Ontario’s minimum wage rises to $17.60 as businesses brace for impact

On October 1, 2025, Ontario’s minimum wage rises to $17.60 per hour, a 40-cent increase from the previous $17.20. The adjustment, which will affect more than 800,000 workers, represents a 2.4 per cent boost tied to the province’s Consumer Price Index (CPI).

The increase is part of Ontario’s annual review under the Employment Standards Act, which requires that new rates take effect every October 1. Since 2022, the province has tied those increases to inflation, a move the government says protects the purchasing power of workers while offering employers predictability.

Labour Minister David Piccini said the change reflects the government’s commitment to supporting workers in the face of economic pressures, including the lingering effects of global uncertainty and tariffs imposed by the United States. “At a time when many families are feeling the pressure of global economic uncertainty, our government will protect Ontario workers with a minimum wage increase that supports our world-class workforce,” he said in a statement.

Who is affected

The general rate is not the only minimum wage being updated. Under the Employment Standards Act, two specialized categories will also see increases on October 1. The student minimum wage will rise from $16.20 to $16.60 per hour, while the homeworkers’ rate — for employees who perform paid work from home, such as call-centre operators — will increase from $18.90 to $19.35.

Together, the changes apply to employees across full-time, part-time, casual, and temporary jobs. Employers are legally required to ensure all eligible workers receive the new minimums starting in October. There are no exemptions, transitional rules or carve-outs.

The Ministry of Labour estimates that the majority of affected employees work in customer-facing sectors. About 36 per cent of minimum wage earners are employed in retail trade, while 23 per cent work in accommodation and food services. Both industries rely heavily on hourly, frontline staff and are expected to feel the effects most directly.

For an individual working 40 hours per week at the minimum wage, the change adds up to an annual pay increase of roughly $835. According to the CBC, with the adjustment, Ontario’s provincial minimum wage will become the second-highest in Canada, just behind British Columbia’s $17.85, which took effect in June.

Debate over adequacy

Despite the raise, critics say the increase does not go far enough. Craig Pickthorne, Communications Director for the Ontario Living Wage Network, argues that linking wage increases to CPI fails to account for the actual costs faced by workers, especially housing. “There is simply no place in the province where you can work full-time at a minimum wage job even after the increase,” he told CBC Toronto.

Pickthorne said CPI measures only a narrow slice of consumer prices and does not reflect the full burden of living expenses. “They’re using one statistical tool to inform what is largely a political decision,” he said. “So what they’re not considering is all the real costs that people have to deal with, including shelter costs.”

Labour advocates have long pushed for the province to adopt a living wage model, which is calculated based on the actual cost of essentials such as housing, food, transportation and child care. According to the Ontario Living Wage Network, the living wage ranges from $18.85 per hour in Elgin/Oxford County to more than $26 per hour in Toronto — far above the legislated minimum.

Business groups, meanwhile, have expressed concern about the rising costs of labour, particularly for small and medium-sized employers already struggling with inflation and slowing consumer demand. Restaurant operators and independent retailers warn that while the increase supports workers, it could squeeze already-thin profit margins. Some say they may need to raise prices or reduce hours to offset the higher payroll costs.

Economists note that minimum wage increases can have both positive and negative effects. While they put more money in the pockets of low-income workers — who are more likely to spend their earnings locally — they can also create challenges for employers in competitive sectors. Ontario’s experience since adopting annual CPI-linked adjustments has so far shown modest but steady increases, avoiding the sharper jumps seen in earlier policy changes.Looking ahead, the next minimum wage adjustment will be announced by April 1, 2026, and will take effect on October 1 of that year. Beyond wages, the provincial government has committed $2.5 billion through its 2025 Ontario Budget: A Plan to Protect Ontario to help prepare workers for high-demand careers, part of a broader effort to strengthen Ontario’s labour market.