minimum wage

Ontario’s minimum wage overhaul sparks industry warnings

Ontario’s announcement that it will be raising the minimum wage to $15 per hour from January 1, 2022, and eliminating the liquor servers’ wage has sparked disbelief, frustration, and warning from the foodservice and hospitality industries.

As part of its 2021 Fall Economic Statement, the provincial government announced on November 2 that it will introduce legislation that, if passed, will raise the general baseline wage from $14.35 to $15 per hour.

Under the proposed changes, the special minimum wage rate for liquor servers would be eliminated and they would be entitled to the general minimum wage.

Liquor servers have previously received less than the general minimum wage, based on the belief that customer tipping can make up the difference. Often, it does: pay structures in restaurants have already been controversial due to the fact that servers often earn far more than kitchen staff or other back-of-house employees due to tips. However, many of these workers have increasingly seen their tips pooled and redistributed among many staff, making it harder for them to make ends meet.

If the legislation is passed, liquor servers would now see an unprecedented 19.5 per cent increase in their minimum hourly wage, lifting it from $12.55 per hour to the harmonized $15 per hour minimum wage.

Following these increases, the minimum wage will increase every October according to the inflation rate. It was last increased by 10 cents on October 1.

“Ontario’s workers have been the unsung heroes of this pandemic, as they’ve stocked shelves, kept our supply chain moving and helped so many of us enjoy a meal among family and friends at a local restaurant,” said Premier Doug Ford. “When we asked labour leaders what their priorities were, increasing the minimum wage was at the top of the list.”

The government added that its move to increase the minimum wage is a reflection of the fact that the cost of living has increased considerably over the past several months, but wages have largely not kept pace.

Previous raises were frozen

Ontario has discussed raising the minimum wage in the past but has decided against it in recent years.

In particular, soon after winning the election in 2018, the Ford government froze the hourly minimum wage at $14, scrapping legislation that would have pushed it to $15 on Jan. 1, 2019. That freeze stayed in place until October 2020, when an increase of 25 cents per hour took effect. 

Had the initial plan to hike the wage in 2019 come into effect, the current minimum wage of $14.35 would likely be at least $15.75 by now.

Far below living wages

Asked by a reporter on November 2 if he could live on $15 per hour, Ford admitted it’s not enough.

Jerry Dias, Unifor’s national president, called the increase “a good start” but stressed that more progress must be made in moving towards a living wage, per CBC News.

According to the Ontario Living Wage Network, the current living wage in Toronto is $22.08 Even outside of Toronto, it is significantly higher than $15 per hour: Halton Region is $20.75, Peel Region is $19.80, Niagara is $18.90, Ottawa is $18.60, and Hamilton is $17.20. Those living wages do not even include paying off debt, homeownership, saving for children’s future, or any type of emergency fund. 

Anger at lack of industry consultation

However, while union leaders have voiced some cautious support, the reaction from within the foodservice and hospitality industry has been largely one of disbelief and frustration.

In a strongly-worded emailed statement, Tony Elenis, President and CEO of the Ontario Restaurant, Hotel, and Motel Association (ORHMA) said the proposed elimination of the liquor server wage has caused “shock and disbelief”.

“The timing of this announcement in an environment where restaurants are barely surviving is unbearable,” Elenis continued, describing the announcement as “a slap in the face” and criticizing the government for failing to consult the industry before making such an important decision.

“Eliminating the Liquor Server rate contributes to one of the most critical struggles in a foodservice operation, which is inequity between servers, who earn healthy incomes due to tips, and the kitchen and support staff,” Elenis added. “Eliminating the Liquor Server rate and moving it up to the general minimum wage rate will make this issue much worse.”

Elenis stressed that while the government announcement states that servers see their tips pooled and redistributed among staff, in reality, the
“vast majority” of tipping pools only marginally support non-server employees compared to server take-away pay, which can crush employee morale and create conflict that divides workers.

Negative knock-on effects expected

Elenis’ complaint of lack of consultation was echoed by Larry Isaacs, president of Ontario’s Firkin Group of pubs. Per the Toronto Star, he also criticized the timing of the wage hike, noting that it will come at the end of restaurants’ slowest season when it could instead have been implemented in spring as patio season ramped up again.

Meanwhile, Dan Kelly, president and CEO of the Canadian Federation of Independent Business (CFIB), added on Twitter that operations with staff serving liquor and earning tips for doing so will be hit the hardest with a 20 per cent increase in minimum wages.

“Raising min wages does next to nothing to address labour shortages,” Kelly continued. “Employers who pay more than min wage to attract workers are forced to increase their wages too.”

And Restaurants Canada vice-president James Rilett is frustrated by the short amount of time to prepare — especially since liquor server wages are also being eliminated.

“We’re just getting tired of getting these major policy decisions foisted on us with no discussion and very little implementation time,” he said, as quoted by the Star.

That was echoed by Ontario Chamber of Commerce president and CEO Rocco Rossi, who said that “now is no time to add” to the costs of the many businesses still grappling with the ongoing impacts of the pandemic.

To make the new wage bump equitable, restaurant owners may need to further adjust the way tips are distributed, Rilett warned. “It’s complex and it takes time and it just won’t be done in two months.”

As a result, Rilett added, consumers should expect the new wages to be reflected in already-soaring menu prices.