New Government, same result: PEI continues to ignore concerns of businesses with another unpredictable increase in minimum wage

The new Prince Edward Island (PEI) government continued the province’s trend of ignoring the concerns expressed by the private sector business community in announcing that the government will increase minimum wage by almost 5% on April 1, 2020.  The 2018 consumer price index for PEI and for the country only increased by 2.3%. 

In September, RCC presented to the PEI Employment Standards Board’s Minimum Wage Review and once again, asked for the province to join with its Atlantic neighbours in developing a process for setting the province’s minimum wage that is predictable and transparent.  For years, industry associations representing the largest private sector employer groups in PEI have been asking for the government to provide better predictability and transparency in setting the province’s base wage.  Despite these efforts, the Employment Standards Board and the government continue to not act on these legitimate requests.

Background:

On April 1, 2020, minimum wage will move from $12.25 per hour to $12.85 per hour.  Compared to 2019 statistics, a $12.85 per hour minimum wage will give PEI the fourth highest minimum wage among Canadian provinces (behind only Alberta, Ontario and British Columbia).

The PEI government proudly states that PEI has the highest minimum wage rate in Atlantic Canada and that the base wage rate will help low income Islanders.  For years, RCC has explained to the PEI government that while minimum wage increases do little to benefit low income Islanders, the increases do have a significantly negative impact on retail employers.  RCC has continually presented the PEI government with Statistics Canada data that proves the retail sector in PEI and every Canadian province pays its fulltime employees well above minimum wage.  Excessive and unpredictable changes in minimum wage only create upward pressure on all other retail wages. 

The PEI government continues to raise the base wage at a rate that far outpaces inflation.  In 2015, minimum wage on Prince Edward Island was $10.35 per hour.  At the end of 2019, minimum wage on the Island is $12.25 per hour.  The wage increased by over 18 percent in four years.  In comparison, from 2015 to the end of September 2019, the Consumer Price Index (CPI) for PEI only increased by 6.8 percent.  Even with the growth of the PEI economy, the final CPI tally for 2019 will not bring CPI to a level where it matches the growth in the province’s minimum wage between 2015 and 2019.  The government refuses to recognize that business costs continue to outpace the ability for retailers to raise prices.  With the minimum wage moving to $12.85 per hour in 2020, retailers face the stark realization that the government will have increased minimum wage by 25 percent over the past five years.

RCC has raised this issue in meetings with the new government.  This includes the Minister of Finance, the Deputy Minister of Labour and the Premier’s Office.  RCC consistently calls for minimum wage increases to be based on the change in the Consumer Price Index (CPI) for the previous year.  RCC also continues to explain to the PEI government the negative impact that these non-transparent minimum wage increases have on entire salary scales in PEI businesses.  RCC has warned the PEI government that as business costs continue to rise, there is a greater potential for the government’s minimum wage decisions to impact retail prices, retail jobs and retail wages.

During the annual Minimum Wage Reviews, most private sector business interests echo RCC’s advocacy by calling for some form of predictability and transparency in setting minimum wage.

Next Steps:

RCC will continue to remind the government that PEI is the only Atlantic Province that does not determine its minimum wage based on the change in the Consumer Price Index (CPI) for the previous year. 

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