Moving P.E.I. minimum wage to $17 next year could add to inflation, business group says
A national advocacy group says a $1 increase to Prince Edward Island's minimum wage over the next year will bring challenges for Island businesses.
Starting Oct. 1, the minimum wage will rise from $16 to $16.50 per hour. It will increase again to $17 per hour on April 1, 2026.
The changes were announced in the provincial operating budget tabled last week by Finance Minister Jill Burridge.
"Obviously, minimum wage does have to go up… Our low-wage earners have to have a livable wage, and this is another step towards that," Burridge told reporters Friday.
A livable wage is defined as the minimum income necessary for a worker to meet their basic needs. A 2024 report from the Canadian Centre for Policy Alternatives estimated the livable wage on P.E.I. to be $22.76 an hour — well above the coming increase.
The province's timeline for the wage hike is six months later than what was recommended by the Employment Standards Board — the board the province relies on to help guide its minimum wage decisions.
In its 2024 report, the board recommended the increase to $17 per hour take effect on Oct. 1 of this year.
Small business concerns
Frédéric Gionet, the director of legislative affairs for the Canadian Federation of Independent Business in Atlantic Canada, said Burridge's new budget includes several tax cuts that will help businesses in an uncertain time, given the still-unknown impact of U.S. President Donald Trump's global trade war.
However, he's concerned over the impact of the P.E.I. minimum wage increase.
He said while minimum wage hikes are often used as poverty-reduction measures, the approach is too simplistic and may not be the best solution to the high cost of living.
The $1 increase Islanders will see translates into only a modest net pay raise for workers, Gionet said, adding: "It's not going to make a difference on reducing poverty in that sense."
However, he said about 60 per cent of CFIB members will need to raise prices and increase wages for other employees in response to a wage increase.
"If you're making $20 an hour, and then the minimum wage is going up, there's some kind of upward pressure on those who are already making more than minimum wage, and that's the majority of small businesses already paying above minimum wage. So really, it's inflationary a little bit."
Labour costs make up the bulk of expenses for small businesses, Gionet said. With many challenges already straining operations, including the lingering impacts of the pandemic, changing consumer habits and global trade instability, he said paying higher wages could be a major struggle for many.
"They're not going to have any other choice but to raise prices, which contributes, therefore, to the cost of living," he said.
'A race to the top'
Elsewhere in Atlantic Canada, minimum wages are also rising.
In New Brunswick, the minimum wage rose by 35 cents on April 1, bringing it to $15.65 an hour, up from $15.30. The increase is part of a scheduled annual adjustment tied to inflation.
Nova Scotia 's minimum wage increased from $15.20 to $15.70 on April 1 and is set to rise again to $16.50 on Oct. 1.
In Newfoundland and Labrador, the minimum wage went from $15.60 to $16 an hour on April 1.
"I see P.E.I. is going to have the highest minimum wage again. And then New Brunswick and Nova Scotia catch up, and then P.E.I. goes. And so it seems like a race to the top," Gionet said. "I think this raise to the highest minimum wage needs to stop… We are pleading with governments to find other methods to establish minimum wage, something more grounded."
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