Behind the strong rebound in employment in October looms heightened distress. With wages struggling to protect against inflation and interest rates sinking ever further into the restrictive zone, more and more of them last month were having difficulty meeting their basic needs without having to go into debt. more, at an ever-increasing cost.
The data surprised. After four months of decline or little change and with everything pointing to an impending recession, Statistics Canada tells us that employment rose by 108,000 in Canada in October to return to its peak in May. However, at the same time, 110,000 people joined the ranks of the labor force, which enabled the federal agency to conclude that “overall, the growth of the labor force was almost entirely attributable to the growth of number of people in employment, given that the total number of unemployed has changed little”.
It is therefore safe to assume that the growth in wages combined with the pressures on household budgets, exerted by inflation and rising interest rates, have encouraged more people to join a labor market which is still welcoming in due to labor shortages and high vacancies, suggests Oxford Economics.
This supposition is all the more defensible since Statistics Canada accompanied its Labor Force Survey a question about the ability of households to meet their needs in the current circumstances. When asked about their concerns about the cost of living, “35.3% of Canadians aged 15 and older lived in a household that reported finding it difficult or very difficult to meet their financial needs, i.e. to pay for transportation, accommodation, food, clothing and other necessary expenses”. The same question was asked in October 2020. They were 20.4% to say while living in a household experiencing the same difficulties. However, we must remember the existence of government emergency aid programs in this first year of the pandemic.
Similarly, the results of a poll released by Equifax Canada on Tuesday indicated that 50% of Canadians view their financial future with optimism, down from 61% last year, a deterioration that is not without reflecting concerns about affordability and the cost of living. “Overall, 52% of respondents say they worry about not being able to pay their monthly bills (rent, utilities, insurance). And this concern is felt more among those aged 65 and over, joining 73% of them, against 40% of 18 to 34 year olds.
Salaries don’t keep up
It’s because wages don’t keep up with inflation. Year-over-year growth in employee average hourly earnings remained above 5% for a fifth straight month in October. They were up 5.6%, or $1.68, to $31.94, but to keep well below the pace of inflation, which was 6.9% in September according to the ‘consumer price index. We can therefore link this erosion of purchasing power to the 0.7% increase in total hours worked last month. This total is up 2.2% from October 2021.
And there is a gap whose effect is amplified by unionization. Among employees who had worked for their employer for at least 12 months, 59% had received a raise in the previous year. Among these employees, 56.8% of union members received a salary increase during the previous year, compared to 60.1% of non-union members. Unionized employees on average receive higher wages than their non-unionized counterparts, but their wage adjustments are generally delayed until the expiry of collective agreements.
Finally, not everyone is equal when it comes to salary adjustments. In October, 64.3% of employees earning more than $40 an hour had received a raise in the previous year, compared to 50.1% of those earning $20 an hour or less.
Small consolation, Statistics Canada adds that last month, 59.8% of employees who changed jobs obtained a position offering a higher hourly wage, up from the average of 50.5% observed during the last month. month of October from 2017 to 2019.
Returning to the Equifax survey, 53% of respondents say they are very anxious about their level of personal debt. The ratings firm’s survey indicates the average credit card balance held by Canadians was at an all-time high of $2,121 at the end of September, falling back to its level of $2,118 seen at the end of the fourth quarter. of 2019. “Average credit card debt has fallen during the pandemic, but usage has now increased for six consecutive quarters […] to reach historic heights,” she wrote.
For its part, the average non-mortgage debt was $21,188 in September, returning to levels not seen since the first quarter of 2020, before the pandemic.