Loblaw warns minimum wage hike will mean cost cuts

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Toronto – 

Loblaw has added its voice to the companies who suggest that minimum wage increases may wind up hurting, rather than helping, some workers.

Loblaw Companies Ltd. said Wednesday that changes to the minimum wage in Ontario and Alberta will increase their labour expenses by $190 million in 2018.

How to make up that loss?

Loblaw chairman and CEO Galen G. Weston said the company would move to save money by, “increasingly digitizing manual invoice jobs and rolling out more self-checkouts at its Shoppers Drug Mart locations.”

In other words, via technology — and savings achieved through technology usually involves job cuts.

In the U.S., minimum wage hikes and consequent increased labour costs were offset in the fast-food industry by automation — kiosks replacing cashiers in McDonald’s, for example.

The minimum wage in Ontario and in Alberta is going to $15 an hour.

In Ontario, it is currently $11.40 an hour and will rise to $14 in 2018 and then $15 in 2019. Alberta will have a $15 minimum hourly wage by next year.

One obvious way to cover off higher labour costs is with price increases, although the rising cost of groceries has already been problematic for many Canadians. (Besides grocery stores, Loblaw owns Joe Fresh clothing stores, Shoppers Drug Mart and PC Financial.)

Nonetheless, a CIBC analysis put forward by Global News states that an increase of only 0.4 per cent would offset Loblaw’s increased labour costs.

Luckily for the consumer, the current retail environment — with such developments as Amazon hoping to acquire Whole Foods — may prevent any such price jumps for now.

Kevin Groh, Loblaw VP of Corporate Affairs and Communication, suggested the grocery giant would examine other solutions first.

“We have many cost levers and will be looking at every one. In terms of grocery prices, we continue to work hard to keep prices low in a very competitive environment. That focus has not changed.”

The company website claims that Canadians make one billion visits a year to the company’s stores; it also says that Loblaw employs some 200,000 Canadians, coast to coast.

The higher cost of labour came up in a report showing a second-quarter profit attributable to shareholders of $358 million or 89 cents per diluted share — quite a jump over a profit of $158 million or 39 cents per diluted share for the same period a year ago.


Canadian companies complaining that raising the minimum wage will hurt profits?

Some chalk it up to “corporate greed,” while others say the entire issue is being overblown.

Loblaws was the latest to get on the anti-minimum wage raise bandwagon, suggesting on Wednesday a wage hike could force the company to find cost-savings elsewhere, possibly through automation.

The province is looking at boosting the minimum wage from the current $11.40 an hour to $15 by 2019.

“They are threatened by any loss. It’s just corporate greed and immoral in every way,” Cheeba Cole said on Wednesday outside the Danforth and Broadview Aves. grocery store.

“This is about survival for some people. Why can’t they look at their employees as human beings,” Cole added.

Companies such as Loblaws are saying a raise in minimum wage will hurt profits and increase the costs of their goods.

Doug Fyfe said forecasts of corporate ruin because of a minimum wage increase never come to be.

“There has always been a history of protests against minimum wage increases and in the end when workers get a wage increase it turns out to be good for the economy,” Fyfe said.

Loblaw shopper Suzy Thomson, who was with her two-year-old boy and four-year-old girl, doesn’t believe the average person is against raising the minimum wage, although she worries about her food bill.

“It’s already outrageous feeding two little ones with the cost of milk and produce. Prices are already too high,” she said. “People don’t begrudge a raise in minimum wages, but I don’t know what will happen.”

Anne Lamont has kids paying off their educations working in minimum wage jobs that aren’t in their field of studies.

“Young people are facing such challenges and I think the companies should absorb the costs of a minimum wage increase,” Lamont said.

“The money will go back into the economy. It’s a long-term investment in our labour force and our future.”

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