Too Much? Too Soon?

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Your supervisor calls you into their office and lets you know that, over the next 18 months, your current wage will increase by 32%. Guaranteed. You skip out of the office imagining how you will spend your new fortune.

This is the good news story that a portion of Ontario’s workforce received, when the provincial government announced that the current minimum wage rate will be increased to $15 per hour by the year 2019. Based on the percentage calculations alone, this is an incredible boost to a targeted segment of Ontario’s workers who currently earn the $11.40 per hour minimum wage.

This significant wage increase comes from the provincial government’s Changing Workplaces review. As a result, the province has moved to the implementation of changes to existing employment laws that are intended to reshape the present and future of Ontario’s workforce challenges.

Click here to read a summary of the changes.

While promoted as a positive and much needed amendment, the proposed wage increases have not been met with an equally positive reaction from the small and independent business communities in Ontario.

Click to read reactions from the Canadian Federation of Independent Business from an HR perspective.

Click to read a news article about the reaction from small businesses.

It is interesting to note that the negative reactions seem not to be focused on the amount of the wage increase. Instead, the primary concerns are focused on the pace of implementing the increases over a very short period of time. How will small employers, with limited infrastructure and support, be able to adjust all of their compensation considerations within the time limit of the next eighteen months?

This is a question that will go beyond the small business community in Ontario. All employers in the province will have to look at adjustments to their overall compensation strategies and monetary policies. Many employers will have to engage in a potentially painful process to justify increasing payroll costs that they may no longer be able to carry or afford.

There is no doubt that turbulent times are ahead for anyone working in the field of compensation strategy and structure. Hopefully, the end result will reinforce a good news story once we get there.

Discussion Questions:

  1. What strategies or actions do you think small and independent business owners will have to implement in order to pay the $15 per hour minimum wage by January 2019?
  2. From a compensation planning perspective, how will the minimum wage increase impact mid-size employers in Ontario?
  3. As the minimum wage rates are adjusted in Ontario, do you expect that your own salary/wages will be adjusted accordingly? Explain your rationale.