Year-over-year average hourly earnings of new employees soared by 2.3% to the highest since December 2009
Canadian workers see hottest wage growth in years, with pay for new employees soaring 10% in 24 months
Wages in Canada are up sharply, a new report has found, but how much impact was the trade war that Canada’s economic experts have repeatedly warned about?
The year-over-year average hourly earnings of new employees soared by 2.3% to the highest since December 2009, the report released on Friday by the Toronto-Dominion Bank found.
“The surge in new-employee wages is an early but notable indication that the tight labour market is finally trickling through to pay increases,” the report stated.
It added that the number of job openings, which reached a record high in February, suggested that increased competitiveness could spark a new round of wage growth, though “it could be the lagging effect of stronger economic activity”.
“If this trend in wage growth continues, it will weigh on the Bank of Canada,” it said.
The report surveyed 400 companies, and found that many of those companies had been offering hefty promotions to attract and retain workers, such as two weeks of vacation to employees with six or more years on the job.
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Those terms were also cutting into profits, the survey found, as companies were left with less money for investing in the future.
The report noted that when executives were asked about what they could do to reduce costs, they were most likely to name employee leave. The survey also found that a third of firms had gone as far as reducing employees’ vacation time and 36% of respondents had done away with employee rosters entirely.
Overall, respondents reported that customer satisfaction had also increased, and the vast majority of large companies had no plans to decrease workforce numbers.
But business leaders reported that the dollar value of labour costs had increased by 5.3% and small and medium-sized businesses experienced a 6.7% rise in labor costs.
The change had to be highlighted to help employees understand the prices that they were paying for the products they were consuming, the survey found.
“The report shows that employers are not pushing the risk on customers through price increases, yet they are doing it at the risk of cost burdens,” said TD economist Brian DePratto.
Jobless rate hits four-year low, as Canada continues to create jobs Read more
Taken as a whole, it was “another good sign for the labour market and for the economy as a whole”.
At a Bank of Canada policy meeting in April, the Canadian central bank governor, Stephen Poloz, estimated that the labour market had been tightening by about a quarter percentage point a year over the last few years, assuming no change in population growth or productivity.
In an interview with CBC earlier this week, Poloz said, “With the strength of the economy, we have the capacity to absorb new labour.”
“We don’t need to be in a period of concern that there might be a labour shortage,” he said.