Inflation happens whether Canadians see more money in their pockets or not. The Ontario and Prince Edward Island provincial governments plan to raise minimum wages. Minimum wage increases will aim to bridge the gap of high and rising costs of living. Lifeworks 2022 Salary Projection Survey shows employers across the country are aiming to provide 2.7% wage increases to their employees. Whether through legislation or through company strategy, wages are likely to rise. The Canadian government will raise the federal minimum wage to 15 per hour on December 29th, 2021. This will only apply to federally regulated workers though. In Canada, the provinces typically handle minimum wages. Here is information on the Retail Council of Canada (RCC) minimum wage by province.
Inflation is causing a need to increase wages
The central Bank of Canada attempts to maintain inflation rates no higher than 2%. Inflation is currently at 4.4%. This rate has been significantly higher than the desired 2% since March 2021. Inflation will likely stay high well into 2022. To ensure Canadians can continue to live and survive, wages must go up. Especially through a period of high inflation.
Does raising the minimum wage help the economy?
Costs of living are already above many provincial minimum wages. Wage increases will help stimulate the economy. Making sure Canadians have access to the necessities of living. Some people doubt whether increased wages help the economy or not. It is true that with more money in their pockets, Canadians may contribute to inflated costs. However, through periods of high inflation, something must happen to ensure wages keep up.
The consequence of raising the minimum wage is higher costs to businesses. This increased cost makes everything more expensive. To maintain operations, businesses need to reduce costs or increase prices. The key way to reduce costs is to reduce labour. After huge job losses in 2020 due to the COVID-19 pandemic, unemployment rates are finally declining. Canada is currently going through a labour shortage. Minimum wage increases may mean fewer employees. The sectors most affected by minimum wage increases are already operating understaffed. These sectors include accommodation and food services, and retail trade. Higher wages may make these underemployed sectors more desirable. Increased to 15 dollars, more people may be open to doing minimum wage jobs.
Ontario government announces $15 hourly minimum wage by 2022
On November 2nd, 2021, the Ontario government announced a $15 hourly minimum wage. This raise in minimum wage will come into effect on January 1, 2022. Currently set at $14.35 hourly, this new legislation will remove a previous sub-minimum wage category. Liquor servers who used to earn a minimum of $12.55 hourly will now harmonize with the rest of the province. This is being done because of tip pool and redistribution many in this sector have experienced. Their tips are not their own anymore.
Full-time workers are set to see an increase of $1,350 annually. Research shows this wage increase will affect 760,000 Ontarians who are minimum wage workers. This will hopefully lead to reducing poverty in Ontario.
Some other wage changes in Ontario include:
- Student wages will increase to $14.50 from $13.50
- Homeworkers, people working out of their own homes, will get $16.50 up from $15.80
- New hunting and fishing guidelines: $75 for working less than five consecutive hours in a day and $150.05 for working five or more hours in a day. Up from $71.75 and $143.55.
Living wages required for basic lifestyle in many Ontario regions
A wage increase aims to give Ontarians more. The new minimum wage of 15 dollars an hour does not reach the cost of living in any Ontario community. Below are the livable wages of communities in Ontario. The Ontario Living Wage Network (OLWN) includes basic living expenses in these costs. Food, clothes, shelter, transportation, childcare, medical care, recreation and a modest vacation.
|Hastings Prince Edward||$17.95|
|Leeds, Grenville, Lanark Counties||$18.25|
|Sault Ste. Marie||$16.20|
|Perth and Huron||$17.95|
|St. Thomas Elgin||$16.57|
P.E.I. minimum wage increasing to $13.70
On the east coast of Canada, P.E.I. will get a wage increase to $13.70 per hour. This is set to begin on April 1st, 2022. The minimum wage in P.E.I has been rising annually since 2017. Even in the island province, this higher minimum wage does not mean a living wage. A living wage in Charlottetown, P.E.I. is $19.30 per hour. The minister of economic growth and tourism, Matthew MacKay, acknowledges that this minimum wage is not enough. The government is balancing struggling businesses and citizens. They’re attempting to find a solution that will work for everyone.
Some organizations are planning salary freezes
Governments and many Canadian companies intend to offer higher wages. There are some companies that have put wage increase freezes for the next year. According to the Lifeworks 2022 Salary Projection Survey, 3.3% of companies will freeze salaries. This is down from one-third of employers who froze salaries in 2020. While not ideal, some employers are not able to pay more money. This can be tough during the upcoming holiday season.
What does this mean for you?
Are you working for a company that will give you a raise this year? Are you able to keep up with inflation? While minimum wage increases mean more money in the average Canadian pocket, there are downfalls of raising the minimum wage. Including the question “Will raising minimum wage raise food prices?” You may still find yourself in a tight position financially. With the minimum wage going up and still well below the cost of living, you may need support if you are in debt or unemployed. Check government supports. Consolidated Credit Counselling Service of Canada can help navigate your finances. Connect with one of our financial professionals for additional support.