Hospitality industry reacts to minimum wage hike

TORONTO—Two hospitality industry associations have voiced objections to the minimum wage increase, announced Jan. 30 by Premier Kathleen Wynne.

By Leslie Wu

TORONTO—Two hospitality industry associations have
voiced objections to the minimum wage increase, announced Jan. 30 by
Premier Kathleen Wynne.

The general minimum wage increase from
$10.25 to $11 per hour will take effect June 1, as well as
corresponding raises in student hourly minimum wage from $9.60 to $10.30
and liquor server minimum wage by hour from $8.90 to $9.55.

Both
the Ontario Restaurant Hotel and Motel Association (ORHMA) and the
Canadian Restaurant and Foodservices Association support the province’s
decision to tie future increases to the Consumer Price Index (CPI),
which will be announced at the beginning of April and take effect on
Oct. 1.

At issue, however, is this year’s one-time seven per cent
adjustment across the board, which the CRFA called “unnecessary, tough
for small business, and counter-productive” in an open letter. 

“The
hospitality industry has still to recover from the 2008 and 2009 wage
increases that have changed the industry. We believe that CPI is the
right mechanism to apply minimum wage in the future, but going
retroactively from 2009 is a total mismanagement of running any type of a
business, including government,” ORHMA president and chief executive
officer Tony Elenis told ORN. “It’s not only about the businesses, it’s
about the jobs and the people. In the end, decisions like this backfire
on the employees,” he said.

Although the effect of the minimum
wage increase will vary by operator, the associations are criticizing
the way the plans are being incorporated.

“Some operators will be
able to absorb these changes, but others may not, and have to lay off
staff. The timing of the changes, coming mid year, when operators can’t
adapt other costs to adjust and at the time when they are ramping up for
the busy summer season makes it unfair,” James Rilett, CRFA vice
president, Ontario, said

Elenis cited challenges to
the foodservice industry, such as rising labour, food and energy costs
as a risk factor for operators and menu prices. “The rise of these
expenses exert pressure on menu prices while sacrificing the risk of
losing customers to grocery stores and homebound meals due to tight
pricing in a very competitive business,” he wrote in an open letter.

The
CRFA said that the increase will cost the average Ontario restaurant
$9,440 per year. “On one hand, the government is doing the right thing
by giving our members the ability to plan for increases, but on the
other hand they mandate a large increase that wasn’t planned for,” said
Rilett.
According to the association, the increase will cost the restaurant industry $287 million.

There
are also potential risks to the youth labour force due to the changes,
warned Rilett. According to the CRFA, Ontario’s restaurants employ
200,000 young people under the age of 25, accounting for 20 per cent of
all jobs for youth in the province and 45 per cent of the jobs in the
industry.
“This increase will hit at the same time students are
looking for summer jobs,” said Rilett.  “What they will find is fewer
available jobs.”

Both associations also note the impact that
the increase may have on investment in the province from business. “One
of the questions that always gets asked is ‘How hard is it to do
business in Ontario?’” said Rilett. “The effect of these increases may
be cumulative, since people looking to put their dollars in Ontario will
look at where the climate is best.”

Elenis also points out
that the changes could cause job loss in Ontario, with employers moving
jobs away from Ontario and into other provinces or to the U.S.