Wages are rising, but inflation is rising faster — and workers in some industries are being left behind.
Statistics Canada’s monthly Labor Force Survey found that average hourly wages rose by a dollar, or 3.4 per cent, between March 2021 and March 2022.
That’s a slightly faster pace year-over-year than February, but not as fast as inflation — the Consumer Price Index was up 5.7 per cent in February.
And wages aren’t rising as quickly as they were pre-pandemic, when labor market conditions were similarly tight.
The growth in wages in March was partly driven by the professional, scientific and technical services industry, which saw overall employment go up by 13 per cent while wages went up 7.5 per cent.
Other industries that saw more significant wage growth include agriculture at more than eight per cent; manufacturing at almost seven per cent; and wholesale and retail trade at almost seven per cent.
However, wages stagnated and in some cases went down year-over-year in education, health care, accommodation and food services, transportation, utilities, public administration and more.
Jim Stanford, director of the Center for Future Work, said the most recent data puts wage growth back on track compared with pre-pandemic. But thanks to burgeoning inflation, there’s some catching up to do in the coming months, he said.
Overall, goods-producing sectors are seeing higher wage growth than services, said Stanford.
He noted that in the provinces with the weakest wage growth — Ontario, Manitoba and Alberta — there are “harsh” caps on public sector wages, such as Ontario’s one-per-cent raise cap for public sector workers.
That’s why he’s not surprised to see wages stagnating in those sectors.
Sheila Block, senior economist with the Canadian Center for Policy Alternatives, agreed.
“That’s not the result of market forces,” Block said. “That’s the result of government policy.”
Given the ongoing labor difficulties in food and accommodation, Block said she’s surprised there wasn’t a bigger wage increase in that sector, but said it’s too soon too tell whether March was just an odd month or wages will catch up later in the year .
But one thing is for sure: if inflation continues while some sectors don’t see their wages go up, those workers are losing purchasing power, said Block, who added the lagging wage growth in health and education is a “huge concern.”
Deena Ladd, executive director of the Workers’ Action Centre, said workers in those essential sectors aren’t going to stick around if they have the opportunity to work elsewhere for better wages and less precarious hours.
“We are going to start to see this exodus,” she said.
In fact, that’s already happening, Stanford pointed out: though total employment is high, some sectors such as hospitality are still struggling to hire.
“That reflects not that people aren’t working, it’s that they’re working somewhere else,” he said.
Employers should expect more raise asks from individual employees and from unions, said Stanford.
The rising cost of living, combined with a tight labor market and wages going up, means new hires may be getting competitive compensation packages that leave employees in the lurch.
That’s why, in the coming months, many companies may have to bump up salaries for their existing workers, according to new research from recruitment agency Robert Half.
In online surveys of 234 C-suite executives in March by the firm, two-thirds of respondents said they had noticed salary discrepancies between new and existing staff. Of those, more than half are reviewing and increasing compensation to keep those existing employees at market rate.
In another recent survey by Robert Half, this one of Canadian workers, half of those surveyed said they plan to ask for a raise this year, to reflect current market rates and deal with rising inflation.
Michael French, national director for Robert Half, said the balance is shifting in favor of employees.
“Now you have more cards to play than you’ve ever had before,” he said.
Across Canada, governments are raising their minimum wages. The federal minimum wage went up to $15.55 an hour at the beginning of April, while at the beginning of the year Ontario increased its to $15 and eliminated the lower liquor minimum wage wage minimum wage. This fall, Ontario’s wage — which is tied to the Consumer Price Index — will again rise, this time to $15.50.
Minimum wages in Prince Edward Island, Nova Scotia, Newfoundland and Labrador, and New Brunswick all went up, though all four provinces’ minimums are below $15.
Meanwhile, Quebec’s minimum wage will go up to $14.25 in May, while British Columbia’s minimum wage, which is tied to inflation, will go up to $15.65 in June.
But advocates say minimum wages pale in comparison to what’s truly needed to live in Canada in 2022.
For example, the Ontario Living Wage Network calculates that a true living wage in Toronto is more than $22 an hour. This calculation includes the costs of food, clothing, shelter and other basic necessities, but does not include saving for retirement or home ownership, repayment, or other long-term debt costs.
Bea Bruske, president of the Canadian Labor Congress, said unions are getting increased pressure from their workers to fight for higher wages, and some are seeing more interest in unions from non-organized workers.
She’s optimism that the tight labor market and high inflation rates will continue to embolden workers to ask for better conditions, but said it’s not an easy fight.
“We’re in for a rough ride over the next number of months,” Bruske said.
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