Minimum Wage. This will make the minimum wage in the NWT one of the highest in Canada.

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Eileen Barrett
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Backgrounder Minimum Wage The Minister of Education, Culture and Employment will increase the minimum wage in the NWT to $12.50 per hour on June 1 st, 2015.

In 2011, the minimum wage in the NWT was set at $10.00 per hour. Since then, the purchasing power of minimum wage earners has effectively deflated to approximately $9.35/h.

1 Backgrounder Minimum Wage The Minister of Education, Culture and Employment will increase the minimum wage in the NWT to $12.50 per hour on June 1 st, This will make the minimum wage in the NWT one of the highest in Canada. The NWT currently has the lowest minimum wage and one of the highest costs-of-living in Canada. In 2011, the minimum wage in the NWT was set at $10.00 per hour. Since then, the purchasing power of minimum wage earners has effectively deflated to approximately $9.35/h. Research shows that fewer than 1,000 of the 21,000 employees in the NWT presently make between $10.00 and $12.99 per hour. The number of people making exactly $10.00 per hour is unknown. The employees that fall within that range are split with approximately 400 in Yellowknife and approximately 600 outside of Yellowknife and are primarily in the service industry, including retail and hospitality The Minister of Education, Culture and Employment chose to establish a Minimum Wage Committee to help inform his decision on increasing the minimum wage in the NWT. The Minimum Wage Committee In the fall of 2013 the Minister of Education, Culture and Employment established the Minimum Wage Committee (MWC) to provide options to the Minister on the minimum wage rate in the NWT. The mandate of the MWC was to review and consider relevant information including social and economic factors, and use this information to inform and provide options for the minimum wage rate to the Minister. The MWC provided options based on five foundational principles: Equitable: Considers the impact of a change to the minimum wage rate on both employers and employees and must be reasonable and predictable. Competitive: Decisions on minimum wage rate should not discourage investment, job creation, and economic growth. Promotable: Encourages living and working in the NWT. Responsive: Responsive to changing social and economic conditions.

2 Sustainable: Maintains and supports the continued security and strength of the economy. The MWC considered the NWT s social and economic conditions, available research, statistics, new articles, opinions and other provinces and territories rates. The MWC was made up of: two employees of the Department of Education, Culture and Employment; two members representing the interests of employers; Executive Director of the NWT Chamber of Commerce and the General Manager of the Ptarmigan Inn; two members representing the interests of employees; President of the Northwest Territories Federation of Labour and a representative of Alternatives North; and one member representing the interests of social agencies; the Manager, Child and Family Programs, Centre of Northern Families. The work of the MWC was assisted by staff from the NWT Stats Bureau, ECE s Employment Standards Office, and the GNWT s Department of Finance. The MWC completed the work in six face-to-face meetings. Minimum Wage Committee Options In April 2014, the Minimum Wage Committee provided its findings to the Minister of ECE. The Committee provided three options for an increase in minimum wage: 1. An increase to the minimum wage based on the average hourly wage. 2. An increase to the minimum wage based on a base rate, a cost of living offset, and an annual consumer price index (CPI) adjustment method. 3. An increase to a living wage of $18.75 per hour + variable community allowance + annual consumer price index (CPI) adjustment method. The options were thoroughly considered and analysed by the Committee in terms of wider economic and social implications, advantages, disadvantages, and the potential effects on employers and employees. The Minister of ECE chose the first option as his approach to increasing the minimum wage in the NWT. This approach will help ensure that the minimum wage in the NWT is competitive with other jurisdictions, provides a modest increase to the wages of minimum wage earners to help keep up with the cost-of-living in the NWT, and is manageable for employers.

