TIM HORTONS, Canada’s largest coffee-and-doughnut chain, is so beloved that politicians campaigning for office rarely fail to visit one. Its “double-double”, a coffee with two splashes of cream and two sugars, has an entry in the Canadian Oxford Dictionary. But in January trade-union activists held demonstrations outside Tim Hortons restaurants in Ontario, the country’s most populous province. Those have died down, but angry letters and phone calls keep coming.
The activists’ gripe is about the way the chain handled a sharp increase in Ontario’s minimum wage. On January 1st the province’s Liberal government raised it from C$11.60 ($9.25) to C$14. That makes it the highest in Canada. Another rise to C$15 is scheduled for next year.
Tim Hortons’ workers have no complaint about that. But they are dismayed by many franchisees’ plans for covering the cost. Barred from raising prices by Tim Hortons’ owner, a company controlled by 3G Capital, a Brazilian private-equity firm, some franchisees cut benefits, including paid breaks. From the brand’s point of view, such tactics are “hall-of-fame stupid”, tweeted Frank Graves, a pollster—though the money has to come from somewhere, and price rises are seldom popular, either.
Kathleen Wynne, Ontario’s premier, faces a difficult election in June. Raising the minimum wage looked like a good way to lift her approval rating, which stood at 20% in December. The pay boost has the support of 60% of voters. Demand for labour is strong, which makes it less risky. Ontario’s unemployment rate, now 5.5%, has been lower than the national average for nearly three years. Just 7% of the province’s workers earned the previous minimum wage.
But the abrupt rise has hammered firms with lots of low-wage workers, such as restaurants, hotels and farms. Marijuana growers say they may raise prices (after the stuff is legalised, which is supposed to happen by July 1st). Metro, a supermarket chain, says it will replace more checkout staff with machines. Ontario’s independent “financial-accountability officer”, who reports to the Speaker of the legislature, warned in September that the wage increase could cause a net loss of 50,000 jobs. Ontario is already an expensive place to do business, especially because of its high energy costs, firms grumble.
The government should have helped low-paid workers in other ways, says Julie Kwiecinski of the Canadian Federation of Independent Business. She suggests tax credits, a higher personal income-tax exemption and more training. But the provincial government would have to pay for these. Having promised to balance the budget this year for the first time in a decade, it preferred to shift the burden to businesses and workers who will lose their jobs. There is no such thing as a free lunch, or even a free doughnut.
Tim Hortons’ owner belatedly allowed franchisees to raise prices, but not before blaming a “reckless few” for sullying the brand’s image. On the campaign trail, Ms Wynne may skip the customary visit.
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