Bank of Canada offers explanations for country’s ‘puzzling’ wage disappointment

Technological advances have lowered demand for routine jobs, reduced competition

A senior Bank of Canada official offered explanations Thursday for the country’s “puzzling” and disappointing stretch of wage gains, even though job market been experiencing one of its biggest labour shortages in years.

In a Toronto speech, senior deputy governor Carolyn Wilkins said weaker wage growth in energy-producing provinces since the 2014 oil-price slump has dragged down national numbers.

But she said even after accounting for these factors, wages have fallen short of where they should be in a tightened job market that has seen Canada’s unemployment rate drop to a 43-year low.

“This is particularly puzzling when you consider what businesses are telling us about how hard it is to fill jobs,” Wilkins told the Toronto Region Board of Trade.

“As far as I can tell, no one has found a smoking gun,” she said of the search for an explanation.

“But there are at least a couple of compelling suspects.”

READ MORE: GDP contracted 0.1% in November

Wilkins said wages are also likely lower than expected as employers struggle to find candidates with the right skills, cautious employees decline to trade up for higher-paying positions elsewhere and people are reluctant to move to a new city in order to land a new gig.

Structural factors, she added, may also be weighing on wages — such as technological advances that have lowered demand for routine jobs, reduced competition in some industries and the emergence of the so-called gig economy that has taken away bargaining power for some workers.

Wilkins offered potential areas for policy-makers and businesses to focus on to help improve the job market. They could invest in education and training, find ways to encourage labour mobility and increase the competitiveness of Canadian firms.

She noted the results of the bank’s latest business outlook survey suggested labour shortages were at one of their highest levels since the Great Recession a decade ago. Job vacancies, she added, are still rising in Canada and now total about 550,000.

In the months ahead, Wilkins said the central bank predicts Canada’s economic expansion to pick up its pace after a recent slow patch — and she anticipates wage growth will eventually accelerate along with it.

Andy Blatchford, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Castlegar’s Stanley Humphries School’s got talent

Talent show to be held Feb. 21 at Brilliant Cultural Centre

What’s Up: Things to see and do on Family Day

There’s plenty of fun to be had across the West Kootenay this coming long weekend!

Province announces $23 million for upgrades at Kootenay Boundary Regional Hospital

West Kootenay-Boundary Regional Hospital District Board has yet to review the provincial proposal

Selkirk College Saints score pair of crucial wins

Stellar goaltending and timely goals lead to victory over the Vancouver Island University Mariners.

UPDATE: Two-car accident closes Highway 3A at Thrums

Road expected to open for single-lane alternating traffic at 2 p.m.

‘Just like Iron Man’: Calgary surgeon undergoes experimental spinal surgery

Dr. Richi Gill was in a freak accident on a boogie board during a family vacation in Hawaii

Ammonia leak shuts down curling club in Nelson

It’s not yet clear when the leak was detected

Sex abuse survivors to meet with Vatican summit organizers

Pope Francis has urged participants to meet with abuse victims before they came to Rome

Ex-FBI official: ‘Crime may have been committed’ by Trump

Andrew McCabe said FBI had good reason to open a counterintelligence investigation into whether Trump was in league with Russia

B.C. athlete takes home gold in freestyle aerials at Canada Games

Brayden Kuroda won the event with a combined score of 121.65.

Cabinet likely to extend deadline to reconsider Trans Mountain pipeline

New round of consultations with Indigenous communities is coming

B.C. government provides $75,000 towards salmon study

Study looks at abundance and health of Pacific salmon in Gulf of Alaska

Murdered and missing honoured at Stolen Sisters Memorial March in B.C.

‘We come together to make change within the systems in our society’

Most Read