A group representing business owners says raising the minimum wage in the Northwest Territories to $12.50 could have a ‘devastating’ impact.

The increase, announced on Tuesday and set to come into effect from June 1 this year, is set to establish the territory’s minimum wage rate as the highest in Canada.

However, the Canadian Federation of Independent Business argues the increase will inflate payroll costs for employers while delivering little benefit to workers on a low income.

Amber Ruddy, who represents the group in the Northwest Territories, told Moose FM: “This is going to have devastating impacts. Not only will this affect people making minimum wage, but other people within the economy will expect to see a little bit of a bump in their salary based on this, and that’s not fair.”

The increase substantially lifts the territory’s minimum wage from its present $10/hour rate. The highest rate in Canada is presently $11/hour, found in Ontario and Nunavut.

Ruddy says the increase is too severe, and believes the territorial government should instead have pursued greater tax exemptions for low-income families.

“This is a huge increase,” she said. “Usually, when governments increase minimum wage, we’re looking at 30 cents or lower than that. If the actual goal is poverty reduction, this is not the way to do it.

“They should really look at raising the basic personal exemption. Those making the basic minimum wage, about half of that is exempt from taxes. They should look at extending that further so people can keep more of their hard-earned money.”

Opinion in the business community is divided, as NWT Chamber of Commerce members – for example, executive director Mike Bradshaw – were among those on the minimum wage committee whose recommendations informed this increase.

“This is fairly dramatic but the NWT, over time, has been falling behind,” said Ben McDonald, another committee member.

“If we’re going to try to make it live-able in the Northwest Territories for people at the lower end of the scale, we have to be really conscious of having a substantial minimum wage.”

Ruddy says the committee was given only a narrow range of options to consider.

“The options that were presented were all different ways to increase minimum wage,” she said.

“The basic personal exemption was the route that they should have considered.

“That’s not something governments typically think of when it comes to minimum wage, and that’s why the debate really needs to be reframed so that they understand that this would have a more positive impact.”