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

Northwest Wave Riders return from Victoria Dragon Boat Festival

This was the first time in 25 years that northern B.C. teams competed

Feds approve $4M for Tahltan protected and conserved areas

Well defined stewardship will help nation reduce uncertainties for resource partners

BC Parks student rangers complete several northwest B.C. conservation projects

This was the first time the summer program operated out of Terrace

Australian gold mining giant acquires Red Chris mine

Newcrest now owns 70 per cent of the mine south of Iskut and operatorship

All Nations Driving Academy gets $360K boost from province

Terrace-based driving school bridges gap in services for remote northwest B.C. communities

VIDEO: B.C. Mountie killed by drunk driver honoured by memorial playground

Sarah Beckett Memorial Playground opens with ceremony in Langford

B.C. man who died after rescuing swimmer was known for helping others

Shaun Nugent described as a dad, a coach, a hero and stand-up guy at celebration of life

B.C. RCMP plane chases fleeing helicopter as part of major cross-border drug bust

The helicopter eventually landed at a rural property near Chilliwack

Thousands cycle to conquer cancer

The 11th annual Ride to Conquer Cancer took place Saturday morning, Aug. 24 in Surrey, B.C.

PHOTOS: Brazil military begins operations to fight Amazon fires

Amazon fires have become a global issue, escalating tensions between Brazil and European countries

Racist confrontation in Richmond parking lot caught on camera

Woman can be heard yelling racial slurs, swear words at woman in apparent parking dispute

Groups ready campaign to help young voters identify ‘fake news’ in election

The media literacy campaign to focus on identifying misinformation and suspicious sources online

Big rally in northern B.C. draws attention to continuing lumber crisis

Mayor Joan Atkinson says about 400 workers have been directly affected by the closure of the Canfor mill

Orangeville Northmen take Minto Cup at Langley Events Centre

Swept best-of-five series 3-0 over Victoria Shamrocks

Most Read