The minimum wage to $12/h : what is the risk for SMES?

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Philippe Hurteau

Wednesday, January 17, 2018 12:34

UPDATE
Wednesday, January 17, 2018 12:39

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We learn this morning that the minimum wage will be raised to 75 ¢ on the 1st of may next. This increase, which is in addition to the 50 ¢ in the past year, will then be the minimum wage to $12/h. We can of course rejoice at this announcement : considering that nearly one-quarter of the employee·e·s of Quebec are of low employee·e·s, any move in the direction of the improvement of their living conditions is welcome.

Of course, considering the increase to $14/h, which has been applied in Ontario and the achievement next to the $15/hour in this province, the announcement today will leave many hungry. It remains only to hope that the trend which began last year will continue after the elections in the fall. To follow…

SMES are at risk?

Always as quick to denounce any increase in the minimum wage, the canadian Federation of independent business (CFIB) is ” sad ” about this measure. The CFIB is concerned about the domino effect that such an increase could have on the whole of the salaries and closures of SMES as this could lead to.

The CFIB is reassured, in a study published in October 2016, the IRIS demonstrates, on the basis of past experience, that current increases remain within the limits of the reasonable.

First, the strong increase in the minimum wage observed in Québec between 2008 and 2010 ($1.50 per hour spread over 3 years) was not associated with rate of closure of SMES in québec are higher than usual, but the closure rate generally lower than outside of this period.

In fact, for firms with less than 5 employee·e·s, the rate of closure observed in 2010 was 13.3%, which corresponds to the lowest rate observed over the period 2001-2014 for this type of companies, and this despite the sharp increase in the minimum wage made between 2008 and 2010.

We should also remember that the 2008-2010 period was one of economic crisis, while we are going through at this time an improvement at this chapter. It is precisely in the current context, when things go relatively well and that an increase in the minimum wage can more easily be absorbed by the SMES.

The concerns of the CFIB, therefore, are not based and are much more to the defence merely of the interests of their members as a vision of a coherent oversight about the wage minimum that it is possible to put in place.