Minimum wage increases could speed up automation, not relocation

Companies might not be able to dodge rising minimum wages by relocating even their most mobile workforces to lower wage provinces, but higher costs could accelerate the pace of automation.

"It would be foolish of some employers to think that they can escape temporarily by moving their operations," said Canadian Labour Congress president Hassan Yussuff.

While companies may get a short-term benefit, he said the reality is that minimum wages across the country are going to keep increasing.

Unifor president Jerry Dias said pressure is being placed on every province to boost entry wages that mostly affect retail and service sectors, where relocation is not an option.

"This is spreading across the country like a very good epidemic and so they can run but they can't hide," he said in an interview.

Some businesses have criticized the pace of wage hikes in Ontario and Alberta.

On Jan .1, Ontario boosted hourly minimum wage by 20% -- from an $11.60 to $14. The rate will rise to $15 an hour in 2019. Alberta is expected to raise its minimum wage to $15 later this year.

But the union leaders argue that higher wages will ultimately help businesses as low income earners are more apt to spend all they earn and boost the economy.

Jobs that can easily be done from any location are theoretically most likely to shift locations. Some companies may move jobs say from Ottawa to Gatineau, Que., but the numbers will be very small, said Fabian Lange, associate professor at McGill University's Department of Economics.

But provinces cannot guarantee that their minimum wages won't unexpectedly rise, said University of Alberta economics associate professor Joseph Marchand.

"No one really saw Alberta's $15 minimum wage coming. In 2014, it was one of the three lowest minimum wage provinces," he said.

Marchand said rising minimum wages could speed up a growing trend to automate with the addition of ATMs, restaurant order screens and grocery self-checkout lines.

"It's happening because technology is moving at a constant rate so that's making capital cheaper year by year, but then if you have a drastic shift in labour costs that's only going to speed up the process."

READ: Dollarama testing self-checkout to offset impending wage hike

A report from the Brookfield Institute on the Canadian jobs most at risk of automation found employees in the lowest-paid sectors, such as cashiers and food and beverage servers, are most vulnerable.

Canadian retailers such as Dollarama and Metro have said they are speeding up studies of automation as they consider options for offsetting the pending wage increase.

But the shift to automation over the last couple of decades has little to do with wage hikes, said labour representative Yussuff.

"There is recognition that more and more automation is coming to a lot of sectors in society and that's long before the minimum wage has been increased."