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Spotlight: Minimum wage increases could result in collateral damage for student jobs in the north

Tourism industry finding ways to adapt to the impacts of new Ontario labour laws
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Visit almost any tourism operation in Northern Ontario during the summer and chances are you’ll receive service from one or more hard-working students. The seasonality of tourism in the North is a perfect complement to most academic schedules creating a win-win for businesses seeking interim, lower-wage labour and for students looking to earn income for their futures.

Because of favourable circumstances for student employment, it’s not surprising that Northern Ontario’s tourism industry is the region’s largest employer of youth workers.

This availability of work is a sunny spot for young earners. But changes to Ontario’s labour laws put into motion by Bill 148 are poised to continue to put a damper on jobs offered by small businesses and apply pressure on tourism operators who depend on student employment and lower-cost labour.

“Representing $33 billion of Ontario’s GDP, tourism is a significant and valuable component of Ontario’s economy,” says the Ontario Chamber of Commerce (OCC) in their report, Blueprint for Making Ontario Open for Business. “However, taxes on travel and accommodation, and unnecessarily high wages place undue burden on an industry which already operates on thin margins.”

Employment law reform in Ontario, specifically the new minimum wage requirements introduced by the recently repealed Bill 148, The Fair Workplaces Better Jobs Act, 2017 have created unintended challenges for tourism businesses and organizations that rely on hiring lower-wage employees.

“Tourism businesses from across the province ranging in size from small and medium-size enterprises (SMEs) comprised of 100 or fewer employees to larger enterprises ranging from 101 to over 500 employees, reported that the dramatic and rapid increase to $14 an hour has negatively impacted multiple elements of business,” said the Tourism Industry Association of Ontario (TIAO) in an email.

“These impacts range from, increased operating costs, decreased sales and profits, diminished expansion opportunities, to a decreased ability to hire students and younger, less experienced employees. While some tourism proprietors indicated their support for the minimum wage increase, many reported that the speed with which it was increased to $14 an hour was a significant issue and an incremental increase over a longer period would have been less detrimental on business and staffing.”

Key areas of concern for TIAO’s members regarding the January 1, 2018 minimum wage increase include hiring stagnation, increased workload for existing staff and fewer opportunities for youth and students.

In October 2018, Doug Ford’s Conservative Government successfully moved to put a freeze on minimum wage hikes at $14 through Bill 47, Making Ontario Open for Business Act, 2018 – a welcomed move for the tourism industry says, Beth Potter, President and CEO, TIAO.

“TIAO was pleased to share with the Minister of Labour the negative impacts of that Bill 148 had on the tourism industry and was pleased when the Ford Government repealed the Bill. We will continue to work with the Ministry of Labour on future policy that will affect the tourism industry as TIAO is committed to providing strategic insight on how to create favourable public policy that allows the tourism sector to continue to serve as a strong economic driver and job creator for Ontario.”

However, this relief for small businesses will only play a role in part of a bigger strategy to aid an industry that has ample opportunity for growth but continues to struggle with labour issues.

“Tourism HR Canada has estimated that, by 2030, labour shortages in Ontario’s tourism industry could exceed 88,000 full-year jobs. Already, over 40 per cent of tourism SMEs identify ‘shortage of labour’ as an obstacle to growth, and over 50 per cent experience issues recruiting and retaining employees,” reads the OCC’s report.

As an inter-provincial economy that faces challenges to adjust new employment laws, the tourism industry can’t simply dodge minimum wage increases. Tourism business operators are left to find proactive ways to increase revenues to offset the expenditure on lower-cost labour they rely on.

An industry moving forward

One way tourism operators are working toward adding to their bottom line and meet the challenges of an increased minimum wage is by partnering with non-profit organizations like Destination Northern Ontario (DNO). DNO directly supports tourism businesses and communities through the development of new tourism products, leveraging partnership funds, improving tourism operations through education and investment strategies, and participating in fresh marketing initiatives. All with the goal of shifting the quality of operations and tourist experiences to ensure the sustainability of jobs offered by businesses adjusting to a new climate for employers.

In the end, it’s not about resistance to new legislation or whether or not minimum wage should
be increased. The priority for the tourism industry lies in sustaining a labour force that
contributes to the success of operations and maintaining the viability of businesses that help
generate a half billion dollars in tax revenue annually for the region.

About Tourism Rocks!

Tourism Rocks! was launched by Destination Northern Ontario to champion growth in Northern Ontario’s tourism industry. The campaign highlights the importance of tourism in the region and creates awareness about exciting career opportunities in the tourism sector.