Minimum wage hike hinders job growth in N.S.: CRFA

May 10, 2011, Halifax – The Nova Scotia government’s decision to raise the minimum wage to $10 per hour this October will hit small businesses across the province hard, according to the Canadian Restaurant and Foodservices Association (CRFA).

“Restaurant operators are already struggling to deal with Nova Scotia’s slow economic recovery, HST and fee increases, and escalating food, energy and beverage alcohol costs,” said Luc Erjavec, Atlantic Canada vice-president for the CRFA. “In the past three years, minimum wage increases have cost the province’s restaurant industry – which is already operating on a thin profit margin of 5.3 per cent – an additional $50 million. Rising labour costs are a key reason the industry has shed almost 2,000 jobs since 2007.”

“This initiative is counterproductive at a time when we are struggling to preserve our jobs and communities. There are better ways to protect small businesses and the jobs they provide, while reducing poverty,” Erjavec added.

In order to help restaurants create more job opportunities across the province, the CRFA made the following recommendations to the provincial government:

• Raise the basic personal tax exemption to a level more consistent with other Canadian provinces, putting more money in the pockets of lower-income workers
• Slow the scheduled increases in minimum wage to match the marketplace. Employers should not be forced to bear a 23.5 per cent increase in minimum wage when the Consumer Price Index (CPI) has only increased by 4.2 per cent, since 2008
• Introduce a tip differential to recognize the significant extra income earned by liquor servers. This differential would freeze servers’ wage rates during the next general minimum wage increase; wages would not be rolled back. (Such differentials exist in B.C., Ontario and Quebec.)

The CRFA estimates that approximately 75 per cent of minimum-wage earners in the restaurant industry are young people under the age of 25 and well over two-thirds work part-time. In most cases, these individuals live at home, are students or are secondary-income earners.