Canadian employers respond to wage increases with automation, AI, layoffs

Most Canadian provinces now automatically tie minimum wage increases to inflation, aiming to keep wages in line with the cost of living. However, this policy creates significant challenges for businesses. A new survey reveals that many Canadian companies are struggling and considering substantial changes if wage hikes continue.

Wage Increases Affecting Entire Companies

• Broad Impact: One in three Canadian companies (32%) report that mandatory minimum wage hikes result in increased salaries across the board, not just for minimum wage workers.
• Employee Concerns: A significant number of job seekers (59%) indicated they would consider quitting if they discovered that entry-level employees were being paid the same as more senior employees following a minimum wage increase.

Support for Inflation-Linked Wage Hikes

• Company Support: 85% of companies agree that minimum wages should keep pace with inflation.
• Job Seeker Support: 90% of job seekers share this view.
• Long-Term Benefits: 85% of job seekers believe that these wage hikes benefit the personal finances of minimum wage workers in the long run.

Find out what the minimum wage is in Ontario, Alberta and B.C., as well as the rate for federally regulated employees in Canada.

Consequences of Automatic Wage Increases

• Increased Automation: 19% of businesses plan to adopt more automation or AI to offset rising labor costs.
• Reduced Employee Hours: 17% anticipate decreasing the number of hours employees work.
• Workforce Reductions: 14% foresee reducing their workforce.
• Outsourcing: Another 14% are considering outsourcing more work.

These changes have led to concerns among job seekers, with two-thirds (66%) worried about job security as a result of these wage increases.

Rights for Canadian Workers

Non-unionized Canadian employees have specific rights when it comes to changes in their job duties and employment status:

• Constructive Dismissal: It is illegal for an employer to make significant changes to an employee’s job, including pay, hours, or duties, without consent. If this happens, the employee can pursue a constructive dismissal claim and obtain a severance package.
• Severance for Job Loss Due to Automation: Canadian employees who lose their job, or are fired without cause, due to a shift to automation or artificial intelligence are entitled to a full severance package. Total compensation can be as much as 24 months’ pay, depending on numerous factors.

If you are a non-unionized employee working in Ontario, Alberta or B.C. and are impacted by these changes, contact an employment lawyer at Samfiru Tumarkin LLP immediately before you sign any termination offer. Get the advice you need, and the compensation you deserve.