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Real minimum wages in Canada haven’t budged in almost four decades Add to ...

These are stories Report on Business is following Wednesday, July 16, 2014.

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Minimum wage effectively flat
Real minimum wages in Canada basically haven’t budged from almost four decades ago.

A report today from Statistics Canada, which looks at the weighted average among the provinces, comes amid a debate over inequality, high unemployment among the nation’s youth, and accusations of abuse of the Temporary Foreign Workers program.

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According to the statistics agency, the average minimum wage in Canada was $10.14 an hour last year. And when you translate the 1975 equivalent into 2013 dollars, it was “almost identical” at $10.13.

Having said that, it certainly varied over the course of almost 40 years, dipping to $7.53 between 1975 and 1986, then rising to $8.81 in 1996.

Up until 11 years ago, it held stable at about $8.50, and has climbed since then.

“In other words, after inflation, Canada’s lowest-paid workers gained only a penny an hour over the past four decades,” said Erin Weir, an economist with the United Steelworkers.

“With many provinces now indexing their minimum wages to inflation, this problem should not repeat itself,” he added. “However, further increases above the inflation rate are needed to actually make low-paid workers better off than four decades ago.”

One of the troubling findings in the Statistics Canada report is the rise in the number of Canadians earning just minimum wage.

The proportion of paid workers earning the minimum stands at about 6.7 per cent, compared to 5 per cent in 1997. The bulk of the jump occurred between 2003 and 2010, according to the agency.

“To some degree, the increase in the proportion of minimum-wage employees during those years was the result of increases in the minimum-wage rate in many provinces,” Statistics Canada said.

“That is because a portion of those who were paid just above the former minimum rate became paid at the new, revised rate and joined the group of minimum-wage earners.”

Consider this statistic: The proportion of young workers, between the ages of 15 and 19, who earned the minimum rose to 45 per cent in 2010 from 30 per cent in 2003, while those who earned between minimum and 10 per cent higher fell to 21 per cent from 31 per cent.

“Young employees, less educated employees, part-time employees and those working in service industries were most likely to be paid at minim wage,” Statistics Canada said.

Indeed, half of those 15 to 19 earned the minimum last year, compared to 13 among those in the 2024 age bracket.

There are huge differences among the provinces, as well.

Alberta, home to the oil industry, for example, boasted the lowest percentage of workers earning the minimum, at just 1.8 per cent last year. Prince Edward Island had the highest rate, at 9.3 per cent.

Another interesting fact is the change in the ratio of minimum wage to average hourly earnings. This, too, has been on the rise, to 46 per cent last year from 41 per cent in 2005.

“This is because the average minimum wage rose faster than the average hourly earnings (in constant 2013 dollars), Statistics Canada said.

Sokalsky resigns
Barrick Gold Corp.'s chief executive officer Jamie Sokalsky is stepping down in September, the company said today in a surprise shake up that will nix the CEO role and promote two senior managers to the roles of co-president.

The move comes less than three months after Barrick’s new executive chairman John Thornton took the reins of the world’s largest gold producer and is a blow to Mr. Sokalsky, who was instrumental in steering the company through the toughest year in its history, The Globe and Mail's Rachelle Younglai reports.

Mr. Sokalsky, who rose through the ranks at Barrick to become its chief financial officer, was appointed chief executive in 2012 when the company’s former CEO Aaron Regent was ousted amid a weakening share price.

In the following two years, he helped put Barrick on sounder financial footing by raising funds to pay down the company’s debt load, suspending a key gold project in the Andes and selling off underperforming mines.

Time Warner surges on rejected bid
Shares of Time Warner Inc. are surging this morning after news that Rupert Murdoch offered recently, though unsuccessfully, to buy the media giant for $80-billion (U.S.).

"21st Century Fox can confirm that we made a formal proposal to Time warner last month to combine the two companies," the Murdoch enterprise said in a statement today after reports in The New York Times were followed by other news organizations.

"The Time Warner board of directors declined to pursue our proposal. We are not currently in any discussions with Time Warner."

