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Inflation, market unpredictability and retiring baby boomers are just a few things at play behind slow salary increases in Canada. (Andrey_Popov/Shutterstock)

Canada | Trends

Wage stagnation encouraging employees to seek new employment

Slow salary increases means employees are sometimes forced to take matters into their own hands

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Salary growth rate across developed nations is half of what it was before the 2008 financial crisis. While job growth rate in Canada has seen unemployment fall to record levels, wages haven’t kept up.

A recent report released by Indeed reveals that 83 per cent of Canadians are frustrated with their salaries. And the cost of living is the biggest reason employees plan to ask for a raise.

In Canada, there are a few things at play behind slow salary increases. Inflation, market unpredictability and retiring baby boomers are just a few things to look at.

Productivity is another factor. “The cross-country slowdown in productivity growth since the financial crisis has likely weighed on wages in Canada and abroad,” says Brendon Bernard, economist at Indeed Canada. “Some researchers have found that coming up with new, innovative ideas has become more costly as technology has advanced. This has the potential to reduce the formation of productivity-boosting high-growth start-ups, along with the high paying jobs accompanying them.”

Wage growth has been stagnant in Canada these past few years, but there are signs showing improvement. “We’ve actually seen some signs of firming Canadian wage growth in 2018. Average hourly earnings were up a decent 3.6 per cent in the June Labour Force Survey compared to a year earlier,” says Bernard. But he adds that it’s hard to separate how much this pickup reflects the tightening labour market compared to external factors, such as Ontario’s minimum wage hike.

As technology advances, job automation also affects wage growth. “Jobs that used to earn high wages are disappearing, and there are high-middle income jobs being replaced by automation,” says Matthew Stewart, Director, National Forecast at the Conference Board of Canada.

Stewart warns that while earnings are up, so are inflation rates, and that means consumers’ ability to borrow will be reduced. “A pickup in wages will help, but not enough to offset the debt costs,” he says. “I do think consumers will have some difficulties over next couple of years.”

Hays’ Canada president, Rowan O’Grady, sees the instability of market trends as another factor affecting salary growth. “The last 10 years have gone from boom to bust, boom to bust, and most employers feel they have to be careful about what’s happening,” he says, citing the 2008 financial crisis, Alberta oil crisis and now looming trade war with the U.S.

Besides driving up debt with consumer borrowing power, low wage growth is forcing some employees to look for new jobs that offer better salaries. Indeed’s study found more than 50 per cent of those surveyed would change jobs for increased pay. According to O’Grady, company retention is becoming a problem.

“I think that companies will say one of the issues is staff retention, offering progression in their roles,” he says. “We see it every day that people want to move because they’re feeling underpaid.”

O’Grady advises companies to understand what the in-demand skillsets are within their organizations and make sure the salaries offered are as close to market level as possible. “That doesn’t have to be the policy towards the entire population and that’s okay,” he says. “It could be certain departments, skillsets or levels because that’s how markets work.”


Brush up on your negotiation skills to get the role and salary you want. Also, take CPA Canada’s course on Breaking down the gender wage gap to educate members of your organization on how to champion women in leadership positions.