Canadian workers experience highest wage growth in years, new hire wages increasing 10% in 24 months
Jason Rosso has announced higher wages for new workers since his Brampton-based restaurant was allowed to reopen last summer.
In search of line cooks, a job that typically earns minimum wage, the owner of J. Red & Co. Food + Drink increased signing contracts to $ 23 an hour. It worked.
âI had never paid so much for a line cook before. But what else were we going to do? said Rosso, the owner of J. Red & Co. Food + Drink. âThe restaurant industry has shrunk exponentially. The talent pool has disappeared. So people can ask for that kind of money now.
The Canadian workforce is experiencing one of the strongest wage growth in years, fueled by employers looking to fill vacant positions by offering competitive wages and hiring bonuses. On average, however, new hires were the primary beneficiaries of large pay increases, while established employees faced moderate to meager earnings.
Average hourly wages were 5.2 percent higher in November than they were two years ago, Statistics Canada reported on Friday. Across industries, average wages rose at a rate of 10 percent for new hires – those with tenure of three months or less – compared to 6.4 percent for employees who have been in their current job for 18 years. months or more.
The differences are more apparent in sectors where vacancies are high. In food services, new hires welcomed wage increases of 8.5 percent from two years earlier, while established employees saw gains of 2.3 percent. In health care and social assistance, which saw an increase in vacancies over the summer, newly hired nurses saw their wages rise 20.5% to $ 35.40, while Long-time nurses saw increases of 2.3%, to $ 40.47.
Salary increases in the health care sector were mainly due to hiring bonuses initiated by the government aimed at reducing a critical shortage of nurses which was threatening hospital staffing levels. But Linda Silas, president of the Canadian Federation of Nurses Unions, said the extra pay also sparked resentment among permanent employees who saw their less experienced colleagues exceed their earnings.
âBonuses created division. Even though we need to recruit new workers, long-time members have found it insulting to work for 10 years to keep the system in place, but they are not getting the increases they deserve, âsaid Silas.
Canada reported more than one million job vacancies in September, most of which were in food services, health care and retail. Typically, increases in the number of vacancies can be attributed to a healthy increase in economic activity, driven by the creation of new roles and increased capacity by employers. But it can also signal structural imbalances in the labor market, where workers disproportionately gravitate towards some jobs while abandoning others.
Recent labor surveys show that workers are dropping out of food service jobs on a massive scale as professional service employment increases. According to Statistics Canada, the professional services sectors, which include secretaries, assistants and office managers, have gained 191,600 jobs since the start of the pandemic, while restaurants, pubs and food services have lost an estimated 178,800 workers during the same period.
Structural imbalances can also seep into private worker industries, noted Avery Shenfeld, chief economist at CIBC World Markets.
âCertain sectors are experiencing labor shortages in particular occupations, so companies that are desperate to fill these positions are multiplying larger wage offers. This will not yet increase the wages of all workers in the same industry, because for other jobs there might still be enough workers available and no need to hire, âShenfeld said.
Inflationary pressure from the pandemic has outpaced the growth in average workers’ wages, leaving consumers with reduced purchasing power even as their wages increased. Consumer prices rose 4.7% in November, an 18-year high on the back of gasoline prices and shelter costs. A modest increase in gross wages, in turn, actually represents an overall decrease in wages if the increase does not match the rate of inflation.
Construction workers, for example, have earned an average hourly wage increase of 3.8% over the past year, from $ 31 an hour in November 2020 to $ 32.20 in November 2021. Considering a 4.7 percent increase in the cost of living over this same period, these workers suffered a real wage cut of 0.9 percent.
In the United States, where wages have increased at the fastest rate in decades, economists have surfaced fears of a “wage-price spiral,” where employees get higher wages and employers pass the cost of those wages on to consumers.
The Bank of Canada, which expects the inflation rate to hit five percent by the end of the year, said it was watching closely for signs of wage inflation, but did not do not expect workers’ compensation to put pressure on consumer prices.
âIf you look at the different wage measures, they’re actually still somewhat below their pre-pandemic levels,â Bank of Canada Governor Tiff Macklem said in October.
In November, wages were up 2.4% year-on-year.
Recent data suggests that wage growth has not had much of an impact on consumer prices, said David Macdonald, senior economist at the Canadian Center for Policy Alternatives. While some industries have increased wages for new hires, wage growth across the economy has not kept pace with inflation.
But recent inflation data suggests wage growth hasn’t had much of an impact on consumer prices, said David Macdonald, senior economist at the Canadian Center for Policy Alternatives. While some industries have increased wages for new hires, wage growth across the economy has not kept pace with inflation.
âThe workers are standing still. They are not moving forward and most are not falling behind. On average, they just stay afloat, âMacdonald said.
Over the next several months, however, incomes may continue to rise as employers seek to retain long-term employees who wish to keep pace with the rising wages of their less experienced co-workers, Macdonald said.
âRight now we’re seeing pressure to pay more for new hires, but not to retain people who have worked in the same job throughout the pandemic. That could change as employers realize that there might be a retention issue otherwise, especially if these workers could make more money elsewhere, âMacdonald said.
Shenfeld noted that the delay in wage growth for experienced workers could be related to when they are allowed to ask for wage increases.
âPay rates for existing employees might only be reset once a year. So their day in the sun may come when their next pay renewal comes, âhe said.