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VIEW: Change BC's out-of-step, ad hoc style in setting minimum wage

The average weekly wage in B.C. increased by only 1.3 per cent between June 2012 and June 2013, half of the 2.6 per cent jump in wages Canada-wide. This latest news, from an August Statistics Canada release, adds one more piece to the growing body of evidence that B.C.'s labour policies are contributing to increasing income inequality and stubbornly high poverty rates.

In January, the Canadian Centre for Policy Alternatives reported that StatsCan data from income tax files revealed that B.C. was the only province where the bottom 90 per cent made less in 2010 that they did in 1982. In Vancouver, the bottom 90 per cent saw their incomes drop by $4,300 after accounting for inflation -- the biggest decline in Canada's three largest cities.

In July, StatsCan reported that B.C. has the highest overall poverty rate in Canada (10.7 per cent in 2011, compared to a national average of 8.8 per cent), and the highest child poverty rate (11.3 per cent in 2011, tied with Manitoba) according to the StatsCan Low Income Cut-Off (LICO) after tax.

Minimum wage legislation is an important policy tool for the provincial government to use in addressing poverty and income inequality. This is a well documented fact. Unfortunately, the B.C. government kept the minimum wage frozen for 10 years, and when an increase was finally announced in 2011, it was done on an ad hoc basis for political reasons.

The political crisis is over for the time being, and the minimum wage has once again been frozen for 16 months (28 months for farm workers), with no plans to increase it for the foreseeable future. Meanwhile, the cost of living continues to rise, and our major metropolitan areas are becoming known as some of the most expensive places to live in Canada.

B.C.'s minimum wage rates are set by the provincial government on an ad hoc, discretionary basis. B.C. is out of step with almost all other provinces, which automatically adjust their minimum wages annually on the basis of certain economic and social indicators, such as the cost of living, average weekly wages, and poverty indicators.

For example, Nova Scotia indexes its minimum wage rate to changes in the StatsCan LICO and cost of living index. Alberta and the Yukon automatically adjust their minimum wages on the basis of increases in the cost of living index and/or average weekly earnings. Manitoba, New Brunswick, Newfoundland, Prince Edward Island and Saskatchewan adjust their minimum wages on the basis of the recommendations of independent minimum wage boards.

The government of Ontario is the latest to abandon the outdated ad hoc discretionary setting of minimum wages and to consider the adoption of a formal automatic minimum wage review process.

In July, the Minister of Labour announced the appointment of a six-member minimum wage advisory panel to examine the minimum wage policy and advise the government as they develop a reasoned approach for setting the minimum wage in the future. The panel's first task is to meet with and solicit input from a broad range of stakeholders.

The United Kingdom and Australia use similar systematic annual review mechanisms to ensure their minimum wages reflect current realities.

It's time for the B.C. government to do the same. Let's make sure that our minimum wages are based on a good public policy rationale, not political whim.

David Fairey is a labour economist, research associate of the Canadian Centre for Policy Alternatives, and co-chair of the B.C. Employment Standards Coalition.

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