Manitoba's minimum wage is going up again and businesses are not pleased about it.

The provincial government announced Thursday the hourly wage will rise 50 cents to $9.50. The change will take effect in October, said Labour and Immigration Minister Jennifer Howard.

"This increase will help maintain the spending power of approximately 28,000 people working in minimum-wage jobs," she said.

"The improved wage will give them a fairer income while helping Manitoba businesses recruit and retain workers."

The Canadian Federation of Independent Business said the increase comes at a terrible time

Shannon Martin, the CFIB's director of provincial affairs in Manitoba, said the recession has hurt small businesses.

'Times are tough for small business too, and where's their wage freeze?'—Shannon Martin, Canadian Federation of Independent Business

"Here they are, the government, the largest single employer in the province, and they're saying 'we're broke; We're running five years of deficits,'" Martin said.

"Well, times are tough for small business too, and where's their wage freeze?"

A better way for the province to help low wage earners would be to reduce the amount of income tax they pay, he suggested.

"Government continues to drill into us budget after budget about how the cost of living is so low, and they use that cost of living as justification for high income tax rates," Martin said.

"So why can't we use that same justification to hold the line on minimum wage?"

Costly hit to restaurants

The increase, which is seven times the forecasted rate of inflation, will cost Manitoba's restaurant industry nearly $16 million a year in extra labour costs, said the Canadian Restaurant and Foodservices Association (CRFA).

"Yet another wage increase of this magnitude will end up hurting the very people it is intended to help, because many employers will have no choice but to control their costs by cutting hours or even jobs," said Courtney Hirota, CRFA's vice president for Manitoba and Saskatchewan.

Manitoba's 2,196 foodservice establishments directly employ more than 38,000 people, making the industry one of the top five private-sector employers in the province, she noted.

"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," Hirota said.

"Hiking the minimum wage by more than five per cent, when restaurant operators are struggling to keep their businesses afloat during tougher times, puts those opportunities at risk."

Wage increased twice in 2009

The minimum wage was increased twice in 2009. It was boosted by 25 cents, to $8.75 an hour, on May 1 then bumped up to $9 in October

It has been incrementally increased on a regular basis since 1999, when it was $6, according to the provincial government.

"While minimum wage increases do raise costs for business, it is important to keep in mind that tax decreases since 1999 will save Manitoba firms $422 million annually," Howard said.

"In December, Manitoba will be the first province to have eliminated its small business tax."

The elimination of that tax was the only bit of good news for business owners in the recent provincial budget, but any gains they could look forward to will be wiped out by the minimum wage increase, said Hirota.