MNI POLICY: BOC's Wilkins: Canada Wages Stay Subdued>

By Courtney Tower

     OTTAWA (MNI) - Following are the key points from a speech by Bank 

of Canada Senior Deputy Governor Carolyn Wilkins on Thursday, saying 

that despite a strong economy, Canadian wage growth, which should 

further strengthen output, remains below what would normally be 

expected. 

     - Wilkins focused in speaking to the Toronto Region Board of Trade 

on a job market in Canada that she said is important to understand as "a 

bellwether of financial health and a useful gauge on inflation 

pressures."  On that basis, this market, by many measures, "is in good 

shape."  She cites a 5.6% unemployment rate which is for Canada "an 

historic low." The participation rate for prime-age workers (aged 25 to 

54) "is around 87 percent, near its all-time high." Canada's so-called 

natural rate of employment is rated by the BOC as 5.5% to 6.5%. 

     - However, a key measure of job market health, she said, is wage 

growth, which is subdued. Wage growth in Canada should be, according to 

productivity, about 3%, she said. Rather, it averaged about 2.5% in 2018 

compared with 2% over the past five years, and "we are still shy of what 

one would expect in a tight labor market." 

     - Wilkins pointed out that "wage gains in energy-intensive regions 

continue to lag behind those in the rest of the country." In the 

beleaguered oil and natural gas industry in three provinces, wage growth 

in the third quarter last year was just under 2%, Wilkins said. It was 

about three-fourths of a percentage point higher in Ontario and Quebec. 

Employment in the oil and gas sector has fallen by about 20% since 2015. 

And goods-producing sectors, such as manufacturing and agriculture, 

where globalization and digitization are prominent, are shedding 

workers. 

     - All of this is occurring at a time when many businesses are 

finding it difficult to fill jobs. A BOC survey reports "one of the 

highest levels of labor shortages since the Great Recession." Job 

vacancies total about 550,000. One key factor is that skills required in 

the new digitalized industries are not available, while manufacturing 

and natural resources sectors have a surplus of people with the skills 

needed there. Other factors perhaps are a sense of caution in these 

times with people reluctant to change jobs, or to relocate over Canada's 

vast distances for better-paying jobs. 

     - Wilkins called on businesses to do more to help create workers 

with the skills necessary for this new age. Businesses ought to partner 

more with schools and universities, for instance in co-op placements and 

other training. They should do more in in-house training. And their 

competitiveness had to be improved, as "the foundation of a robust job 

market." in other comments, Wilkins stressed that 2019 had gotten off a 

"challenging start," with housing, oil, the US-China trade conflict, and 

Brexit "top of mind for all of us." 

 --MNI Ottawa Bureau; yali.ndiaye@marketnews.com

[TOPICS: M$C$$$,MACDS$]