The Brampton Board of Trade has submitted a letter to the Standing Committee on Finance and Economic Affairs regarding the workplace changes that are proposed through the Fair Workplaces, Better Jobs Act (Bill 148). The letter contains questions Brampton businesses have expressed regarding the sweeping changes that include a minimum wage increase, less flexibility in scheduling and easier union certification. The letter also contains real concerns businesses have regarding the changes and recommendations that are calling for a revision of the proposed changes and a slower phasing in of the new legislation — among other things.
Dear Mr. Rennie,
The Brampton Board of Trade, representing over 670 member companies that employ over 42,000 employees in the City of Brampton, is gravely concerned about the changes being proposed under Bill 148, Fair Workplaces, Better Jobs Act, 2017.
Although the spirit of Bill 148 is laudable, and we recognize the importance of fair wages and working conditions, the Ontario Government has not considered all of the immediate and significant negative impacts the changes will have on businesses in our region.
Brampton businesses have posed many questions and concerns regarding Bill 148:
1. How do these changes improve Ontario’s competitiveness? Our members tell us it will put Ontario businesses at a competitive disadvantage with those in competing jurisdictions. Specifically, they warn of investment decisions being re-directed to those competing jurisdictions.
2. How do these changes address the talent gap? Our members believe much greater societal impact can be made by working with business to address the talent gaps in our industry sectors where jobs paying much, much more than minimum wage are seeking qualified workers.
3. How do these changes help young people access jobs? Young professionals and employers tell us addressing the high cost of housing, childcare and the insufficient transit throughout the region will do more to enable young families than increasing the minimum wage.
4. How do these changes support innovation? The changes proposed will do little to support and enable the innovation economy of start-ups and scale-ups that require maximum flexibility in compensation models, work schedules and leave arrangements.
5. How do these changes encourage investment and job creation by small business? Our small and medium enterprises (SMEs) will face an undue burden of cost at a time when we are working closely with SMEs to foster their trade and competitiveness.
Major concerns have been raised across all sectors. I have summarized some direct feedback from Brampton businesses that articulate the magnitude of unintended consequences Bill 148 will bring to youth, job-seekers, employers, and consumers if implemented:
“My plan is to increase fees by 14-18% in the next 6 months. I will definitely cut back on employee positions and employee benefits to offset costs”, says one Brampton business owner.
- Higher consumer costs: The impending changes will result in an increase to consumer prices to offset costs of paying staff more. How will consumers respond to large increases in labour-intensive purchases such as childcare, elder care, and groceries?
- Less opportunity for lower-skilled workers: To mitigate increases to consumers, businesses will be forced to change their hiring practices accordingly — be more selective of who they hire – higher-skilled to justify a higher wage - which may exacerbate youth unemployment.
- Fewer jobs: Bearing in mind the parameters of their allotted budgets, businesses have stated clearly that they will have less room to create jobs
In the words of another Brampton small business owner: “As a small business owner with high staff: revenue ratio, I am concerned about the increase to minimum wage and related changes….the speed of the proposed implementation will be very difficult to bear. I believe a 5-year tiered-increase would achieve the same effect and be much less disruptive to Ontario businesses. Although an election is imminent I would really like to see decisions made by the Ontario government transcend the political horizon; this is a transparent vote-grab without thought for long-term consequences.”
- Increase family/business burden: Changes will mean a heavier burden will be placed on existing employees and business owners to fulfill tasks in the workplace. Concerns have been raised about the physical and mental stress on business owners and their families.
- Workplace disharmony: The changes will result in wage compression and remove fairness in wages among staff levels, which will ultimately, negatively impact workplace harmony
- Fewer hours for workers: Some staff may see a reduction in their hours in order to keep all staff on.
- Fewer benefits for employees: Some businesses are considering not providing workers benefits in order to offset costs of the increased minimum wage
- Elimination of jobs: The impending changes will inevitably lead to layoffs and/or automation of work — businesses are being forced to invest less in people and more in machines and technology to replace low-skilled workers.
- Closure and relocation of businesses: Businesses have advised that provisions proposed in the Bill will reduce accessibility of services in rural areas, including important health services. At the very least, the cost of serving rural populations will increase, if available at all.
- Bias against business: Businesses are concerned the proposed changes are politically motivated and lack a basic understanding of business reality.
Another business wrote the Board to say: “My concern is that the consequences of driving through changes at this speed will result in decreased new job creation and potential failure of existing businesses due to the need to significantly raise pricing to accommodate increased employee expenses (unrealistic in our increasingly globalized business environment), leading to decreased competitiveness of Ontario businesses and, ironically, a negative effect on Ontario employees.”
Local business people – the men and women that create jobs in Brampton - are articulating, quite clearly, that opportunities for work, investment, and job-creation in Ontario will be compromised. This legislation is being proposed without first analyzing the impacts to business and the economy at large.
The Brampton Board of Trade has been hearing directly from our membership that the speed of the implementation for increasing the minimum wage to $14 within six months and then $15 on Jan. 1, 2019 is too much and comes too quickly for them to adjust.
Our members are also concerned about changes to the employee scheduling processes. For those businesses that operate in a demand-driven industry, flexibility in scheduling is vital to ensuring their success. A one-size-fits-all approach to scheduling fails to recognize the diversity of businesses and the global competitive reality.
If not outright repeal of this Bill, at a minimum, the Brampton Board of Trade asks that the Ontario Government implement policies to help employers transition into adopting the changes in Bill 148. In addition to finding more time for an economic analysis, revision of proposed changes and ultimate phase-in of implementation, policy recommendations include:
- Reinstate scheduled reductions in the Business Education tax
- Reduce the Corporate Income Tax
- Reduce the Employer Health Tax
- Restore the Ontario Research & Development and Innovation Tax Credits to 2016 amounts
Specifically, the Brampton Board of Trade supports the OCC recommendations for these five offsets for small business:
- Lower the provincial small business deduction in conjunction with CIT deductions.
- Allow all Ontario-incorporated private enterprises to qualify for a small business deduction.
- Explore opportunities to create a bracketed small business deduction.
- Exempt higher-growth firms incremental income from their respective corporate taxes.
- Utilize the OCC in the creation of the government’s announced SME concierge service.
In summary, the changes being proposed under Bill 148, Fair Workplaces, Better Jobs Act, 2017 come with very significant unintended consequences for Ontario. We strongly urge the provincial government to repeal this Bill or modify it as we have recommended so that unintended consequences are best mitigated.
Click here to see the letter.