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LETTER: Minimum wage Increases should not discourage economic growth

['letter to the editor']
['letter to the editor']

As organizations that serve as the voice of business on economic issues for a combined 1,300 members, representing more than 22,000 employees in Prince Edward Island – we feel it imperative to express concern related to the unfair burden that is being placed on Island businesses by introducing a third minimum wage increase in less than a year.

Our members continue to express frustration about the pace of minimum wage increases. It’s very difficult for business owners to adapt to a wage increase when given just one month’s notice.

This increase is not isolated to one small group - entire industries are affected. The tourism industry, for example, has a short window to generate revenue and prices are promoted well in advance of the summer season. Operators must take the loss or adjust hiring practices to make up for the sudden expense increase.   

Our membership supports a living wage. However, a rapidly rising wage forces employers to amend payroll budgets, and increase contributions to employment insurance, Worker’s Compensation and CPP premiums. When employers are not able to adapt to these changes, workers are impacted by layoffs, reduced hours, or delayed hiring plans.

In consideration of this, we recommend the creation of a long-term minimum wage strategy that would include:

A review process for determining a minimum wage that includes consultations with stakeholders and a study of models and best practices in other jurisdictions;

A commitment to tying minimum wage increases to the consumer price index;

Fixed dates where a wage increase would take effect.

We encourage government to consider an approach that supports employees without negatively affecting the business community:

Increase the personal exemption rate to reflect the average of other Canadian provinces, and adjust it annually for inflation. Even after an increase in 2016, P.E.I. has the lowest basic personal exemption in Canada at $8,000. It is also one of only three provinces that does not automatically increase the basic personal tax exemption at the rate of inflation.

Remove the hidden tax hike that wage earners experience every year due to inflation. Indexing personal tax brackets would put more money in the pocket of employees without imposing extra costs on the employer.

Without consideration of personal tax exemption rates and hidden increases to income tax rates, a minimum wage increase doesn’t address the full scope of the problem.  Instead it leads to more money going into government revenue streams, rather than being reinvested in the local economy by the private sector.

With ongoing economic uncertainty, employers face increasing financial pressures. Island businesses already pay the highest small business taxes in the region, the highest general corporate tax rates in the country (tied with Nova Scotia), and now are facing the looming threat of a carbon tax.  In support of investment, economic growth and job creation, we encourage government to ensure predictability and affordability as a cornerstone for any future minimum wage increases.

- Dan Kutcher is president of the Greater Summerside Chamber of Commerce and Pam Williams is president of the Greater Charlottetown Area Chamber of Commerce

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