Free Trial

Canadian Recruiters: No Big Wage Growth Pick Up On The Horizon

By Yali N'Diaye
     OTTAWA (MNI) - Despite above-potential GDP growth rates and increasing job
creation, wages continue to increase at a "consistent" pace and are unlikely to
accelerate significantly in general across Canada in the coming year, recruiters
tell MNI, although some sectors and provinces are ahead of the rest of the
     Regionally, British Columbia, Quebec and Ontario were cited as the
provinces with the largest wage gains, while recruiters are also noticing a come
back in Alberta that had been battered by the oil price shock.
     Canada's unemployment rate, which started the year at 6.8%, declined to
6.2% in August, a level unmatched since October 2008.
     On the job creation front, the economy has added 219,100 jobs year-to-date
based on the Labor Force Survey data, nearly three times as much as it did over
the first eight months of 2016.
     Meanwhile, hours worked rose 2.2% year-over-year in August following a 1.9%
gain in July.
     Yet, wage growth, a key indicator closely followed by the "particularly
data dependent" Bank of Canada, has been lagging, and recruiters don't expect
any notable acceleration except for some specific skill sets.
     This disconnect is puzzling to the Bank of Canada, which said in its
September 6 policy statement that "there remains some excess capacity in
Canada's labor market, and wage and price pressures are still more subdued than
historical relationships would suggest."
     Going forward, "particular focus will be given to the evolution of the
economy's potential, and to labor market conditions," the BOC said.
     To be sure, there has been a slight pick up recently and average weekly
wages rose in August by 1.8% year-over-year, following a 1.4% gain in July.
Hourly wages rose 1.8% as well, following a 1.3% advance in July, according to
Statistics Canada's Labor Force Survey.
     The payroll survey has also shown a pick up, with average weekly earnings
including overtime for all employees rising 1.8% year-over-year in July, after
1.5% in June and a 2017 low of 1.0% in March.
     Over the second quarter, while real GDP expanded at an annualized rate of
4.5% that BOC Governor Stephen Poloz qualified as a "huge" number, hourly wages
increased 1.7%.
     For Poloz, wage increase "has been slower than would be expected in an
economy that is approaching full output." He partly attributes the slow pace to
a shift from higher-paying jobs in the energy sector to lower-paying jobs in
     "How long this effect will continue is not clear," he said in a speech
     Rowan O'Grady, President of Hays Canada, has started surveying north of
3000 recruiters in preparation of the 2018 salary guide to be released later
this year.
     While responses are still being processed, after steady increases in 2017
so far compared to 2016, it looks again "like it's going to be consistent, I
would say, with the previous couple of years," he told MNI, not seeing signs of
an acceleration across the board.
     In 2017, about 50% of employers offered and implemented an increase of less
than 3%, and 24% offered an increase of more than 3%, which is "pretty
consistent" with 2016 and 2015, he said.
     For 2018, 55% expect an increase of less than 3% and 23% of more than 3%,
which is similar to 2017.
     From a sector standpoint, O'Grady expects the biggest increases in IT and
construction. There could be gains in mining and oil and gas, he posited, where
there have been salary cuts and freezes, though it might still be too early for
a wage pick up in the sector.  
     Regionally, he said the job market in British Columbia continues to be very
strong, as well as Ontario, and Montreal (Quebec) - especially for IT and
construction. Meanwhile, Alberta has leveled out for the last year and is now
showing some signs of increase.
     In his view, what's going to move salaries upward beyond companies' plans
is that "there is far more confidence in the job market among individual people
right now," who feel confident they could leave their job, or are open to new
     Once they leave for a new job, and employers realize they are suffering
from staff turnover, they will have to pay more, O'Grady said.
     The Conference Board of Canada's consumer confidence index climbed 8.1
points to 121.7 in August, its highest level since November 2007, fueled by
improved optimism about future finances but also job prospects.
     Nonetheless, "we haven't seen a lot of wage growth this year," said Elise
de Vasconcelos, director of client programs at Adecco. "It's been pretty
     Generally speaking, de Vasconcelos noted that despite a better job market
in terms of job creation, they are not necessarily paying better than last year.
     To be sure, some skills are in "hot" demand across the country,
particularly digital website, digital marketing, online marketing or social
media type of jobs, she told MNI, be it temporary or permanent jobs.
     But salaries for middle management "are flat right now."
     Canada, however, is not isolated.
     In fact, a report published Wednesday by the International Monetary Fund
was dedicated to the disconnect between unemployment and wages in many advanced
     "Nominal wage growth in most advanced economies remains markedly lower than
it was before the Great Recession of 2008-09," the IMF said in a World Economic
Outlook chapter on recent wage dynamics.
     It found that most of the wage slowdown can be explained by labor market
slack, productivity and inflation expectations, all amplified by the
synchronized nature of excess capacity globally. But until such factors improve
and involuntary part-time employment declines, wage growth could remain
     In Canada, Poloz said Wednesday that youth unemployment also keeps him up
at night, hoping that firms will eventually expand capacity and create new jobs
to draw back the "decidedly discouraged" youth.
     Overall, however, Canada's job market has been faring well in terms of
employment, consistently exceeding analysts' expectations.
     But Adecco's de Vasconcelos doesn't see wage growth accelerating "hugely"
in 2018, expecting the same sectors as in 2017 to record the highest gains:
finance, utilities, construction and engineering. "But it still will not be a
big increase," she told MNI.
     So far she said the biggest wage gains have been in the province of Quebec,
followed by British Columbia.
     B.C., along with Ontario and Quebec enjoy low unemployment rates of 5.1%,
5.7%, and 6.1%, respectively, below the national level of 6.2%. While Alberta
still stands at 8.1%, it came down from 8.8% in January.
     While she doesn't see huge gains, de Vasconcelos expects the proposed wage
increase in Ontario to boost numbers there from next year through a domino
effect that would put pressure on jobs currently paying $14 or $15 per hour, as
these workers will seek better-paying jobs.
     In May, the province of Ontario proposed a legislation to raise the minimum
hourly wage from $11.40 currently to $14 in 2018 and $15 in 2019, followed by
annual increases at the rate on inflation. 
     Across Canada, "overall we've seen salaries rise about 3% to 4% on
aggregate on average," said Koula Vasilopoulos, a district president with Robert
Half, which is consistent with 2016. She sees no notable difference between
temporary or permanent positions when it comes to wage growth.
     Based on interaction with clients as well as national growth and employment
statistics, she expects that trend to continue, although some gains could be as
large as 6% to 9% for the most in-demand skill sets.
     A key reason she believes salaries are not increasing more in line with the
pace of expansion of Canada's economy is that a growing number of employees are
ready to forgo some wage gains for other benefits in the overall package.
     While unhappy employees are not hesitant to look elsewhere, they are now
taking more factors into consideration than just the pay check, she said, citing
flexible work schedules as an example.
     This is "absolutely" happening more and more, she said.
     On a sector basis, Vasilopoulos noted the resource sector has come back
"quite nicely," while manufacturing is also seeing good wage gains.
     Regionally, she too sees a pick up in British Columbia, Ontario, Quebec,
and to a lesser extent Alberta.
--MNI Ottawa Bureau; +1 613 869-0916; email:
[TOPICS: M$C$$$]

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.