Not surprisingly, we have heard so much about how the proposed legislation regarding changes to Ontario’s employment and labour laws is going to affect businesses. The increase in minimum wage is needed, and having a “living wage” has been long overdue. Unfortunately, having an increase of $2.60 per hour will cause ripples into the business structure that may be irreparably damaging to some, but will create some re-structuring for others.
So, what can the Ontario consumer expect if the legislation is enacted? Read on for the opinion of this small-town Ontario Certified Bookkeeper.
In Canada, small businesses make up 97.9% of the employer businesses in Canada. Ontario by far has the largest population of small businesses of all the provinces and is the equivalent of 36% of the total across Canada as of December 2015 (the most recent statistics available) says Statistics Canada.
Another statistic that people should be aware of is that 8.2 million Canadians are employed by small businesses, which is the equivalent of 70.5% of the total private labour force. In Ontario alone, 87.3% of the total employment comes from small and medium-sized businesses.
So, why all the statistics? The market can bear incremental increases without rocking the boat too much. For example, what do you hear each time Hydro rates increase? People and businesses complain. Again. Why? Because the price increases affect the bottom line of consumers and businesses alike. Briefly, we will complain, but look for ways to decrease the cost of the utility by decreasing our usage and finding alternative sources to power our homes and businesses whereever possible.
With an increase like this, many businesses will find that the increase is just too much to bear and will find ways to decrease one of the highest expenses on their Profit and Loss. Unfortunately for this consumer, this could mean decreased hours, restructuring of positions or layoffs.
Increase in Taxes
Let’s look at what will happen when the minimum wage increases for the “most vulnerable” in our society. Unfortunately, the increase in hourly wage will increase the amount of taxes that need to be paid. Not only off your pay cheque, but at the end of the year. Is this concerning? No, but just keep that in mind for when the time comes.
Cost of Living
As this initiative is province wide — and it will be a cost that will have to be absorbed — the potential for increases to consumer goods may occur. This will include not only products, but services that the consumer purchases daily. As to the level of the increase, it will be hard to judge, but it is a factor that needs to be brought to the attention of the populace.
Our belief is that if this legislation is enacted, there will be widespread ramifications to not only small businesses, but to the economy. As to how this will ultimately fall out, only time will tell. As with anything, it is better to plan for the worst, and hope for the best.
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Until the next time,