Two minimum wage increases for P.E.I. restaurant, bar and pub operators

Charlottetown – The P.E.I. government’s decision to raise the minimum wage twice in 2016 to $11 an hour will undermine Prince Edward Island’s foodservice industry, Restaurants Canada said in a news release.

The provincial Cabinet has approved 25-cent increases to take effect on June 1, 2016, and Oct. 1, 2016, bringing the rate to $10.75 per hour and $11 per hour on those dates, the province announced in a news release.

“The announced increases are significantly higher than other economic indicators, and will make the Island’s minimum wage the highest in the Atlantic region,” Restaurants Canada said. This will hurt small businesses across the province making it more difficult to provide job opportunities for Islanders.

Nearly a third of every dollar in restaurant sales goes towards payroll and is a significant input cost for Island restaurant operators who are struggling with razor thin margins of just 4.9 per cent. The increases will cost the average operator over $7,000 and the foodservice industry as a whole over $2.5 million a year.

“As the third largest industry on the Island with 5,700 employees, restaurants provide more first-time jobs than any other industry,” says Luc Erjavec, Atlantic Canada Vice President for Restaurants Canada, in the release. “Many of these jobs are a stepping stone to the broader workforce, giving young Islanders the opportunity to gain valuable work experience.” 

To help restaurants create more job opportunities across the province, the association recommends that government: 

• Raise the basic personal tax exemption to a level more consistent with other Canadian provinces, putting more money in the pockets of lower-income workers.
• Slow the scheduled increases in minimum wage to match the marketplace. 
• Introduce a tip differential to recognize the significant extra income earned by liquor servers. (Such differentials exist in B.C., Alberta, Ontario and Quebec.)

About 75 per cent of minimum-wage earners in the restaurant industry are young people under the age of 25, and well over two-thirds work part-time. In most cases, these individuals live at home, are students or are secondary-income earners. 

“This initiative is counterproductive at a time when we are struggling to keep young Islanders from leaving the province because of a lack of job opportunities,” said Erjavec.