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

Several Red Deer businesses are doing the downtown shuffle

Four businesses change locations and or name and re-open

Patient data stolen during theft at Red Deer hospital

Alberta Health Services is notifying 6,129 patients that their health information may… Continue reading

Some central Alberta bus drivers face zero tolerance for cannabis

While Canada’s transportation regulator tells flight crews to stay off weed for… Continue reading

Waskasoo Seepee Pow Wow returns to Red Deer

Grand entries at 1 and 6 p.m.

Pro-pipelines rally draws crowd to City Hall

Canadian Taxpayers Federation says Canada missing out on billions in revenue

Raptors announcer credited with calming massive crowd after shooting

TORONTO — The Toronto Raptors’ play-by-play announcer is winning widespread praise for… Continue reading

Massive crowds, security concerns prove to be issues at Raptors parade

TORONTO — A shooting that sparked a stampede at a massive rally… Continue reading

Toronto mayor gives Raptors star Kawhi Leonard key to city

Toronto Mayor John Tory tried to woo Kawhi Leonard by presenting him… Continue reading

Huawei says U.S. sanctions will cost it billions in revenue

SHENZHEN, China — Huawei’s founder said Monday that the Chinese telecom giant’s… Continue reading

Blackout in South America raises questions about power grid

BUENOS AIRES, Argentina — Te huge blackout that left tens of millions… Continue reading

Gloria Vanderbilt, heiress, jeans queen, dies at 95

NEW YORK — Gloria Vanderbilt, the intrepid heiress, artist and romantic who… Continue reading

Toronto mayor gives Raptors star Kawhi Leonard key to city

Toronto Mayor John Tory made his pitch to Raptors star Kawhi Leonard… Continue reading

Health: What you should know about low intensity light therapy

Years ago I nearly made a bad decision. I was asked to… Continue reading

Most Read