SMEs facing setbacks, federation of grocers says

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The publicly promised and long awaited “offsets” promised by the Ontario government over the last few months, following their announcement to increase the minimum wage in the province by 32%–is instead a huge setback for small business in Ontario, according to Gary Sands, senior vice president of the Canadian Federation of Independent Grocers.

“To try and tell us that the province is ‘offsetting’ a 32% increase in the minimum wage by deducting 1 percent from the small business tax bill, is ludicrous. Thirty-two minus 1 doesn’t equal 32 in grade school math, and it sure does not work for any small business,” said Sands.

In Ontario, 59.7% of all grocery stores are independent, employing approximately 25,000 and generating about $540 million in wages, salaries and benefits. Sands pointed out however, that this same sector, which operates on margins of about 1.5%, can have that margin eroded when a customer uses a credit card for payment, with a corresponding 1.5% and higher interchange fee. That fee and other costs however, are fee invisible to the consumer and it seems, to the Ontario government. As well, in an increasingly consolidated food industry, small business grocers are also facing exorbitant and unsustainable increases in energy costs with absolutely none of the reductions available to other small businesses or chains.

The dramatic hike in the minimum wage is also a trigger for increasing other expenses. When the payroll of a business increases, so too do other costs, such as the Employer Health Tax, WSIB, Employment Insurance and the CPP. Sands pointed out that this is probably why even the NDP government in B.C. decided to phase their $15 increase in over a longer time frame, being fully implemented in 2021.

“The mistake the government has made is to view the minimum wage in a silo, without taking into consideration the context in which particular sectors operate, or the myriad of costs they face,” said Sands. “For many small businesses, there are now three options: raise prices; significantly reduce staff and curtail hiring; or close shop. A temporary $2 an hour wage subsidy for those aged 16 to 29, does not address the deep, long term systemic challenges grocers now face. Instead of helping Main Street grow, Sands added, the Ontario government has erected a roadblock. If there was a longer phase in period, at least one lane on Main Street would be left open.”

Transcontinental Media G.P.