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Economic downturn not right time for minimum wage increase, CFIB says

The Canadian Federation of Independent Business (CFIB) says it's disappointed the provincial government has decided to increase the minimum wage.
The Canadian Federation of Independent Business (CFIB) says it's disappointed the provincial government has decided to increase the minimum wage.

The Canadian Federation of Independent Business (CFIB) says it's disappointed the provincial government has decided to increase the minimum wage.

Vaughn Hammond.

Advanced Education and Skills Minister Gerry Byrne announced this week that the Newfoundland and Labrador minimum wage will increase on April 1, 2017 to $10.75 and again to $11.00 on Oct. 1, 2017,

The CFIB said in a news release that's an increase of five per cent in 10 months.

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The federation said it has consistently asked the government to focus on using the tax system to help low-income workers and leave the minimum wage alone. As a result, it said, low-income workers would find more money in their pockets.

"Unfortunately, the discussion has been focused on the politics rather than the economics of minimum wage."

 Vaughn Hammond, CFIB’s director of provincial affairs in Newfoundland and Labrador, said the government’s reason for taking this action is that this province currently has the lowest minimum wage in the country. “Unfortunately," Hammond said, "the government has not released any economic rationale for the minimum wage increases nor has it provided an employment and economic impact analysis of these increases.”

 The CFIB said after making adjustments this year to deal with "the considerable increases in taxes and fees, small business owners now have to consider what action they will take to alleviate the burden of the planned minimum wage increases. If the past is any indication, small business owners will adapt by increasing prices of goods and services and absorbing the increases through reduced profits."

The federation said many small businesses will likely also reduce staff hours and there will be fewer job opportunities for youth and inexperienced employees.

 “Small business owners do not support minimum wage increases during an economic downturn,” said Hammond. “The provincial economy is fragile at the moment as unemployment has risen to its highest level in years and a large number of small business owners expect to lay off employees in the next three months. Next year’s increases in minimum wage is unlikely to reverse this.”

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