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

Second dump site of Dungeness crab discovered

DFO confident new site related to April 2 dump of 250 more crab

Nisga’a leader named UNBC chancellor

Dr. Joseph Arthur Gosnell is the first Indigenous leader to assume the role

Life experience key to NDP nomination hopeful

Amanda Ramsay is one of four in the running

Northwest local governments team up to fill in future employment gaps

Around 17,000 jobs will need to be filled in the region over the next eight years

Deadly logjam still poses a threat to boaters, anglers

“It’s no fun pulling bodies out of the river.” - Manny Arruda

VIDEO: B.C.’s waving granny gets incredible send-off from school kids

Tinney Davidson has been waving at students on their way to school for over 11 years, but is moving in a month

Isn’t it spring? Forecast calling for snow across eastern B.C.

Up to 10cm expected within 48 hours; motorists urged to prepare for deteriorating conditions

B.C. parents still missing out on hundreds of thousands in free money

Chilliwack financial advisor still banging the drum over unclaimed $1,200 RESP grant cash

Be wary of robot emotions; ‘simulated love is never love’

Research has shown that people have a tendency to project human traits onto robots

One million recyclable bottles ‘lost’ daily in B.C., foundation says

387 million beverage containers didn’t make it back into the province’s regulated deposit refund system in 2017

Struggling B.C. adoption agency elects new board that intends to keep it open

The previous board announced that Choices would close May 31

Vancouver man, 19, charged in human trafficking case involving teen girl

The 16-year-old girl was reported missing and later discovered in Vancouver

Most Read