TORONTO—Ontario’s lowest paid workers will get a raise this year when the $10.25 an hour minimum wage is hiked for the first time in four years, government sources said.
A special advisory panel examining ways of adjusting the minimum wage will recommend it be tied to the inflation rate, and that businesses get four months warning ahead of any increases, said various sources.
The panel will not recommend what the new rate should be, but government sources said there would be an announcement later this week to hike the minimum wage retroactively to 2010, based on the rate of inflation since then.
Statistics Canada puts the annual inflation rate at 2.9 per cent in 2011, 1.52 per cent in 2012 and 0.91 per cent in 2013.
The Canadian Federation of Independent Businesses said large jumps in the minimum wage hurt the very people they are supposed to help—low-skilled and low-income workers—because they force small firms to absorb the cost through “reduced hours, reduced training or even job cuts.”
However, the Ontario Chamber of Commerce last year called for all future changes in the minimum wage to be tied to inflation.
Premier Kathleen Wynne said it was smart to base all future changes in the wage on the inflation rate.
“It takes the decision out of the realm of political whim and puts it into the realm of some kind of relationship with the way the economy is growing,” she said.
“I think that businesses and individuals should be pleased that there will be a more predictable system in place.”
A study last fall by the Wellesley Institute, a policy research organization in Toronto, showed the number of minimum wage workers more than doubled since the Liberals were elected in 2003 to nine per cent of Ontario’s workforce in 2011, or 464,000 people.
Young people used to make up the bulk of minimum wage workers, but the data show that by 2011, nearly 40 per cent were 25 or older.
Various social groups, unions and health-care professionals have been pressuring governments to raise the minimum wage to $14 an hour.
They say a $14 minimum wage would mean a pre-tax difference of $650 a month to thousands of the lowest-paid workers in Ontario, but Wynne is worried about the impact of such a big hike on business.
“I know that there’s a call for $14 (but) we have to move very carefully because this is about making sure that we retain and create jobs,” said Wynne.
The $10.25 hourly rate in Ontario and British Columbia is about middle of the pack for provinces and territories, which range from $9.95 in Alberta to $11 in Nunavut.
Ontario also has a $9.60 an hour minimum wage for students under 18 working less than 28 hours a week, and a $8.90 minimum for liquor servers. People doing paid work at home for an employer are entitled to a minimum wage that is 110 per cent of the general minimum.