Skip to main content
economy

Izzah Javaid in her downtown Toronto home, which she works out of while sharing the space with her brother and husband, on Feb. 11.Christopher Katsarov/(Christopher Katsarov/The Globe

In theory, now is an ideal time to switch jobs.

At last count, Canadian employers were recruiting for about 875,000 positions – a lofty number by historical standards – and labour shortages have been a persistent headache for companies. Newer employees are pocketing bigger wage gains than longer-tenured workers, an upside to shaking up one’s career.

But in reality, few people are actually quitting their jobs.

The job-switching rate – the proportion of workers who remained employed from one month to the next but who changed jobs – was 0.8 per cent in January, according to Statistics Canada’s latest Labour Force Survey. That’s higher than early in the pandemic but also typical of rates before the health crisis.

Furthermore, most people are planning to stay put a while longer. Statscan found just 7.3 per cent of workers aged 15 to 69 were planning to leave their current jobs within the next year, compared with 16.1 per cent in 2016, when respondents to a separate survey from the agency were asked the same question.

The results suggest the “Great Resignation” isn’t much of a trend in Canada, despite anecdotes of massive turnover in workplaces. It’s a very different situation in the United States, where the quits rate jumped to record highs last year.

The ‘Great Resignation’? It’s not happening in Canada

Job churn is often a sign of a healthy economy, helping people find better pay and working conditions. A willingness to switch jobs is a reflection of confidence in the labour market, the Bank of Canada has said.

But while the economy is recovering quickly, it is still hostage to COVID-19 and public-health measures, as recently seen in the Omicron wave, which led to mass layoffs, more telework and the highest rates of work absence owing to illness on record. With such a murky view of the future, it’s tough for people to plan a career change.

“Usually, when an economy comes out of recession, it’s pretty clear,” said Mikal Skuterud, a professor of labour economics at the University of Waterloo. “The nature of the uncertainty this time is really different. We’ve seen this again and again, right? There’s another wave of the virus, and then things are forced to shut down.”

Alida, a Toronto software company with 500 employees, to introduce a four-day work week

Over the past two years, workers have learned to adapt and remain effective under tough circumstances, Prof. Skuterud added. But taking a new job could disrupt a delicate balance, adding to pandemic stresses.

Workers may be thinking, “I can’t add yet one more thing that could have a negative impact on my life. I’ll just wait a bit” to start a new job, said Zabeen Hirji, executive adviser on the future of work at Deloitte.

Prof. Skuterud said there may be a simpler explanation for the lack of job switching: Wages, while increasing, aren’t nearly enticing enough. In the third quarter of 2021, the average offered hourly wage for a job vacancy was $22.55, an increase of $1.30 (or 6.1 per cent) from two years earlier.

“That’s the puzzle here,” he said. “Despite the fact that labour markets are tight … there really isn’t much evidence of any unusual wage growth.”

Canada and the U.S. have some key differences. For one, Canada has much higher rates of unionization, with collective bargaining agreements that often mandate annual pay raises. In the U.S., minimum wages can be quite meagre – as low as US$7.25 or US$2.13 for tipped workers in some states.

Indeed, U.S. quit rates have been elevated for the young and less educated in low-wage industries.

“This is a group of workers that, frankly, especially in the United States, have been paid very little,” Claudia Sahm, director of macroeconomic research at the Jain Family Institute and a former White House and Federal Reserve economist, told The Globe and Mail in October. “Whatever it is that gets them some extra pay is a good thing.”

The Canadian data are somewhat patchy. Unlike the U.S., Canada doesn’t have a dedicated employer survey of labour turnover, while Statscan’s job-switching rate reflects a quick transition in roles.

That metric doesn’t capture someone such as Izzah Javaid of Toronto. Feeling the effects of burnout, she quit her position as a business analyst at a Big Six bank in September. After taking a few months off to travel and recharge, she just started as a product manager at a fintech company. Not only did Ms. Javaid nab a more senior position, her pay jumped 35 per cent and she’s allowed to work from home permanently.

“I can never see myself being in an office again,” she said.

Throughout the pandemic, tech companies have been in hiring mode, and that’s meant plenty of turnover among staff – unlike the stasis in other industries, executives say.

“Because the war for talent is so real, you’ve got people jumping ship left and right to take another $5,000 to $10,000 – or we’ve seen $40,000 or $60,000 [raises] per year to go to the company next door,” said Travis O’Rourke, the president of recruiting firm Hays Canada.

But higher turnover could be imminent in the broader labour market as well.

A recent Bank of Canada survey came to a very different conclusion than Statscan, finding the likelihood that workers will switch jobs in the coming year the highest in many years. There may be pent-up demand to change jobs after a pandemic lull, the bank said, while a tighter labour market may offer more opportunities. And most companies have told the central bank they intend to raise wages at a faster pace over the next year.

That’s the key, Prof. Skuterud said. “What incentivizes workers to change jobs, ultimately, is about wages.”

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.