Rising costs, in part due to Alberta government policies according to critics, are causing a great deal of angst these days for small business owners in the province.
From restaurants to retail stores, entrepreneurs are feeling the pinch on their bottom line as they continue to operate in an environment of a slow economic recovery following recessions in 2015 and 2016.
The issue heated up recently with the announcement by the upscale and iconic Bears Den dining establishment in the Calgary area that it will be closing its doors at the end of the month.
“Unfortunately, economic conditions in the industry including the continuing poor business environment along with recent changes in the minimum wage and statutory holiday pay requirement have resulted in conditions that are unsustainable for remaining open,” posted the restaurant on its website.
Employers are concerned about a growing number of factors that are making it harder for some to operate. They include carbon taxes which are having a ripple effect on costs for some business owners, increasing minimum wages and now changes to Alberta’s Employment Standards Code, which includes regulations that all eligible employees get holiday pay even if they don’t work on the holiday.
Alberta’s minimum wage rose Oct. 1, 2017 from $12.20 to $13.60 and will spike again to $15.00 on Oct. 1, 2018.
“The recent changes to the Alberta employment code is having significant impacts on business, and particularly on small local businesses. These changes were passed with a very short consultation period, and they’ve taken many businesses by surprise as they find they have new costs and often more administration. Small businesses often run on very, very tight margins; $10,000 in new costs can easily be the difference between profit and loss,” said Zoe Addington, Director of Policy, Research and Government Relations with the Calgary Chamber of Commerce.
Amber Ruddy, Alberta director for the Canadian Federation of Independent Business, said the eligibility and pay calculation changed for general holidays in Alberta as of January 1. Previously days were categorized as ‘regular’ or ‘non-regular’ working days – i.e. for someone that works Monday to Friday 9 to 5, holidays that fell on the weekend were considered ‘non-regular’ and therefore not eligible for holiday pay. Currently, there is no distinction so all employees qualify no matter when holidays fall.
She said that pay calculation was previously based on average daily wage in the nine weeks prior to the holiday. Now it’s based on five per cent of wages, holiday pay, and vacation pay in the last four weeks prior to the holiday.
Ruddy said the eligibility changes to holiday pay is catching business owners off guard.
“Small business owners are frustrated with the growing list of prescriptive government rules and requirements that mandate how businesses should run. Removing flexibility for entrepreneurs erodes the business climate and in turn hampers what small businesses can provide their employees,” she said.
Prominent Calgary restaurant owner Michael Noble, who runs NOtaBLE and The Nash in the city, said both his establishments, which employ 140 people, are closed on Mondays but because New Year’s Day fell on Monday he had to pay his employees. A cost of about $11,000 on a day when he had zero revenue.
“For some reason the general public seems to be under the understanding restaurants are a licence to print money,” said Noble. “Anytime there’s a shift and a legislative cost to any small business . . . we all have the ability to add costs to the business to a certain point but I fear as we go down the road if there’s more and more of these legislated impacts then it will actually start affecting people. That’s the part I don’t have an appetite for.
“Alberta’s based off of entrepreneurship. It always has been and I know we’re moving toward diversifying. To me that’s when it becomes that much more critical to allow small business to stay alive and to diversify and to be a big part of the future solution for this province.”
Megan Szanik, who operates the boutique fashion store espy experience in Calgary with 18 employees, has also felt the pinch of rising costs in doing business. The stat holiday pay change alone represents a 33 per cent increase in costs for her store.
“The administrative costs are ridiculous too and all the new tracking information. That’s what they don’t think about. Especially the small business person. All the administrative stuff there is already and they’ve just added a whole other line that’s going to cost me hours and hours and hours,” said Szanik. “What’s it going to cost to administer all this stuff? . . . My margins are slim. Everything is really, really adding up.”
Christina Gray, Minister of Labour in Alberta, in a written statement to Retail Insider said that every Albertan who works a full-time job deserves to earn enough to provide for themselves and their family.
“No one who works full-time should have to stop at the food bank on their way home to their family after their shift. Our government’s minimum wage increase not only makes life better and more affordable for working Albertans but every extra dollar that these families earn boosts their spending power, which gets invested back in their communities and directly supports Alberta’s economic recovery,” said Gray.
“The recent changes to Alberta’s Employment Standards help to bring our province in line with standards most other Canadian jurisdictions already had. Prior to these changes, Albertan workers lacked important job protected categories of leave . . . As Alberta’s economy continues to grow and recover, workers deserve labour laws that are going to protect them in their time of need, and employers deserve standards that are balanced and ensure their businesses long term sustainability. Albertans believe in work life balance, and our new labour standards are rooted in Albertan values. Under Alberta’s old laws, workers could end up receiving no time off and no holiday pay for statutory holidays, because of unusual rules around payment and work schedules. Alberta was the only province where a worker could end up receiving no benefit from a statutory holiday.”