The COVID-19 pandemic changed the Canadian economy in a number of different ways. First, there were layoffs as companies sought to comply with restrictions and remain solvent. Then, the Canada Emergency Response Benefit (CERB) program kicked in to help workers pay expenses.

A lifeline for Canadian workers in 2020, the CERB scheme paid the equivalent of a 40-hour-per-week minimum wage job in many provinces. After CERB payments came to an end, employers found it more difficult to hire reliable minimum wage workers.

But should Canadian companies pay workers minimum wage in the first place? What are the advantages of minimum wage increases? Are there any benefits to doing so? The short answer is: yes, there are lots of benefits to increasing employee wages above the minimum wage in Canada.


Curious about roles that require higher pay to attract and retain talent? Check out our article with shared salary insights for in-demand positions.

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CERB and minimum wage

CERB payments meant that workers — particularly minimum-wage workers — were able to stay home and stay safe. As the pandemic continued its relentless march across Canada, people were still able to pay rent, mortgage, grocery and other essential bills. 

CERB benefits also took the pressure off Canadian employers, including many small businesses without the capital to pay employees in the midst of an economic crunch.

CERB payments came to an end in December 2020. Former recipients transitioned to employment insurance (EI), and many workers were eligible for Canada Recovery Benefit (CRB) or Canada Recovery Caregiving Benefit (CRCB) payments instead. Both the CRB and the CRCB will continue until the end of September 2021.

Canada’s financial response to the pandemic meant that a large proportion of formerly employed people no longer had to work for inadequate pay. That prompted an average wage increase in the marketplace as companies sought to tempt workers back into warehouses, factories, offices and restaurants across the country. 

No matter what type of company you operate, minimum wage vacancies no longer attract many talented applicants — especially in high-demand areas. To improve your candidate shortlist, consider offering a better hourly rate.


the benefits of paying your employees more than the minimum wage

As an employer, you can take the initiative and pay your workers more than the minimum wage. The benefits of better wages go far beyond talent acquisition, too. Let’s dive deeper into some of the tangible perks of paying more.

staff turnover decreases

As wages increase, staff turnover rates decrease. When people struggle to pay for the basics because they’re not compensated well at work, they seek alternative employment. Conversely, people who are paid well — who can afford the basics plus a little extra — tend to stay with their employers. 

High turnover isn’t just inconvenient: it’s also expensive. Recent research by the Canadian Federation of Independent Business revealed that employers often underestimate the costs associated with hiring new employees. Recruitment expenses, training expenses and loss of revenue associated with a new employee’s limited initial productivity soon add up. According to Manulife Financial, these costs can total 40% of an employee’s yearly salary.

Need additional information on why paying your employees more pays off for your business? Learn more in our insightful article and how you can implement these positive changes for your workforce and company as a whole.

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employee morale improves

People who are paid more feel better about the work they do — and generally speaking, company profits increase along with employee morale. It makes sense, then, to implement measures that boost morale across the board. Perhaps unsurprisingly, wage increases lift the spirit.

When people feel happier at work, they also feel more loyal toward their employers. Perhaps one of the biggest advantages of hourly wage increases is that they improve loyalty—paying dividends in the long run. 

Loyal employees produce better work, stay engaged, recommend other potentially good workers when vacancies arise, and spread good cheer about your brand.

productivity improves

You don’t have to limit better compensation to an hourly wage increase. Performance-based bonuses, annual bonuses and commission schemes boost morale and productivity at the same time. Highly engaged, productive employees drive your company forward. 

In simple terms, highly productive companies are more valuable than less productive peers in their industries. Productive companies handle bigger contracts successfully and can then market themselves to progressively larger clients, further boosting their industry standing. If you plan to scale your company, paying more than the minimum wage makes strategic sense

profitability improves

Earlier, we mentioned that company profits improve alongside employee morale. There are many reasons for this, including reduced absenteeism and presenteeism, increased productivity and greater employee loyalty. In economics, this phenomenon is known as the efficiency-wage theory: employees who are paid more work harder to keep their jobs, boosting your profits in the process.

Recently, a Gallup poll found that highly engaged teams were 21% more profitable than unengaged teams. For a real-world example of the better-wage-better-productivity connection, look no further than a recent Harvard University working paper. 

Warehouse workers at a large company who received a $1 wage increase moved more boxes per hour, which led to an overall increase in productivity and profitability

brand image improves

When companies don’t compensate employees fairly, they lose street cred. Millennials and Gen Z Canadians gravitate toward socially conscious brands — and they make employment choices based on those preferences, too. 

When companies pay well, they directly contribute to the communities they’re based in. In turn, community members spread the word and boost brand engagement at every level. 

Socially conscious well-paying brands reap profitable rewards. They don’t just sell more products — they also attract productive, loyal workers. Staff turnover rates stay low, reducing the need to recruit. Costs fall across the board, and profits go up even more

At the end of the day, paying more than minimum wage can help you compete with other, similar employers in the marketplace. You’re more likely to attract highly-skilled candidates when you post job openings, and your existing workers are more likely to remain with your company. 

In turn, you’ll spend less on recruitment and training expenses and reap the benefits of a brand image boost.

Minimum wages in Canada are rising across the board in response to the COVID-19 pandemic — but you don’t have to wait to pay your people more. If you raise wages at your company, you’ll attract talented candidates and keep your best team players on side for longer.

Want to learn more about how paying higher than minimum wage is impacting salary trends? 

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