Restoring Minimum Wages in Canada

CaledonInst.org – What’sNew/Restoring Minimum Wages in Canada
April 05, 2011.   Ken Battle

A severe recession with its tight fiscal aftermath is not a time when one expects improvements in social policy.  But there is a bright spot for one of Canada’s oldest social programs – minimum wages, which have risen substantially in recent years in every province and territory except one ( British Columbia ).  And BC just announced an end to its lengthy freeze on the minimum wage, starting with an increase on March 16, 2011.

The national average minimum wage rose from $6.54 an hour in 1965 (in constant 2010 dollars) to a peak of $9.92 in 1976, then fell to $7.01 in 1986.  But it increased again to reach $9.16 in 2010 – just 76 cents below the mid-1970s high.

The recent increase in minimum wages across Canada is due in part to the creation of poverty reduction strategies, which have focused attention on minimum wages.  Starting in Quebec and then Newfoundland and Labrador, poverty reduction strategies – comprehensive and far-reaching plans to reduce, prevent and eliminate poverty – have been launched by all provinces and territories except Saskatchewan , Alberta and British Columbia .  While the minimum wage is only one tool among many required to build an effective poverty reduction strategy, it is crucial to the task.

Most jurisdictions do not protect the value of their minimum wages by indexing them.  Currently only Yukon indexes its minimum wage, to the cost of living in Whitehorse .  New Brunswick is phasing in a series of increases that will bring its minimum wage to $10.00 as of September 1, 2011, after which it will be indexed to the cost of living in 2012 and annually thereafter.  Nova Scotia also is implementing a series of increases to its minimum wage to bring it to $9.65 on October 1, 2011, after which it will be indexed to the annual change in the Consumer Price Index.

The report argues that the provincial and territorial governments should – in conjunction with key actors including business, labour, experts and social groups – work together through a transparent process to define what constitutes an adequate minimum wage (e.g., equal to the poverty line, or a percentage of average earnings) and how to protect its value over time through some form of indexation (e.g., to the cost of living, or to the change in average earnings).

The report also compares minimum wages in Canada to other countries.  Ontario ranks third-highest in the US and Canada , next to Oregon and Washington .  Eight jurisdictions in Canada rank on the higher side of the Canada/US spectrum – Ontario , Nunavut , Newfoundland and Labrador , Saskatchewan , Quebec , Nova Scotia , Manitoba and Yukon .  The remaining five jurisdictions rank on the low end – the Northwest Territories , Alberta , PEI , New Brunswick and BC.  Canada ranks mid-pack in the value of its minimum wage ranked with other OECD countries, but poorly in terms of minimum wages as a percentage of average wages.

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