be paid the same wage?" Phillips responds, calling the difference in wages discriminatory.

Ganong also claims that an increase in the minimum wage will force employers to raise all wages in order to attract and keep quality employees.

Tourism Ontario president Roly Michener agrees.

"Contrary to your belief, this increase will have a rippling and inflationary effect, as other wage earners press their presumed entitlement to higher wages," Michener wrote in a letter to Mackenzie.

Michener claims the tourism industry has suffered two years of declining patronage and is in no position to increase wages this year or next.

In a meeting with Mackenzie just weeks before the labour minister's announcement, Michener claimed that "if Ontario's minimum wage is established at 60-per-cent of the average wage in Ontario it will decimate our industry."

"We told the government that we couldn't afford it, and that tens of thousands will be forced out of work," he recalls.

A study recently completed by three economists from the University of Montreal concluded that an estimated 53,000 jobs will be lost if the minimum wage is increased according to the province's plan.

The study showed that most of the job cuts will affect women and younger workers because businesses unable to pay the higher wages will lay off low-paid, lower-skilled workers.
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Title Annotation:Canadian Federation of Independent Business
Author:McDougall, Douglas
Publication:Northern Ontario Business
Date:Sep 1, 1991
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