COVID-19 expected to impede wages

Canadian workers and companies expect wage growth to stay low over the coming year over heightened uncertainty from the COVID-19 pandemic, the Bank of Canada says in two new reports.

The central bank's business outlook survey finds that wage growth is widely expected to slow over the next year, with some firms reporting a wage freeze. A separate survey on consumer confidence suggested workers expect their wages to grow over the next year at a pace below pre-pandemics levels.

Business hiring intentions remain historically low, even as the overall outlook on employment edges up. Almost one-third of businesses told the bank they expect their workforce numbers to remain below pre-pandemic levels for at least the next 12 months, or to never fully recover.

About 100 firms took part in the bank's regular survey released Monday, but did so between late August and mid-September when COVID-19 case counts were still low.

As of September, the country has gained back about 2.3 million of the three million jobs lost in the spring when non-essential businesses were ordered closed to curb the spread of COVID-19.

The survey of consumers showed an uptick in job prospects and landing a new job, as the Bank of Canada found a decline from the second quarter in the reported likelihood of losing a job. That's not to say they were ready to quit: The reported likelihood of voluntarily leaving a job remained much weaker than pre-pandemic, despite a small improvement, “suggesting that concerns about the health of the labour market are still elevated.”

“If this results in less turnover, it could lower the quality of job-worker matching, leading to lower future productivity and wage growth,” the report said.

Now, restrictions once rolled back have been imposed anew in some parts of the country over concerns about an acceleration in the number of COVID-19 cases. As case counts rise, so too do concerns that job gains seen over the last three months may roll back.

The Liberals have extended a key wage subsidy program to next summer, hoping to provide a boost of business confidence and prod hiring.