Bank of Canada offers explanations for country’s ‘puzzling’ wage disappointment

Technological advances have lowered demand for routine jobs, reduced competition

A senior Bank of Canada official offered explanations Thursday for the country’s “puzzling” and disappointing stretch of wage gains, even though job market been experiencing one of its biggest labour shortages in years.

In a Toronto speech, senior deputy governor Carolyn Wilkins said weaker wage growth in energy-producing provinces since the 2014 oil-price slump has dragged down national numbers.

But she said even after accounting for these factors, wages have fallen short of where they should be in a tightened job market that has seen Canada’s unemployment rate drop to a 43-year low.

“This is particularly puzzling when you consider what businesses are telling us about how hard it is to fill jobs,” Wilkins told the Toronto Region Board of Trade.

“As far as I can tell, no one has found a smoking gun,” she said of the search for an explanation.

“But there are at least a couple of compelling suspects.”

READ MORE: GDP contracted 0.1% in November

Wilkins said wages are also likely lower than expected as employers struggle to find candidates with the right skills, cautious employees decline to trade up for higher-paying positions elsewhere and people are reluctant to move to a new city in order to land a new gig.

Structural factors, she added, may also be weighing on wages — such as technological advances that have lowered demand for routine jobs, reduced competition in some industries and the emergence of the so-called gig economy that has taken away bargaining power for some workers.

Wilkins offered potential areas for policy-makers and businesses to focus on to help improve the job market. They could invest in education and training, find ways to encourage labour mobility and increase the competitiveness of Canadian firms.

She noted the results of the bank’s latest business outlook survey suggested labour shortages were at one of their highest levels since the Great Recession a decade ago. Job vacancies, she added, are still rising in Canada and now total about 550,000.

In the months ahead, Wilkins said the central bank predicts Canada’s economic expansion to pick up its pace after a recent slow patch — and she anticipates wage growth will eventually accelerate along with it.

Andy Blatchford, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Alberta was crowned champions in Wheelchair Basketball at Canada Winter Games

Ontario won silver while Quebec took home the bronze medal

Pride Days are Feb. 21st and 28th during the 2019 Canada Winter Games

Events will be held at the 52 North Music + Cultural Festival

PHOTO: Meeting of the mayors

Winnipeg Mayor Brian Bowman, Red Deer Mayor Tara Veer and Naheed Nenshi, mayor of Calgary enjoyed a meeting at the Winter Games Thursday.

Alberta to play for gold in wheelchair basketball

Action-packed first week of Canada Winter Games nearly a wrap

Boxers claim two silver medals for Alberta in wild night

Cole Brander of Edmonton fought for the gold medal against Avery Martin-Duval of Quebec

Trudeau tells Canadians to listen to clerk in SNC-Lavalin matter

Privy Council clerk Michael Wernick delivered a blunt assessment at the House of Commons justice

Mueller report looming, new attorney general in hot seat

Robert Mueller is required to produce a confidential report to pursue or decline prosecutions

B.C. woman shares story of abuse with church officials ahead of Vatican summit

Leona Huggins was the only Canadian in the gathering ahead of a historic summit at the Vatican

Sylvan Lake’s Megan Cressey misses Freestyle Skiing Big Air podium

Alberta’s Jake Sandstorm captured silver in the men Freestyle Skiing Big Air contest

Why do zebras have stripes? Perhaps to dazzle away flies

Researchers from University of Bristol look into why zebras have stripes

Poll: More voters believe Canada doing worse under Trudeau government

22 per cent believed the country is doing better and 27 per cent said things are the same

Ponoka host to Bayer Crop Science seed innovations trade show

The company held a trade show with seed crop science industry partners at the ag event centre

Peter Tork, Monkees’ lovable bass-guitar player, dies at 77

Tork, Micky Dolenz, David Jones and Michael Nesmith formed the made-for-television rock band

Most Read