Newfoundland and Labrador follows Nova Scotia in temporarily deviating from predictable minimum wage formula

Despite the push from industry to stick with the Consumer Price Index (CPI) formula for determining minimum wage, the Government of Newfoundland and Labrador announced that it will deviate from its formula by making four increases to the province’s minimum wage over the next two years. On April 1st of each year, the government will continue to make minimum wage adjustments based on the change in CPI. However, on October 1st of 2020 and 2021, the government will make additional increases to the province’s base wage. Following the minimum wage increases in 2021, the government will return to its practice of only making one minimum wage increase per calendar year. This increase will be based on the CPI formula.

In recent years, many Canadian provinces have made significant increases to their minimum wage rates. RCC understands that the Newfoundland and Labrador government was under increasing pressure to increase the base wage, especially once Nova Scotia announced its additional increase. Unlike Nova Scotia’s increase, the Newfoundland and Labrador announcement at least provides time for businesses to adjust to the additional increases. Nevertheless, RCC has expressed its opposition to the increases due to the fact that:

• the government has temporarily moved away from the CPI formula
• it is administratively difficult for businesses to make multiple wage increases in one year
• these wage increases create costs for retailers that are difficult to pass on to customers

Background

In recent years, RCC (along with most industry associations) has consistently called on the Newfoundland and Labrador government to maintain its practice of only determining its minimum wage increases, based on the change in CPI for the previous year. 

RCC participated in the government’s minimum wage consultation during the fall of 2019.

Currently, Newfoundland and Labrador has the second lowest minimum wage rate in the country. 

Newfoundland and Labrador currently has a minority government. The current Liberal government has spent the past few months dealing with significant internal and external challenges that may threaten its ability to continue governing. It is likely that the unstable political climate played a role in the government’s decision to make the additional increases to its minimum wage.

The details of the upcoming wage increases are as follows:

April 1, 2020: minimum wage will increase by $0.25 to $11.65 per hour. This increase corresponds to the change in CPI for 2019 and thus, RCC takes no issue with this action.

October 1, 2020: there will be a further increase of $0.50, bringing the base rate to $12.15 per hour.

April 1, 2021: the wage will increase based on the change in CPI for 2020 plus an additional $0.25.

October 1, 2021: the wage will increase by $0.25.

April 1, 2022: a return to one minimum wage increase per year, based on the change in CPI for the previous year.

Next Steps

RCC will continue to oppose the practice of governments announcing multiple minimum wage increases in a calendar year. RCC will push for a return to predictability in setting the province’s minimum wage.

If you have any questions or concerns, please don’t hesitate to contact Jim Cormier, Director (Atlantic) at:  jcormier@retailcouncil.org or (902) 422-4144