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Canada adds more jobs, but wage growth stalls

Workers inspect cars moving along assembly line at Honda manufacturing plant in Alliston, Ontario.

Fred Thornhill/Reuters

Canada's job market is booming, but wage growth has slowed to its lowest level in almost two decades.

Average hourly earnings increased 1.1 per cent over March of last year, with full-time earnings up 0.9 per cent – the weakest growth since 1998, according to Statistics Canada's monthly labour-force survey released on Friday.

Since the collapse in oil prices, the loss of natural-resources jobs has been responsible for dragging down the average wage in Alberta, along with the rest of the country.

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But Ontario was to blame last month for slowing the country's wage increases. The average hourly wage in Canada's most populous province rose just 0.1 per cent, to $26.43, from a year earlier – its slowest pace on record.

Part of the weakness can be attributed to the earnings decline in higher-paid industries such as manufacturing, education and professional, scientific and technical services. But other higher-paid areas such as finance, insurance and real estate saw average hourly earnings increase by just 0.4 per cent in Ontario. Meanwhile, one of the lowest-paid parts of the economy – accommodation and food services – saw an 11-per-cent increase, to $15.20.

"A lot of the relatively decent-paying jobs have fallen by the wayside," said Derek Holt, head of capital markets economics with Bank of Nova Scotia. "The whole cycle is generally weak because you have less confidence in the work force and more hesitant employers."

Across the country, wage growth has remained under 2 per cent for nine consecutive periods, even though employers continue to hire.

Canada added 19,400 positions in March – most of them full-time – bringing the total number of new jobs to 276,400 over the past 12 months.

Still, the unemployment rate rose to 6.7 per cent from 6.6 per cent in February.

And the job boom comes as the composition of the labour force shifts: a decline in lucrative oil-patch jobs and an increase in lower-paid service positions.

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Although Alberta is showing signs of economic recovery, such as the creation of 20,700 new full-time positions in March, the province has lost 1,600 jobs over the course of the year.

It has weathered steep employment declines in natural resources and other high-paid parts of the economy, such as finance and real estate.

The average hourly wage in Alberta fell 0.3 per cent, to $29.89, from a year earlier.

"The lack of growth in Alberta and Ontario will have a big impact," Andrew Fields, an analyst with Statistics Canada said.

Other analysts found the data perturbing amid months of job creation.

"It really is a conundrum," said Dawn Desjardins, deputy chief economist with Royal Bank of Canada.

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"The thinking to some degree is that it is in the pipeline, because we are seeing strengthening in employment growth. … It is quite an anomaly."

Benjamin Tal, deputy chief economist with Canadian Imperial Bank of Commerce, said the wage data in the labour-force survey was unreliable.

He compared it with the payroll survey, which showed wage growth of almost 2 per cent for the most recent January period.

"You have alternative measures that suggest that wages are rising by 2 per cent," he said.

Analysts polled by Thomson Reuters had expected Canada to create 5,000 jobs.

In the United States, the average hourly wage grew 2.7 per cent year over year, while the economy added a disappointing 98,000 jobs in March.

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About the Author
Economics Reporter

Rachelle Younglai is The Globe and Mail's economics reporter. More

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