EDMONTON: More Alberta small business owners are looking to scale back staff rather than hire in preparation of provincial minimum wage hikes, says the Canadian Federation of Independent Business (CFIB).
In the lobby group’s monthly business barometer, an index which measures how confident business owners are for the next 12 months, Alberta is seen lagging behind the rest of the country after dropping a further half point in July to 43.9.
“Alberta’s small business confidence remains, by far, the lowest in the country. Perhaps most worrying, however, is the latest trend on wage costs and hiring that shows small business sentiment clearly moving in a negative direction,” said CFIB’s vice-president for Alberta and BC, Richard Truscott, in a written statement.
The index is based on a scale between 0 and 100. According to the CFIB, an index above 50 means owners expecting their business’ performance to be stronger in the next year outnumber those expecting weaker performance. An index level of between 65 and 75 is an indication the economy is growing at its potential.
According to the report, 19 per cent of Alberta’s business owners in July expected to cut full-time staff within the next three months, versus only 16 per cent who planned to add staff.
Truscott points to Alberta’s rising minimum wage as the cause of this low confidence.
On June 29, Jobs, Skills, Training and Labour Minister Lori Sigurdson announced Alberta’s minimum wage will increase from $10.20 to $11.20 as of Oct. 1. The NDP government is planning to reach $15 per hour by 2018.
“Alberta’s entrepreneurs are feeling gloomier than they have in a long time. The provincial government would be wise to pay heed to these latest numbers, especially in the context of drastic new policy directions like the proposed hike in minimum wage to 15 dollars,” said Truscott.
It’s an issue Brad Ferguson, CEO of the Edmonton Economic Development Corporation (EEDC), says isn’t being felt in Edmonton as much as the rest of the province, but is still making an impact.
“What we have is a cumulative effect of a number of different policy issues that individually might make sense on paper, but when you add them together and you start understanding the cumulative effects and the second-order effects, it’s creating a very uncertain and a very concerning economic situation here in the province,” said Ferguson, citing uncertain oil royalties and greenhouse gas emission legislation, coupled with corporate tax, personal tax and minimum wage increases as adding instability to Alberta’s overall economic outlook.
“This is a concern because I’m not seeing a whole lot of certainty in our ability to rebound from our current economic downturn.”
Meanwhile, the national business barometer index dropped another 1.2 points in July to come in at 58.2 points.
