Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }
C-Suite Survey

Canadian executives harried by rising interest rates, minimum wages

Despite strong recent employment numbers and buoyant second-quarter GDP growth, Canadian business leaders' economic forecasts have hardly budged this year

Bank towers are shown on Bay Street in Toronto’s financial district in this file photo. A recent survey asked corporate leaders about interest rates, minimum-wage increases, manufacturing, trade policy and the Trump administration.

Rising rates are rendering executives restless. The majority of Canadian business leaders are opposed to an October interest-rate hike from the Bank of Canada, suggesting they can't afford increased borrowing costs at a time when operating and production costs are also on the rise.

Half of the 153 executives who took part in the Gandalf Group's third-quarter C-Suite Survey said another rate hike this soon, following the Bank's two quarter-point rate increases in July and September, would have a negative impact on their business – while 65 per cent said it would negatively affect the broader Canadian economy.

The research firm suggests there might be a connection between the prospect of rising rates and the economic outlook coming from Canada's corporate offices. Despite strong recent jobs numbers and powerful second-quarter GDP growth, Canadian executives' economic forecasts have hardly budged this year, with the vast majority – 84 per cent – expecting only moderate growth in the next 12 months.

Story continues below advertisement

The survey, conducted by phone from Sept. 11 to Oct. 5, asked corporate leaders about interest rates, minimum-wage increases, manufacturing, trade policy and the Trump administration.

Only 13 per cent said the two rate increases this year were positive for their company, while 39 per cent said the rise negatively effected them; 46 per cent were neutral. Among resource-company executives, the split widened: only 4 per cent cited a positive effect, while 45 per cent said the increases were negative.

"This is a capital-intensive industry, so any quarter-percentage hike does translate into quite a bit of money very quickly," said Normand Champigny, the chief executive of Sphinx Resources Ltd., a Quebec mineral-exploration company.

Another rate increase would further raise the cost of borrowing in an industry that already has reasons to worry. "Such an increase would negatively impact the resource industry by increasing the cost of capital, access to which has been limited in the resource sector in recent years," said Catharine Farrow, CEO of TMAC Resources Inc., an emerging Toronto-based gold producer.

Frustration with rate increases was more prominent in Western Canada, the survey found. Garnet Amundson, CEO of Calgary's Essential Energy Services Ltd., an oil field services company, said this likely has much to do with how capital-intensive the oil patch is. "A lot of the cash flow that's generated in the oil and gas industry gets reinvested in new land, new drilling and new completions. And often we do that by a combination of debt and equity," he said.

Other executives noted that in an era of historically high consumer debt, rate increases put a pinch on housing spending that could soon trickle down to their businesses. The Bank of Canada announces its next rate decision Oct. 25.

Canada's business leaders are somewhat concerned about the forthcoming rise in minimum wage to $15 an hour in Alberta and Ontario, although a surprising number believe their own companies will remain relatively unaffected by it.

Story continues below advertisement

About 70 per cent of executives said such changes, proposed for 2018 and 2019, respectively, wouldn't directly affect their businesses – including in the two affected provinces. (The C-Suite Survey sample is comprised largely of publicly traded Canadian businesses, a substantial proportion of which are resource companies – 49 per cent – although service companies, which are more likely to employ minimum-wage workers, make up 37 per cent of respondents.)

But only 30 per cent of executives actually support boosting the minimum wage in their own provinces – and in Alberta, that number is fewer than one in five. "I think the timing in Alberta is insensitive and a little bit careless, given that we're just barely getting on our feet with the start of a recovery after a couple of very difficult years," Mr. Amundson said.

Slightly more than 50 per cent of executives said they would be supportive of a $15 minimum wage two years later, in 2021. But just about the same number said they believed that a 2019 target would accelerate the decline of manufacturing in Canada, in part through increased labour costs. Coinciding with that sentiment are intentions to invest in advanced technology to do tasks otherwise done by employees: nearly 75 per cent of corporate leaders are planning on such investments, and even more believe advanced manufacturing could help the country's whole manufacturing base grow and rebound.

"Those companies, those countries that get advanced technology, artificial intelligence, robotics, are going to be leading the way from an economic standpoint going forward," said Willy Kruh, KPMG's global chairman of consumer markets. "Is there a risk that, with upping the minimum wage, that it's just going to spur some companies to go to … robotics sooner than they would have as well? Potentially."

Scott Edmonds, CEO of Richmond, B.C.-based measurement-technology manufacturer Photon Control Inc., said a major shift to advanced technologies in manufacturing would boost demand for his products – and could lead to a happier work force.

"I think the demands placed on people that work in those industries will become greater, and I think that means more rewarding jobs," Mr. Edmonds said. "… There will be a natural tradeoff with work force reduction numbers, but we'll have more interesting jobs that will require better-trained and better-educated workers, which will lead to a better environment to work in."

Story continues below advertisement

Canada's C-Suite aligned on U.S. trade and politics

Hope for pragmatic, minor tweaks to the North American free-trade agreement is disappearing among Canadian executives. In the first quarter of this year, 37 per cent said they expected negotiations would "very likely" end with only minor tweaks to impact Canada in the trade deal. Six months later, just ahead of this month's fourth negotiation round, that number fell to 20 per cent, according to the most recent quarterly C-Suite Survey.

Meanwhile, as Canada fights to hold on to NAFTA's Chapter 19 dispute-resolution process, nearly all Canadian executives – fully 98 per cent of them – are in full support of the effort.

Business leaders here also support their American colleagues who have spoken out against U.S. President Donald Trump, particularly in the case of this past August, when his remarks about violence in Charlottesville, Va., led members of his business advisory councils to criticize him. (After many executives left the councils, Mr. Trump disbanded them.)

Three-quarters of Canadian executives said it was appropriate to speak out publicly on such issues, even if they're not related to their own businesses.

"A stable political environment is conducive to a stable business environment," said Normand Champigny, the chief executive of Quebec mining-exploration company Sphinx Resources. "If you have … statements made by presidents and other leaders which tend to destabilize, that's not good news for anyone."

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Latest Videos

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies