Businesses can always relocate their operations to dodge the effects of the new minimum wage hike, but the relief will likely be temporary.
A likelier effect would be an acceleration of the pace of automation, the Financial Post reported.
Economics professor Joseph Marchand of the University of Alberta said minimum wages could speed up a growing trend to automate with the addition of ATMs, restaurant order screens and grocery self-checkout lines.
“It’s happening because technology is moving at a constant rate so that’s making capital cheaper year by year, but then if you have a drastic shift in labour costs that’s only going to speed up the process.”
On Jan. 1, Ontario boosted hourly minimum wage by 20% — from an $11.60 to $14. The rate will rise to $15 an hour in 2019.
Alberta is expected to raise its minimum wage to $15 later this year.
“It would be foolish of some employers to think that they can escape temporarily by moving their operations,” said Canadian Labour Congress
president Hassan Yussuff.
“This is spreading across the country like a very good epidemic and so [businesses] can run, but they cannot hide,” said Jerry Dias, Unifor president.
He added that pressure is being placed on every province to boost entry wages that mostly affect retail and service sectors, where relocation is not an option.
Union leaders also say higher wages will help businesses because low-income earners are inclined to spend all they earn and boost the economy.
Jobs that can easily be done from any location, such as call centre work, are theoretically most likely to shift locations.
And while some companies may move jobs, say from Ottawa to Gatineau, Que., the numbers will be very small, said Fabian Lange, associate professor at McGill University’s Department of Economics.
“It would be political suicide to do that because ultimately [the wages are] all going to be at $15,” added Dias.
Then again, the shift to automation over the last couple of decades has little to do with wage hikes, said labour representative Yussuff.
“There is recognition that more and more automation is coming to a lot of sectors in society and that’s long before the minimum wage has been increased.”
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