3 Approach Used to Set the Minimum Wage in the NWT As part of the Minimum Wage Committee s research, it looked at other jurisdictions in Canada and compared minimum wage rates (Appendix A). A direct comparison of minimum wages in different jurisdictions in Canada is not appropriate however as different jurisdictions have different costs-of-living. The cost-of-living in the NWT is significantly higher than in NB, for example, which has a comparable minimum wage as the NWT, but a much lower cost-of-living. As an alternative method for comparing minimum wages in Canada, the average hourly wage (AHW) for each jurisdiction can be used. The AHW of a jurisdiction gives an indication of both the cost-of-living as well as the state of the economy, and at $27.80 per hour the AHW in the NWT is the highest in Canada. By using the AHW as a basis for comparison, the NWT s current $10 per hour MW is 36% of its AHW, which is the lowest in Canada. The un-weighted Canadian average for this same measure is 45%. Bringing the NWT MW to $12.50 per hour brings the NWT s AHW in line with the Canadian average (Appendix B and C). The research suggests that in theory setting the minimum wage below 50% of the AHW would likely not reduce employment levels in the NWT but any higher than 50% of the AHW might have a negative an impact on employment levels. In practice however there is no evidence to suggest that increasing the minimum wage in any Canadian jurisdiction results in reduced employment levels. Other Considerations Across Canada a variety of methods and mechanisms have been used to assess and set minimum wages. There is also no consensus of what is being achieved through setting a minimum wage, or what minimum wage rate level is adequate. Increases minimum wage may help to: improve retention and reduce recruitment and training expenses as employers see their employees as more valuable and worth investing in benefit the local economy as higher income may increase the purchase of local goods and services even if changes do impact general employment levels, the changes usually result in improved overall efficiency reduce businesses that can survive by paying very low wages and that should not be in the economy

4 On its own, increasing the minimum wage rate is not an effective means of fighting poverty. The working poor benefit from an increase, but those who are poor because they are not employed or not in the paid labour market do not. Other GNWT programs and services exist to provide support regardless of income status. History of Minimum Wage Increases in the NWT Although records on the minimum wage rates for the NWT are limited, the minimum wage rates in the NWT from 1986 to present were: April 1, 1986, $5.00 per hour. April 1, 1991, on highway - 16 years of age or older $6.50 per hour, under 16 years of age, $6.00 per hour; and off highway - 16 years of age or older $7.00 per hour, under 16 years of age, $6.50 per hour December 28, 2003, $8.25 per hour. April 1, 2010 $9.00 per hour. April 1, 2011 $10.00 per hour and is the current rate.

5 Appendix A Current Minimum Wage Rates and Setting Mechanisms for all Canadian provinces and territories as of January 1, JURISDICTION CURRENT RATE EFFECTIVE DATE CHANGE METHOD Alberta $10.20 Sept 1, 2014 Formula Based on annual increases in Average Weekly Earnings and CPI British Columbia $10.25 May 1, 2012 Ad hoc Manitoba $10.70 Oct 1, 2014 Ad hoc New Brunswick $10.30 Dec 31, 2014 Ad hoc Newfoundland & Labrador $10.25 Oct 1, 2014 Ad hoc Nova Scotia $10.40 April 1, 2013 Nunavut $11.00 Jan 1, 2011 Ad hoc Ontario $11.00 June 1, 2014 Ad hoc Prince Edward Island $10.35 Oct 1, 2014 Ad hoc Quebec $10.35 May 1, 2014 Saskatchewan $10.20 Oct 1, 2014 Formula Based on increases in annual CPI Formula based on 47% of Average Earnings. MW to increase to $10.55/h May 1, Ad hoc New legislation to take effect early 2014 Yukon $10.72 April 1, 2014 Formula Based on increases in annual CPI

6 Appendix B Minimum Wage as a Percentage of Average Hourly Wage Provinces and Territories, 2013 Average Hourly Wage Minimum Wage ($) ($) (%) British Columbia $22.27 $ % Alberta $25.34 $ % Saskatchewan $23.74 $ % Manitoba $20.64 $ % Ontario $22.07 $ % Quebec $21.62 $ % New Brunswick $19.88 $ % Nova Scotia $20.06 $ % Prince Edward Island $18.81 $ % Newfoundland and Labrador $22.87 $ % Yukon $24.09 $ % Northwest Territories $27.80 $ % Nunavut $27.42 $ % Minimum wage rates are current as of October 2013 Average hourly wage are for employees paid by the hour excluding overtime Average hourly wage is from Statistics Canada CANSIM Table

7 Appendix C Percentage of Average Hourly Earnings for Employees Paid by the Hour, Excluding Overtime Northwest Territories, 2013 Share Perspective Minimum Wage 30% $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $16.68 Average hourly wage is from Statistics Canada CANSIM Table

2014 MINIMUM WAGE RATE ANNUAL REPORT

DEPARTMENT OF JUSTICE 2014 MINIMUM WAGE RATE ANNUAL REPORT PREPARED BY: POLICY & PLANNING DIVISION DEPARTMENT OF JUSTICE BACKGROUND INFORMATION The Nunavut Labour Standards Act (the Act ) regulates employment