Canada

Canadian Wages Aren’t Rising, Despite Soaring Job Vacancies: BMO

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Canada is seeing a shortage of labor, but no one wants to pay more. BMO chief economist Douglas Porter broke down June’s average wage earnings. He found wages aren’t rising very much, especially when considering rising vacancies and high inflation. 

Canadian Wages Have Been Showing Low Growth

Canadian wages aren’t growing very fast, even with soaring job vacancies and rising inflation. Statistics Canada (Stat Can) data shows an annual increase of 2.3% in June, a little slower than the 2.4% annual growth reported a month before. Over the past year, it was a little stronger, the past 12-months averaging 3.6% annual growth. Stat Can uses a weighted basket, so the skew by industry is minimized. 

Longer-Term Wage Growth Looks Healthier But Still Slow

BMO noted a base effect, which produces a slightly more consistent growth when averaged over two years. “ If we look instead at the two-year metric, it unveils a gradual upward climb, and is now running at around 3% in recent months—probably the most indicative figure,” said Porter. Adding, “While not sizzling, that does represent a modest upward grind.” 

Much More Job Seekers Than Vacancies

Separately, BMO economist Shelly Kaushik wrote to clients about Canada’s job vacancies, which makes the slow wage growth more perplexing. There were 816,000 vacancies in June, the highest number since the index started in October 2020. Most of these vacancies are in the service sector, which was hit harder than other sectors during the pandemic.

At the same time, there is a whack of Canadians currently looking for employment. There were 1.5 million people looking for work. “While a large chunk of those people didn’t specify an industry, most of the ones who did are looking for service sector jobs,” she said. 

The combination of relatively low wage growth and rising vacancies is not usually seen together. It gets even odder when there are significantly more job seekers than vacancies. Yesterday the National Bank of Canada attributed the broken dynamic to government income support. They expect it to fade towards the end of the year.

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8 Comments

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  • Omar 2 months ago

    Employees can holdout because of the government unemployment benefits. Once that runs out, the reality is these numbers might be crushed.

    • Trader Jim 2 months ago

      Companies can holdout because of government income supports. Subsidized wages and rents. What’s the rush to raise wages?

      The fact is this economy isn’t recovered, it’s completely artificial and unsustainable.

  • Ian Brown 2 months ago

    Maybe raise your wages if you can’t find employees. It’s impossible to live anywhere in Canada when shelter costs rise 20% and incomes grow 3%.

    • Axel McLion 2 months ago

      If it were impossible to live there, then people would leave and prices would come crashing down. Obviously that’s not the reality, so far. It does seem like housing prices will have to come down at some point. Perhaps if many business become infeasible due to the high prices and move or close, that would have a negative feedback on the prices.

  • Oakville Rob 2 months ago

    Possibly businesses that been ravaged by COVID circumstances (virtually every business in every sector) can’t afford to pay more because they are in survival mode still. Why pay someone more if you can work longer hours and do it yourself? Why pay someone to cut vegetables for your restaurant when you can just tell your customers that the dish is not available because no one is willing to work? It’s a plausible excuse, almost expected, and could be vital savings for the proprietor. It’s just another act in the ongoing sh*t show that is our new reality.

  • IthoughtWeWereSmarter 2 months ago

    This country has become a big joke!!!!
    For at least 5 years before the pandemic hit, many international banking associations warned that Canadian RE was dangerously over-inflated. Then COVID came and it it went ballistic! Only a moron would think things can keep on this upward trajectory. The Real Estate industry has somehow successfully lobbied our so-called leaders into allowing it to continue unabated. We deserve what we get; however, it is our next generations that are going to suffer for our greed and stupidity!!
    How can we allow Real Estate boards to have this much power? Again, we deserve it if we don’t act and stop this insanity! Lets face it, a trained chimp could sell a house in a hot market. Sorry turds!!! You ain’t special.

  • Flipg 2 months ago

    Realtors really only make sense serving as proxies for overseas foreign buyers, out of towners, corporate investors…. With the internet their days are numbered.

  • D 2 months ago

    How about not requiring 10 years experience and a masters? Companies in Canada love taking government dole to hire workers but don’t want to bother training and developing Canada’s workforce. They complain about workers leaving their jobs after a few months or years but neglect the fact that it’s their uppity strict experience requirements that propels workers to diversify their resume with numerous experiences so they can get better paying jobs. How about we do what Japan does?????

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