C-Suite survey finds executives worried about minimum wage
Canada’s top executives are optimistic about the country's economic outlook, but not so optimistic they think the Bank of Canada will raise interest rates to cool growth, according to the latest quarterly C-Suite Survey.
Canada’s business leaders worry the country’s recent economic winning streak could be broken by rising trade tensions with the United States, a potential rise in interest rates, or higher costs associated with proposed minimum wage hikes, according to the survey conducted for the Business News Network by the Gandalf Group, and sponsored by KPMG. The survey was conducted between Sept. 11 and Oct. 5, 2017. One hundred and fifty-three Canadian business leaders from the country’s largest 1,000 companies participated.
Most respondents – 92 per cent – say they expect Canada’s economy to see either strong or moderate growth in the coming year. That’s a slight increase from last quarter and greater than expectations for the U.S. economy. Ninety per cent of those surveyed expect their own businesses to see strong or moderate growth.
Despite that optimism, many executives think economic growth will not be strong enough to prompt Bank of Canada Governor Stephen Poloz to raise interest rates again in the foreseeable future. Only a third of executives think the Bank of Canada will raise rates again this month and 50 per cent of executives say an additional rate bump would have a negative impact on their business.
“The primary opposition to a rate increase stems from concern about debt and financing, although many are concerned about currency and business costs,” the report says.
Opposition to higher interest rates was strongest in the west, where 39 per cent of respondents said they strongly opposed higher rates, compared to 21 per cent in Ontario and the Atlantic region.
Few business leaders see a positive impact from Ontario and Alberta’s proposals to boost the minimum wage to $15 in the coming years. More than 50 per cent of executives either oppose or strongly oppose the increase. Opposition is greater in Alberta where wages are set to increase to $15 next year.
However, business leaders aren't panicking about the direct impact of higher minimum wages on their companies. One in five surveyed expected a slight impact, while less than one in ten said it would be significant. A whopping 88 per cent of small business executives said the changes would have no impact on their company.
Industry groups such as the Canadian Federation of Independent Business have been lobbying hard against the wage hike saying small businesses would bear the brunt of the increase.
Many executives think new advanced technology in the manufacturing sector could offset the concern about rising wages. About half of those surveyed said the higher wages will make Canada less competitive, but about 71 per cent said new technology could reduce those concerns.
“Three in four companies (73 per cent) say they will be relying significantly more on advanced technology in the next five years to conduct tasks that can otherwise be completed by employees,” said the report.
As renegotiations of the North American Free Trade Agreement reach a critical juncture, Canadian executives are very worried about the fate of the deal. About 67 per cent of those surveyed believe the U.S. is looking to make major changes to the trade agreement.
More than 40 per cent believe U.S. President Donald Trump wants to tear up the deal. In March, 60 per cent of those surveyed thought the U.S. only wanted small “tweaks” to the deal.
Despite Trump's threats to terminate the deal, Canada’s executives want negotiators to take a tough stand in negotiations: 98 per cent of those surveyed said Canada should insist on keeping the Chapter 19 trade dispute resolution.
There is some room for compromise, the report said.
“Half agreed Canada should compromise and accept the end of the NAFTA dispute resolution panels if it meant the U.S. agreed to key demands for opening its labour and public sector markets,” the report said.