Restaurants Canada says it’s deeply concerned by what it calls New Brunswick’s “unexpected” decision to raise the minimum wage by $2 over the course of 2022.
The industry group says Thursday’s announcement came without any industry consultation.
“This is an unreasonably drastic increase that couldn’t be coming at a worse time for New Brunswick’s restaurants,” said Luc Erjavec, Restaurants Canada’s Atlantic Canada vice president.
Erjavec says most foodservice operations have been losing money, or barely scraping by, since the Covid-19 pandemic started. Most of them, he said, are small- and medium-sized businesses.
Restaurants Canada estimates that increasing the minimum wage by $2 over the course of 2022 will add at least $25,000 to the cost of operating a restaurant in New Brunswick.
The province announced Thursday that its minimum wage will increase from $11.75 to $12.75 on April 1, 2022, and then again to $13.75 on Oct. 1, 2022.
Even with the raise planned over two separate increases, Erjavec says the first would come into effect just before restaurants lose access to federal wage support on May 7.
He says this week’s minimum wage announcement also broke away from the province’s usual approach to address wage changes over time.
“For the last number of years, they’ve had a formula in New Brunswick where minimum wage kept pace with inflation and that’s something we support. It’s predictable, it’s incremental and, you know, that’s our preferred approach,” said Erjavec.
No prior consultation
When Erjavec first learned of how the increase would be implemented, he called the decision “mind boggling.” He says he’s spoken to several business groups and none of them, including Restaurants Canada, had been consulted.
“We know minimum wage is going to go up. We don’t have any issue. You know, for us, it’s too much, too fast – and at the most inopportune time, said Erjavec.
“Our industry is treading water at best, and they just throw us a brick instead of a lifeline.”
While Erjavec says the timing could not be worse for restaurant owners, he adds that in November most federal subsidies coming to help restaurants were cut. Now, eighty percent of restaurants will no longer qualify for the federal labour subsidy.
“And then, all of a sudden, we’re getting the largest minimum wage increases in 40 years at a time when half of restaurants in New Brunswick are still not making money.”
Erjavec points to the latest round of Covid-19 controls and circuit breakers, which he says have impacted businesses–on top of dealing with the costs to staffing and monitoring vaccine passports–and wonders how smaller operations will adjust.
Mounting pressure for restaurant owners
According to Restaurants Canada, before the start of the Covid-19 pandemic, New Brunswick’s $1.5-billion restaurant industry was the province’s fourth-largest source of private-sector jobs and was employing roughly 22,000 people.
Erjavec says labour still makes up one-third of the industry’s costs. For those running a low-margin business, many of which he says have been losing money, a labour price spike of $2 per hour, even phased in over a year, is too large of a hit.
“I’m sure this will be the tipping point from some who will say ‘I’m packing it in.’ You know consumers are going to see menu price increases. I’m sure people will maybe reduce hours or have to cut staff,” he said.
Erjavec feels the increase being phased in cumulatively is of little benefit to restaurant owners. He says it only gives restaurants a little more time to adjust but contends operators will be scrambling to address the rise in labour costs.
“I’ve already had notes from members like they don’t know what to do with it, throwing their hands up in the air. They have been through absolute hell in the last two years — struggling to maintain their business and struggling to try to continue employing people under complete mental and financial stress, and we all had to get this Christmas present, which is just, you know, could not come at a worse time,” he said.
Erjavec hopes the provincial government can examine the impact on small businesses sustaining the wage hike, saying it would be incumbent upon them to look at offsets to assist an already struggling industry.
“That would be win-win, to put the sole responsibility of this on the backs of small business owners you know, just isn’t fair.”
Tyler Mclean is a reporter with Huddle, an Acadia Broadcasting content partner.
