Wage gap in Atlantic Canada continues for many occupations
Atlantic Canada has trailed average national wages in Canada for decades. According to Statistics Canada data from 2019, average weekly wages across the region are about 10 per cent lower than elsewhere in the country.
However, the differences between provinces within the region are significant. P.E.I. has the greatest wage gap at nearly 19 per cent lower, while wages in Newfoundland and Labrador are actually higher than the Canadian average by three per cent. Average weekly wages in Newfoundland are bolstered by the highest public-sector wages in the region ($1,304 per week versus $1,191 in P.E.I.), along with the highest percentage of public-sector jobs in Atlantic Canada. In addition, high-paying oil industry jobs in Newfoundland also contribute to higher weekly wages in the province.
There are sections of the economy where there is no wage gap. For example, those working for the federal government are generally paid the same across the country. Other levels of government also tend to track their pay levels against national norms.
The small and mediumsized businesses that are mostly locally owned generally pay competitive wages but based on local market conditions that determine demand for their goods and services. Those working for large national organizations like banks and financial institutions tend to be paid similarly across the country. Other organizations, such as utilities, benchmark their competition nationally as well.
WEAKER CONDITIONS
Slower economic growth relative to the rest of the country has led to slower wage growth in the region. In Atlantic Canada, there has been an oversupply of those seeking employment relative to the availability of jobs in the region for decades.
That is why the region has led the country in unemployment rates for literally generations. Until the pandemic, there had been some significant progress in balancing the workforce supply with demand in much of the region.
In recent years, there has been a downward trend in unemployment rates due to an increasing number of baby boomers exiting from the workforce, which is gradually tightening the labour force. Indeed, it can be expected the wage gap with the rest of the country will narrow naturally over the next decade as a result of having fewer workers entering the workforce as those exiting.
LABOUR DEMAND
The private sector is already experiencing skill shortages in some job categories. The recent success in attracting newcomers (particularly immigrants) to the Maritimes (not so much in Newfoundland and Labrador, unfortunately, where another 3,700 individuals are expected to leave the province this year) is evidence of the need to increase both the population and the labour supply. The good news is that population growth leads to economic growth. Just look to Prince Edward Island’s economic performance over the last decade for proof.
While the pandemic has slowed economic progress, business owners in the region will need to face the reality that the cost of labour will continue to increase beyond the cost of inflation for the foreseeable future as the competition for talent increases. This will particularly be the case for high-skilled and knowledge-based jobs.
LIVING WAGE
At the same time, lowskilled, low-pay jobs need to be considered a high priority in terms of ensuring a livable wage. The pandemic has underscored the importance of some previously undervalued work, like that in the food supply chain and long-term care facilities.
Certainly, increasing the minimum wage for these jobs should be a priority, understanding that there will be an impact on the cost of services and products to consumers as a consequence.
The debate about a guaranteed income has risen through this pandemic, although it is unclear how this might work or what the impact on the availability of those willing and able to work might be.
The federal government’s CERB program has led some workers to refuse to return to work, as an example. Would a guaranteed income program have the same consequence?
There are many jobs already that Canadians are unwilling to accept. Think about the need for foreign workers, particularly within the agricultural and fishery sectors. How would a guaranteed income program be financed? Lots of unanswered questions at the moment.
In the meantime, we need to face the reality that some work is undercompensated and needs to be adjusted now. This will mean that food prices will likely have to increase to pay grocery workers more fairly.
Higher taxes will be necessary to pay long-term care workers more appropriately and have more of them to care for our elderly.
MARKET CONDITIONS
In my previously owned business, I tracked compensation in our industry sector to ensure our compensation levels were generally competitive at the national level.
The availability of skilled and experienced workers in market research was limited within Atlantic Canada.
Another limitation faced by many businesses in our region is getting paid less to do the work compared with elsewhere in the country. This was certainly the case in market research, where it was common to cost work significantly lower within the region than for work outside the region due to lower demand for the services.
This places significant burden on those businesses in terms of paying wages at a national level, when their products and services are valued lower within the region.
This is particularly true if economic growth lags the rest of the country, as has been the case within much of Atlantic Canada for decades.
The good news for the region is a shrinking labour supply and continued population growth will improve the labour market in terms of compensation as the competition for talent increases and economic growth improves.
Don Mills is the former owner of Corporate Research Associates and a recognized expert in data trends in Atlantic Canada. After selling his business recently, he remains passionate about data - and learning the guitar. He can be contacted at dmillshfx@gmail.com or on Twitter at @donmillshfx