March 31, 2009, Toronto – Today’s nine per cent increase in the minimum
wage will cost Ontario’s restaurant industry more than $250 million a
year.
The wage increase takes effect
even though the economic downturn is expected to take a $575-million bite out
of restaurant sales this year.
“A mandated wage hike couldn’t come at a worse time
for Ontario’s restaurants, the vast majority of which are operated by small,
independent business people,” says Stephanie Jones, vice president Ontario for
the Canadian Restaurant and Foodservices Association (CRFA). “Given the current economic challenges, a
minimum wage increase of this magnitude will end up hurting the very people it
is intended to help. Employers will have
no choice but to control their costs by cutting hours or even jobs.”
Ontario’s restaurant industry now has the lowest
average profit margin in the country at less than three per cent of revenues,
leaving little to no room to absorb a minimum wage hike.
“The restaurant industry creates one in five jobs for
youth as well as thousands of entry level opportunities for people looking to
gain a toehold on the career ladder” says Jones. “Hiking the minimum wage by nine per cent
when restaurant operators are struggling to keep their businesses afloat during
the economic storm puts those opportunities at risk.”
CRFA is urging Ontario to revisit minimum wage
increases and consult with business to evaluate the cost to Ontario jobs. Ontario’s 32,600 foodservice establishments
directly employ more than 406,000 people, making the industry one of the top five
private sector employers in the province.
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