For Canadian employers, three straight months of declining employment still haven’t alleviated hiring and retention problems.
Employment fell in Canada in August for the third straight time, posting a cumulative decline of 114,000 since May 2022. The number of people looking for work also increased by 106,000 since June. Still, “many employers are likely to continue to face considerable difficulty when trying to fill their vacancies,” warns Statistics Canada.
The federal agency starts from June statistics, which for the first time since data from the Job Vacancy and Earnings Survey began to be published in 2015 indicated that there were fewer people in the unemployment (989,000) than vacancies (1,038,000).
In addition, August data shows that 307,000 Canadians left their jobs for retirement in the past year, up from 233,000 a year earlier. “If the contribution of each age group to the total population had remained constant over the past three years — rather than the situation where older Canadians represent an increasing proportion of the population — the number of people in the labor force would have been 374,000 higher than the level observed in August”, calculates Statistics Canada.
Wage pressure
Finally, 11.9% of the 14.3 million permanent employees plan to leave their jobs in the next 12 months, nearly double the level of 6.4% measured in January. In the segment of 20% who are at the bottom of the salary scale, this proportion reaches 19.6%. The main reason cited is career change, for 3.1% of permanent employees; this proportion was 1.6% in January. For its part, the proportion of permanent employees who point to the salary being too low rose from 1.2% to 1.9% between January and August.
When respondents to the Statistics Canada survey were asked what were their essential or very important considerations, 85.4% mentioned salary and benefits.
Thus, the increase in the average hourly wage of employees continued to accelerate in August. It reached $31.33 in August, up $1.60, or 5.4%, year-over-year. In June and July, the recorded increase was 5.2%.
In the aftermath, inflation as measured by the consumer price index posted a 7.6% year-over-year increase in July, following an 8.1% increase in June. The increase hovered around 2.5% at the start of the year. The pace is – by far – faster in Quebec, with an average increase of 8.1%
over 12 months in July, compared to 3.1%
in January.
Added to this is the transition to better paid jobs, which the pandemic has accelerated. Compared with August 2019, employment in occupations that usually require a high school diploma or less education was down 3.8% (-267,000) in August, as the number of employed Canadians generally requiring a university education was up 18% (+700,000). “The number of workers who had a high school diploma or less, but who worked in a job that generally requires a university education increased by 41% (+79,000) during the same three-year period,” adds Statistics. Canada.
The Beveridge Curve
However, this persistent tension on the labor market cannot ignore the context of monetary austerity for very long, with the Bank of Canada showing ever more firmness in its fight against inflationary slippage.
Jimmy Jean, chief economist and strategist at Mouvement Desjardins, says of the stronger-than-expected rise in Canada’s unemployment rate in August — by 0.5 percentage points to 5.4% — , that “apart from the confinements during the pandemic, an increase of this magnitude tends to have occurred in the context of a recession”.
Inspired by the situation in the United States and using the Beveridge curve, which links the unemployment rate and the job vacancy rate, “the leaders of the Federal Reserve have adopted the hypothesis according to which a moderation in the demand could lead to a drop in job vacancies, without an increase in unemployment. This scenario is not impossible, but the history indicates that it is a rather rare occurrence. Right now, the U.S. job vacancy rate is 0.4 percentage points below its March 2022 peak. from its peak, a rebound in the unemployment rate (and therefore a recession) followed,” he wrote.