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

Campbell River’s Canyon View Trail loop planned for opening in mid-December

Campbell River trail users were hopeful the Canyon View Trail loop may… Continue reading

Reminder: John Hart Dam road closed until Nov. 20

BC Hydro is providing public notice that the road across the John… Continue reading

Strathcona Gardens shuffles ice time to accommodate BCHL game ousted by ammonia leak at Port Alberni rink

Campbell River’s Rod Brind’Amour Arena will host a British Columbia Hockey League… Continue reading

B.C. to restrict nicotine content, bring in 20% tax on vaping products

Province will also restrict candy and fruit flavoured vaping products to adult-only stores

Tolko shuts B.C. divisions for two weeks over holidays

Head office to close from Dec. 23-27; two weeks’ downtime runs Dec. 21-Jan. 6

More rain may mean more leachate at Comox-Strathcona landfill

Staff considering ways to mitigate situation of excess leachate at site

B.C. government working with RCMP to address $10 million in budget cuts

Public Safety Minister Mike Farnworth issues statement following report of RCMP cost-cutting

Port Moody mayor says stayed sex assault charge related to ‘awkward date’

Rob Vagramov said charge was related to a string of dates in 2015

UBC conference draws fire over speaker from Chinese tech company blacklisted in U.S.

The company that has been blacklisted by the U.S. over links to the repression of China’s Muslim minority

‘City that protects rapists’: Sexual assault survivor slams Kelowna mayor for defending RCMP

Heather Friesen spent the morning handing out flyers around city hall calling out the mayor

Use of force deemed justifiable in arrest of suspect after snowy chase near Nanaimo

Independent Investigation Office of B.C. reports on incident from late last winter

‘It’s been 12 years’: Father of murdered B.C. real estate agent pleads for mayor’s help

Lindsay Buziak was stabbed to death on Feb. 2, 2008 in Saanich. Her case is unsolved.

Most Read