Minimum wage in Nova Scotia will rise 40 cents to $12.95 an hour starting April 1, the province announced Tuesday, but coming to a decision on the size of that increase was fraught with difficulty.

The province decides the increase based on a recommendation from the Minimum Wage Review Committee, an arms-length body mandated by Nova Scotia's Labour Standards Code to conduct an annual review of minimum wage.

The committee is made up of employee and employer representatives — but this year, the two groups couldn't agree with each other, according to the committee's report.

Employee representatives wanted to take projected inflation into account and increase Nova Scotia's minimum wage from the current $12.55 to at least $13 an hour, putting it on par with P.E.I. The Island makes the jump to $13 an hour on April 1.

Employer representatives, on the other hand, wanted to keep the increase at 40 cents, which was in accordance with a formula set out in the minimum wage regulations.

The business representatives were concerned that "the ultimate impact of the pandemic on small business is still unknown and that any increases in the minimum wage rate should be predictable so that employers can structure their practices to best absorb the increase in the cost of labour," according to the report.

The two sides were unable to reach an agreement.

"For the sake of a majority recommendation, employee representatives decided they would not oppose the current formula for adjusting the minimum wage, which would increase the minimum wage rate to $12.95," said the report.

The province has accepted that recommendation, allowing the minimum wage to increase to $12.95, the second highest in Atlantic Canada behind P.E.I.'s.

Representatives also wanted the province to review how the current rate and approach to setting it is done.

The committee believes other options for deciding on minimum wage be explored.

"During the Committee's discussions, concerns were expressed regarding the demographics of minimum wage workers, and it was suggested that a diversity and inclusion lens be applied when setting government policy in relation to the minimum wage," said the report.

There were also concerns that Nova Scotia's minimum wage should be closer to the middle of the pack nationwide and a leader in the Atlantic provinces as a way to better attract workers.

The Department of Labour said the recommendation will be considered in the coming weeks.

Provincial NDP Leader Gary Burrill isn't impressed by the government's increase to minimum wage. He said it needs to be pushed up to at least $15 an hour, making it the same as Alberta's, the second highest in the country. Nunavut's is the highest, at $16 an hour.

"The pandemic has revealed how important so many minimum wage workers are to our communities. Grocery store workers, cleaning staff, gas station workers, and other low-wage workers provide essential services. They need to make enough to live," said Burrrill.

"A small increase in the minimum wage, as proposed by this Liberal government, is insulting to those who have been making minimum wage while working on the front lines of the pandemic."