New Ontario wage hike will cost jobs in farming says OFA president

Wednesday, January 29, 2014

by SUSAN MANN

Ontario’s plan to raise the minimum wage by 75 cents per hour June 1 will cost jobs in farming and cause farmers to possibly stop growing many labour intensive crops, says Ontario Federation of Agriculture president Mark Wales.

Ontario Premier Kathleen Wynne and Labour Minister Yasir Naqvi announced the wage increase Thursday.

The current provincial minimum wage of $10.25 per hour has been in place since 2010. With the rate going up to $11 per hour, Ontario will be tied with Nunavut for the highest minimum wage in Canada. Quebec’s rate of $10.15 per hour and Manitoba’s rate of $10.45 per hour are significantly lower.

Ontario also has higher rates than many competing American jurisdictions. Wales says the U.S. minimum wage rate is $7.25 per hour but individual states don’t have to follow that. Less than half the states have rates above their federal minimum wage, he notes.

Back in Ontario, the end result will be fewer jobs at the farm level, Wales says, adding that’s particularly true for agricultural sectors, such as horticulture, that traditionally hire the largest number of employees.

Wales says farm groups reminded the government that Ontario’s horticultural industry operates in an environment where it is in direct competition with countries that either don’t have minimum wages or have wage rates far below the province’s rate.

“We’re not able to pass any increase in minimum wage to those who are buying our product because we are absolute price takers,” he says. The main buyers, “chain” stores, want the lowest possible price and don’t take into account the farmer’s cost of production. The stores will buy from other countries if the price is right. “They simply don’t care.”

The wage hike will motivate farmers to reconsider their labour intensive crops. “First they’ll look to mechanize,” he says. But most fruits and vegetables that can withstand mechanized production have already gone that route. So that means farmers will switch to crops that don’t require them to hire people, he says.

“By and large a lot of horticultural crops don’t lend themselves to mechanization,” Wales explains. “It’s very hard to mechanize strawberry or pepper picking.”

It will also trigger increased amounts that employers will have to pay for their workers’ Canada Pension, employment insurance and Workplace Safety and Insurance Board premiums, along with employer health taxes. Taking all those fees into account along with the 75 cents per hour wage increase, that amounts to a 10 per cent increase, Wales says.

The wage increase will also make the processing industry less competitive, he notes.

Plamen Petkov, Canadian Federation of Independent Business vice president for Ontario, says any time the minimum wage goes up it puts pressure on all wages. “We are really concerned this might have a snowball effect.”

Farm businesses that already pay above minimum wages to “stay competitive” will face intense pressure to raise wages too, he says.

In a report released Monday, the provincial Minimum Wage Advisory Panel recommended the province raise the rate annually based on the same percentage as the Consumer Price Index (CPI) gains. But Petkov says they don’t understand why the government decided to add three years worth of Consumer Price Index gains (beginning at 2010, the last time the minimum wage was updated) to come up with the $11 per hour.

Ray Duc, chair of the Ontario Fruit and Vegetable Growers Association, says “we’re very disappointed in the announcement. Even the current wage was a bit of a challenge for us.”

Duc says the increase will take a lot of money out of the industry. They’ve requested a meeting with Wynne to discuss the rate. “I don’t think there’s much chance of changing it now.” But the industry is proposing there should be a separate rate for agriculture of $10.25 per hour and then the CPI percentage could be added on that amount the following year. BF