3 WAYS TO SURVIVE MINIMUM WAGE INCREASES
Effective October 1, 2018, the minimum wage in Saskatchewan will increase to $11.06 per hour. Currently, the minimum wage is $10.96 per hour.
The minimum wage in Saskatchewan will be indexed. This means the minimum wage rate will be calculated using changes in the Consumer Price Index (CPI), a collection of goods and services typically purchased by households, and the Average Hourly Wage in Saskatchewan for the previous year. This new approach will help to provide security for minimum wage earners and ensure predictability for business owners in the province.
Changes to the minimum wage must be announced on or before June 30th of each year and will take effect October 1st of the same year to give business owners the ability to plan for the change.
Although this may seem like a very small increase of .10/hour. To a small business it also means more expense for payroll taxes (both CPP and EI), statutory holiday pay, vacation pay and WCB premiums. If the company pays for sick time, paid breaks, these costs will also increase accordingly.
Preparing for the effects of raising minimum wage, or any government-mandated cost increase for that matter, is a good practice to get into. Many businesses are not prepared to weather storms.
3 ways to Survive a Minimum Wage Increase
1. Reduce costs for a better ROI
Every successful business needs to be proactive in hunting down inefficiencies, products and services with low profit margins, and outdated systems. These often stink around longer when a company is thriving. However, when increases hit, then it’s time to look and see what can be done more efficient and for less overall cost. Are there certain parts of the business that can be automated, which would also reduce costs, cut down on workloads and keep tasks manageable.
2. Increase Prices
Increasing prices is the most obvious option – if the employers costs go up, they have to pass them on to the consumer. While this isn’t always ideal in current economic climate, some employers are positioning themselves to pay above minimum wage to ensure they can retain talent and when wage increases are implemented, the impact is minimal. Talk to your bookkeeper or accountant to determine what the deficit will be with the wage increase and if there are ways to recoup with incremental, slight price increases across your products or services. Often if you continue to ensure your level of service remains high, most customers will remain loyal.
3. Reducing Hours or Staff
It’s not always ideal, but it’s better than laying off your good staff. If you have a storefront or provide a service where overhead can be reduced, taking a look at your operating hours and schedule is a good idea. If there are certain days that sales are low and you barely cover costs, maybe that’s a day to have minimal staff or close for the day. If you notice certain peak hours throughout the day, staggering staff hours or part time staff, allows accommodating the requirements of the store and also reducing your teams’ overall hours worked.Back