Costs ramp up overnight

Independent businesses face tough hiring decisions

NEW EMPLOYMENT STANDARDS legislation in Ontario is making it harder for businesses to meet labour costs. Sources say when Bill 148, the “Fair Workplaces, Better Jobs Act” came into effect on January 1, it effectively added close to 30 percent to the cost of carrying an employee in the province.

Julie Kwiecinski speaking to small business owners in Whitby, Ont. (Plamen Petkov/Twitter @cfibON)

According to Julie Kwiecinski, Canadian Federation of Independent Business (CFIB) director of provincial affairs for Ontario, the federation has 42,000 members in Ontario. The CFIB was not consulted during the bill’s review process. She believes the act, which also raised the minimum wage from $11.60 to $14 per hour immediately, and other reforms, are union biased and backed. “This is a way for the government to curry favour with the unions,” says Kwiecinski.

But these issues are just the tip of the exposure iceberg for Ontario employers, according to the CFIB. In December, it conducted a survey and asked members what changes they have met to prepare for the increase in the minimum wage to $15.00 per hour, effective January 1, 2019.

Hiring plans QUASHED

“Some of the results included that 51 percent have already raised prices,” says Kwiecinski, “28 percent have already reduced the number of employees, 31 percent have already reduced overall staffing hours, 51 percent reduced or eliminated plans to hire young workers and 54 percent reduced or eliminated plans to hire new workers.

“I think that is a telling picture of what’s to come. We warned government that small businesses, when forced to absorb a 32 percent increase in the minimum wage in only 15 months, would have to make difficult choices. Many of them feel that they are being backed into a corner and are in survival mode. They need to find ways to absorb this and they are making very sad choices, choices that they don’t want to make.”

Cleaning contracts CANCELLED

Kevin Casey of QJS

These conditions are already concerns of Kevin and Paula Casey, husband and wife operators of Whitby, Ont.-based QJS Specialty Cleaning. The company has around 40 employees that keep floors clean at a variety of such commercial locations as schools and offices. “The speed with which the government has implemented this has caused such a rift between us and our clientele,” says Kevin Casey, c.e.o. at QJS. “The month prior to year-end we had about five contracts cancel on us due to Bill 148.

“We have had the odd client that will allow us to make a small increase, but not to cover all the costs. Others we have actually had to cancel — give them their notice. Some of these are accounts that we have serviced for years.”

CFIB members are wondering how they can afford a 32 percent wage increase in only 15 months, on top of other costs.

“EI (Employment Insurance) just went up,” says Kwiecinski.

“CPP (Canada Pension Plan) is going up. We are still trying to find out the financial impact of cap and trade. Hydro is going up again. Also, people may not remember that WSIB (Workplace Safety and Insurance Board) premiums will likely go up, too, based on what the payroll costs are.”

Cost recovery IMPOSSIBLE

These issues beyond the minimum wage aren’t lost on Charla Robinson, president of the Thunder Bay Chamber of Commerce, in Thunder Bay, Ont. She agrees that everything is going up.

“So, the challenge is how do you recoup that? In some businesses, they may have a little more flexibility around pricing. In other retail businesses, they may have a very strict contract with supplier X and supplier X sells this (product) at every store in Canada at the same price.” In this scenario, much like what QJS is facing, “they don’t have the flexibility to raise the price to try to cover the massive increase in their wages,” says Robinson.

In Alberta, where the minimum wage will be also $15/hour, but starting October 1, 2018, has had a softer ramp-up than Ontario. On October 1, 2017, it stood at $13.60/hour and $12.20 the year prior to that date.

For Gayle Baltjes-Bazine, general manager at Star Tile Carpet One in Fonthill, Ont., the minimum wage part of the legislation isn’t the big concern as her company pays its employees more due to the job skills involved. She includes designers, decorators, floor and sales staff as all making that wage or better. However, Baltjes-Bazine does feel badly for some of her clients.

“Particularly commercial clients like restaurants and retail stores,” she says. “They may put off doing improvements — which in that sense impacts our business by putting things off for another year or two because their costs have increased.”

For employers in Ontario wanting to ask questions about the new labour standards, the government has an employment standards hotline. “We can’t even get through,” says Kwiecinski. “Government was not prepared for this. One CFIB business counsellor tried 14 times.

“Unfortunately, there is a lot of information in this bill with a lot of grey areas, where they did not completely explain something.

“A small business might be thinking that they need an HR department to keep up with the paperwork that this bill will cause.”

Schedules SHRINK

According to Robinson, retailers are concerned about the new statutory holiday pay calculations. “It used to be how much you worked over the last 20 days,” says Robinson. “You would sort of split that into a normal eight-hour day. Then you work out if they are going to be paid four hours for the stat or five hours for the stat.

“Now it is not based on the overall period, it’s based on the number of times you work and the number of hours you have worked. Which is quite different than over the 20-day period. So, you can have someone who has worked one shift for eight hours get paid eight hours for that stat day — whereas previously they would have gotten maybe an hour.”

Employers are not only being hit hard on how much they pay, but also how to figure it out, notes Robinson.

Enforcement is another whole kettle of fish entirely, according to Kwiecinski. “The government is planning to hire an additional 175 employment standards officers by the year 2021. The Minister of Labour indicated in a news conference that the first class of that group will be graduating very soon. So, you have more labour police and fines are going up by 30 percent. You’ve got increased powers beyond belief for the employment standards director who will have the authority to issue warrants, place liens on personal property, hold securities, collect and share personal information.”

Business disruption UNNECESSARY

Casey believes that government can create a more favourable climate for business. “Despite whatever you think or feel about what is going on south of the border,” he says, “the two facts remain.

“There is a pro-business government in place and the markets are responding very positively for businesses to thrive. The opposite remains true here in Ontario and Canada, but in particular Ontario. Our government with Bill 148 is three pages of anti-business legislation.”

While the government in Ontario may think it has engineered a better way to help its less fortunate citizens, the opposite may already be occurring by making less work available for the labour pool. “Already we are seeing businesses that are reducing their store hours across the board,” says Robinson.

“Taking off an hour a day, taking out Sundays, taking out any evenings. Those kinds of things are making major changes to their store hours.”

This method of adapting will result in some reduced overhead costs, but also results in less availability for customers, Robinson adds.

The Financial Accountability Officer of Ontario filed a report in September 2017 that says raising the minimum wage would be an inefficient policy tool for reducing overall poverty.

“If you want to help people that are dealing with poverty, it is a much bigger discussion,” says Kwiecinski. “It is not just about labour costs. It is about child care, welfare, education and housing. “To simplify it to this level is a disservice to the very people who are struggling with poverty issues. It is sad because the government is doing this to get reelected.”

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