Businesses will have to continue to raise wages if they’re to close Newfoundland and Labrador’s wage gap, says the province’s business minister.
Keith Hutchings, innovation, business and rural development minister, addressed a luncheon meeting of the Business Association of Newfoundland and Labrador at the Battery Hotel Tuesday, speaking about the province’s business strategies as outlined in last week’s budget.
After his speech, in response to a recent report by Statistics Canada that showed large gaps between the hourly wages paid for unionized trades here versus elsewhere in the country, Hutchings told The Telegram employers will have to increase the wages they pay, adding that it’s something he knows businesses are already doing.
“At some point, if they need to continue to flourish, they need to continue to increase and be competitive in terms of the wages they provide,” he said. “I think over the last number of years, we have seen an increase in those wages.”
Richard Alexander, director of the Newfoundland and Labrador Employers’ Council, acknowledged wages have to go up, but said it can’t happen overnight.
“If we were to jump wages by $10 an hour within one year, then you’d end up bankrupting some of the smaller firms,” he said. “They just cannot absorb that kind of an increase over a short period of time. So we need to be patient. We need to allow the market time to adjust.”
Alexander said the high wages in Alberta in particular are driven by the oilsands, which is on a larger scale than Newfoundland’s offshore industry.
“(The) oil and gas (sector) in this province is very small in comparison to the oilsands development, so the employment opportunities that the oilsands offer are long term,” he said. “It’s going to go on for years and years and years. It’s one of the largest reserves of oil in the world. They’re going to be dealing with oilsands development for many, many years. Some of these projects we have are fairly short, medium term.
“Like Hebron, they’re talking about six years of work. So we need to be careful we don’t drive wages up so high in this province that after all these special projects are over we become known as a high-wage jurisdiction and then we’re unable to compete and attract more work to the province because of that.”
Business leaders were disappointed last week when the provincial budget didn’t include a reduction in the payroll tax this year. Last year, the Progressive Conservatives election platform included a promise to eliminate it, something Premier Kathy Dunderdale at the time estimated would take six years.
“We did make a commitment when we went to the electorate last fall that we would look at, over the next four years, reducing payroll tax. We have done it in past years since we’ve come to power. We’ve put in place a number of initiatives for small business … over $91 million in tax incentives. We’re certainly very engaged with small business — we realize how important it is to the economy of Newfoundland and Labrador.”