Canadian Wage Gains Haven’t Been This Sluggish Since the 1990s

Updated on
  • Country added 19,400 jobs in March, triple median forecast
  • Manufacturing makes comeback, with jobs up most since 2002

The two-faced nature of Canada’s labor market was on full display as employers continued to hire but resisted raising wages.

Canada added 19,400 jobs in March, for an employment gain of 276,400 over the past 12 months, Statistics Canada said Friday from Ottawa. Yet, the pace of annual wage rate increases fell to 1.1 percent, the lowest since the 1990s.

The data will only deepen a puzzle for policy makers who have been perplexed by the conflicting trends in the country’s jobs market. The Bank of Canada has highlighted “subdued” wage growth and hours worked as evidence of continued lack in the country’s labor market. Wage gains that aren’t matching the cost of living may undermine Prime Minister Justin Trudeau’s claim that he is making real gains for a broad swath of the middle class.

Key Points

  • The average hourly wage rate for all workers was C$26.12 in March. That’s a 1.1 percent raise from a year earlier, which is the slowest pace since 1998. For historical perspective, wage gains have averaged 2.7 percent over the past decade.
  • Permanent workers are doing even worse on the wage front. They had a 0.9 percent wage increase in March, which is the lowest in data going back to 1997.
  • The weakness in wage gains seems to be an Ontario phenomenon. The province, which has led employment increases over the past year, recorded an annual 0.1 percent increase in wages in March, also the lowest on record.
  • The unemployment rate ticked up slightly to 6.7 percent as more people entered the labor force.
  • On the brighter side, manufacturing looks like it came back in March, with a gain of 24,400 positions, the most since 2002.
  • Also, there was an acceleration in the total number of hours worked in the Canadian economy, which is an indicator of how much income workers generate. That helps offset the wage weakness. Hours worked jumped 1.1 percent during the month, the biggest one-month gain since 2009, following almost three years of practically no growth.

“Despite outsized gains over the prior months, the Canadian labor market continued to beat expectations in March -- for an eighth consecutive month -- with a very decent gain,” Matthieu Arseneau, senior economist at National Bank of Canada, said in a research note. “Another positive point was the surging hours worked in March, a development that could alleviate the Bank of Canada’s concerns about this indicator.”

Big Picture

Policy makers have been wary of recent upswing in economy data and this report will probably feed their worries even with the job gains. While economic growth has been accelerating and employers are hiring, it’s tough to conclude the recovery has fully taken hold without a pick-up in wages.

Other Details

  • Canada’s employment has been increasing at an annual pace of about 1.5 percent in recent months, growth not seen since the start of 2013.
  • The mix between full-time and part-time jobs has also improved. The net job gain in March reflected an increase of 18,400 full-time jobs and a gain of 1,000 part-time workers. Canada has added 223,100 full-time jobs over the past year versus 53,300 part-time jobs.