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

Newly elected Hope politicians took part in the Local Government Leadership Academy

The three-day event is aimed at helping new mayors and councillors navigate municipal politics

No records were beat, but Hope’s February temperatures aren’t average

Normally around 3C, the sub-zero temperatures made for both good and bad in the Fraser Valley

New Chilliwack YMCA was ‘worth the wait’ say visitors

Family Day will mark officially opening for new building, after sneak peek tours on Saturday

Opioid overdoses killing three people a month in Chilliwack

35 deaths in 2018 locally compare to 23 in 2017, 13 in 2016 up from about five per year before that

B.C. students win Great Waters Challenge video contest

Video, mural and song about saving the salmon claims the top prize

B.C. athlete takes home gold in freestyle aerials at Canada Games

Brayden Kuroda won the event with a combined score of 121.65.

Pedestrian in serious condition after hit by car downtown Abbotsford

A youth was also hit, suffered minor injuries, police say

Cabinet likely to extend deadline to reconsider Trans Mountain pipeline

The can’t decide the pipeline’s fate until a new round of consultations with Indigenous communities

B.C. government provides $75,000 towards salmon study

Study looks at abundance and health of Pacific salmon in Gulf of Alaska

Murdered and missing honoured at Stolen Sisters Memorial March in B.C.

‘We come together to make change within the systems in our society’

UBC researchers develop inexpensive tool to test drinking water

The tricoder can test for biological contamination in real-time

Disgraced ex-Congressman Anthony Weiner released from prison

He was convicted of having illicit online contact with a 15-year-old North Carolina girl in 2017

Most Read