Time Warner also confirmed the bid today, saying the Murdoch Group’s offer was $32.42 in cash for 1.531 of a Twenty-First Century Fox share.

It rejected the advance, it said, because it believes its own planned course will deliver results, and that there’s “significant risk and uncertainty” surrounding Twenty-First Century Fox non-voting shares, as well as its “ability to govern and manage” a combined company of that heft.

“The board is confident that continuing to execute its strategic plan will create significantly more value for the company and its stockholders and is superior to any proposal that Twenty-First Century Fox is in a position to offer,” it said.

Still, the Times said, last month's “bold approach” could well put Time Warner into play.

Investors certainly seem to think so, driving up the stock.

Poloz trims outlook
The Bank of Canada trimmed its economic outlook today as it made no change in policy.

As The Globe and Mail’s David Parkinson reports, the central bank projected economic growth will average about 2.25 per cent during 2014-16, and now won’t reach full capacity until mid-2016.

The Canadian dollar dipped as Bank of Canada Governor Stephen Poloz and his colleagues released their rate statement and monetary policy report, though later shot higher.

The central bank held its so-called neutral bias, which means it’s giving no signal to the markets on where interest rates could be headed, or when.

“Given the downgrade to the global outlook, economic activity in Canada is now projected to be a little weaker than previously forecast,” it said.

It said, though, that it still expects the lower Canadian dollar, which has eroded since Mr. Poloz took the helm of the central bank, and forecast stronger global demand, will lead to his hoped-for rebound in exports.

 “For now, the growth outlook still hinges on getting exports and capital spending going, and the former is then linked in part to a weaker Canadian dollar, a clear sign that the bank will lean against any further C$ appreciation,” said chief economist Avery Shenfeld of CIBC World Markets.

Rogers to demand order
In the wake of a Supreme Court decision last month that upheld Canadians’ right to online privacy, Rogers Communications Inc. says it will now require a court order or warrant for all law enforcement requests for customer information.

As The Globe and Mail's Christine Dobby reports, the Supreme Court of Canada ruled in June that police require judicial authorization before asking Internet providers for basic information that would identify their customers, including in cases involving child exploitation.

The court made it clear that police must obtain a search warrant, even if they are asking only to obtain the name and home address of a consumer who has signed up for Internet use.

Toronto-based Rogers, one of Canada’s biggest providers of Internet, wireless and cable services, said Tuesday it will adjust its policies to comply with the decision.

Factory sales rise
Canada’s factories scored their fourth gain in five months in May as sales climbed 1.6 per cent.

That increase, Statistics Canada said, was largely on the back of the oil, coal and auto sectors.

Over all, sales in May increased in 11 of 21 industries measures, or about 61 per cent of all manufacturing.

Notably, Ontario chalked up hefty increases, with sales climbing 2.3 per cent.

That’s important given that last week’s employment report showed factory jobs in Canada’s most populous province at the lowest on records dating back to the mid-1970s.

Manufacturing sales in the province, however, are now at their highest since the summer of 2008, before the recession. That’s largely thanks to the auto industry.

Inventories across Canada, meanwhile, slipped 0.6 per cent, for the first drop in five months.

The inventory-to-sales ratio, or the time it would take to exhaust inventories amid constant sales, fell to its lowest since late last year.

Unfilled orders dipped 0.5 per cent, and new orders 0.1 per cent.

Beijing should feel ‘vindicated’
There are always questions about Beijing’s official numbers, but today’s reading of second-quarter economic growth is still a strong sign.

China’s economy expanded in the three-month period by 7.5 per cent, according to the official data, a slightly faster pace than the first quarter’s 7.4 per cent.

“This should assuage hard landing fears and leave policy makers feeling vindicated in their decision not

to pursue more forceful stimulus,” said Julian Evans-Pritchard of Capital Economics.

“Looking ahead, we still expect growth to slow slightly during the second half of the year and are keeping

our forecast for 2014 unchanged at 7.3 per cent,” he added in a research note.

“Today's data demonstrate that policy makers have plenty of room to ease policy and shore up growth if necessary. We expect that further targeted measures may be rolled out to offset continued weakness in the property sector."

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