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

Man cycles across B.C. Interior for sobriety

Vancouver Island Resident Matt Fee is approaching the final phase of his cross-Canada bike journey to raise awareness about addiction recovery.

Popular Bird Migration Day open house happening this weekend

Event focuses on bird adaptation to migration, bird conservation issues and threats and bird banding

Okanagan inmate who allegedly assaulted prisoners and officer gets trial extension

Afshin Maleki Ighani appeared in Penticton Supreme Court on Monday

Penticton gas prices among the lowest at B.C. pumps

Nine of the 10 lowest-priced gas locations are in Penticton

FortisBC to offer free energy efficiency assessments for small businesses

Fortis BC wants to helo 900 storefronts in Kelowna, Penticton and Rossland

VIDEO: Liberals make child care pledge, Greens unveil platform on Day 6 of campaign

Green party leader Elizabeth May unveils her party’s platform in Toronto

Canucks sign Brock Boeser to three-year, US$17.6-million deal

Young sniper will be in Vancouver Tuesday

B.C. forest industry looks to a high-technology future

Restructuring similar to Europe 15 years ago, executive says

RCMP conclude investigation into 2017 Elephant Hill wildfire

Files have been turned over to BC Prosecution Service

B.C. wants to be part of global resolution in opioid company bankruptcy claim

Government says settlement must include Canadian claims for devastation created by overdose crisis

B.C. ends ‘birth alerts’ in child welfare cases

‘Social service workers will no longer share information about expectant parents without consent’

U.S. student, killed in Bamfield bus crash, remembered as ‘kind, intelligent, talented’

John Geerdes, 18, was one of two UVic students killed in the crash on Friday night

Facebook group forms committee against Thompson Nicola R.V. crackdown

Group discusses issues with regional R.V. bylaw at recent meeting

Free Tesla 3 offered with purchase of Surrey townhome

Century Group’s offer for Viridian development runs through Oct. 31

Most Read