Quebec Joins Ontario With Record Wage Hike Ahead of Election

(Bloomberg) -- Quebec raised the minimum wage by the most in its history, joining neighboring Ontario as the Canadian provinces try to put more money in workers’ pockets even as companies complain it will lead to job cuts.

The minimum wage will rise 75 cents, or 6.7 percent, to C$12 ($9.67) an hour starting May 1, the government said in a statement Wednesday. The province had previously planned to boost the rate by 50 cents this year, on top of a 50-cent hike in 2017. The increase means Quebec trails only Alberta and Ontario with the highest wages in Canada.

“This increase will improve the quality of life of low-income workers on top of incentivizing work, increasing the net available income and contributing to reducing poverty,” Labor Ministry Dominique Vien said in the statement. The move won’t damage employment or competitiveness, she said.

Ontario’s move to boost the minimum wage to C$14 an hour this month and to C$15 next January has prompted sharp criticism from companies that say the higher costs will force them to reduce staff. The Bank of Canada estimated in a report last month that the moves across the country will result in 60,000 fewer jobs by 2019.

The wage hikes led to a public backlash against Tim Hortons, Canada’s iconic coffee and doughnut chain. Some franchise owners at the company, a unit of Restaurant Brands International Inc., cut workers’ benefits -- including paid coffee breaks -- to offset the higher wages.

Strong Growth

The measure reflects a faster-than-anticipated rise in Quebec’s average wage, which the government uses as a benchmark, according to Vien. Based on November predictions by the finance minister, the province probably grew 2.6 percent last year, its strongest growth since 2002. Unemployment has fallen to a record low, boosting demand for labor. Quebec wants the minimum wage to reach about 50 percent of the average wage by 2020.

Recent opinion polls show the governing Liberal Party of Premier Philippe Couillard trailing the right-wing Coalition Avenir Quebec in popular support ahead of a scheduled Oct. 1 election. Couillard, who focused on curtailing spending to post a budget surplus in the beginning of his mandate, has announced several tax cuts over the past year.

©2018 Bloomberg L.P.