P.E.I. minimum wage increases irk restaurant industry

Restaurants Canada is unhappy with the P.E.I. government's announcement Thursday to increase minimum wage by 50 cents next year, making it the highest in Atlantic Canada at $11 an hour.

'If we go much higher than that, we're not going to be in business'

Increasing minimum wage will hurt Island restaurants, says industry group. (Toby Talbot/Associated Press)

Two planned increases to the minimum wage on P.E.I. next year are "double trouble," Restaurants Canada said on Thursday. 

The government announced the Island's minimum wage will increase by 50 cents over the course of 2016 to $11 an hour — making it higher than any currently in Atlantic Canada.

Liam Dolan, who is on the board of directors of Restaurants Canada and owns the Olde Dublin Pub in Charlottetown. said he was "very surprised" to see plans to hike minimum wage again, because it's already gone up several times in the past few years.

"That's almost a five-per-cent increase ... three times the inflation rate. So I was quite surprised," said Dolan.

"If we go much higher than that, we're not going to be in business."

"This will hurt small businesses across the province, making it more difficult to provide job opportunities for Islanders," Luc Erjavec, vice president of Restaurants Canada for the Atlantic provinces, said in a written release.

Erjavec said the increase will cost the average operator more than $7,000, and the food service industry as a whole $2.5 million annually. He adds restaurants "are struggling with razor-thin margins of just over 4.9 percent."

Charlottetown restaurateur Liam Dolan worries some restaurants will be foreced out of business by rising wages. (CBC)

"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," he said.

Erjavec and Dolan said about 75 per cent of minimum wage earners in the restaurant industry are young people under the age 25, many of whom are students or live at home, and most only work part-time.

Dolan said restaurant owners will have to recoup the loss somehow. 

"Less kids you're going to hire in the summertime ... or else jack the price up so high that people won't come out to eat," said Dolan.

He said he worries some restaurants will go out of business because of the move. 

Restaurants Canada instead recommended that government:

  • Raise the basic personal tax exemption to a level more consistent with other Canadian provinces.
  •  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.

A government committee studied a two-tier minimum wage in 2010 but rejected the idea.