While inflation is finally starting to run out of steam, salaries continued to rise in July, reaching +8.1% in Quebec and exceeding the annual inflation rate.
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“It’s impressive to see wage increases that are close to inflation,” summarizes Hélène Bégin, senior economist at Desjardins Group.
Over a year, wages are now increasing faster than the consumer price index.
There was 7.3% inflation in July in Quebec, for an 8.1% increase in the average hourly wage, in annual variation.
This is good news for the purchasing power of Quebec households, which are doing better than the rest of Canadians. For the same period, inflation in the country reached 7.6%, but wage increases only 5.2%, a dead loss in real income.
“It is certain that there is a particular reality in Quebec,” says Simon Savard, senior economist at the Institut du Québec.
According to him and Mme Begin, the labor shortagehe strongest in Quebec largely explains the gap between the wage situation here and that of other provinces. In Quebec, the unemployment rate is extremely low: 4.1% in July. In Ontario, it’s more than a percentage point higher.
GOOD RATIO OF FORCE
And “the more people we lack, the more we tend to adjust salaries”, explains Mme Begin.
In a tighter job market in Quebec, employees are in a better position to obtain raises, but also to change jobs and thus obtain better salary conditions.
According to Mr. Savard, we have seen a drop in employees in lower-paying positions since the pandemic. Despite some return to normal, they have not returned to lower paid positions.
There is also greater job growth in the public sector, where jobs are on average better paid.
This balance of power in favor of workers is useful to improve their lot, of course, but also to counter the effects of inflation on purchasing power.
According to Hélène Bégin, the current level of inflation and household expectations of future inflation have an influence on wage negotiations.
Thus, in Quebec, employees are better able to obtain salary increases and see their budget cut less by inflation than elsewhere in the country.
IT WILL CONTINUE
With the Bank of Canada’s interest rate hike, Mme Bégin expects a slowdown in the economy in Quebec, as well as the level of inflation.
But “the soaring wages will take some time to settle,” she adds.
The Desjardins Group economist predicts that the unemployment rate will remain relatively low despite the economic upheavals. In the long term, she expects unemployment to be around 3.5%.
This situation should, according to her, cause wage increases to continue at a faster rate than inflation, by 3-4% for an inflation level lowered to 2%.
Soaring wages
Year-over-year wage increase as of July
- Average in Quebec: +8.1%
- Health sector : +12%
- Customer service : +11%
- Natural resources and agriculture: +15%
- Factory employees: +13%
- Average in Canada: +5.2%
Source: Statistics Canada
SOME BIG RECENT INCREASES
- CPE educators: 15 to 20%
- Security agents : 19 to 28% (over 5 years)
- Nolinor flight attendants: 36%
- Pascan Aviation pilots: 20%
Large numbers of workers are increasingly poor
Caroline Senneville, President of the CSN
Even if the increase in the average wage in Quebec in July exceeds that of consumer prices over one year, not all workers benefit from it.
“We can look at the increase in salaries, but we must also look at the relationship between management salaries and average salaries in the organization. And the gap is growing,” said Caroline Senneville, President of the Confederation of National Trade Unions (CSN).
INEQUALITY INCREASES
Several data in the evolution of wages confirm the inequalities decried by the president of the workers’ union.
According to Statistics Canada, the average hourly wage in Quebec for the period January-July 2021 was $28.50 for all employees, and $44.80 for senior executives.
Compared to 2022, senior executives received salary increases of 18.4%, but the average employee only 6.1%.
Another indication noted by Daniel Boyer, president of the Quebec Federation of Labor (FTQ): the minimum wage has just increased, but “only by 5.5%, we are still below inflation”.
COLLECTIVE AGREEMENTS
Many employees are also under a collective agreement. These have seen their purchasing power decline for several months, while their annual increases are capped at the usual 2%.
This is the case in the public sector, where certain essential positions are struggling to be filled. At the FTQ, Mr. Boyer indicates that 550,000 public service employees have their collective agreement which runs until next March. And many other sectors also have collective agreements that do not cover inflation. “There are a lot of people who have a lot to catch up on,” said Mme Senneville.
So even if the average salary in Quebec continues its momentum, Daniel Boyer says he is worried. He sees the cost of food and housing soaring and hopes to be able to negotiate wage increases to maintain purchasing power. But it is not sure to get there for all sectors.
According to him, several signs show that there is a problem with wages: the multiplication of conflicts in the workplace or the increase of 40% of workers who go to food banks.
“A dysfunction of the economy”, according to Mme Senneville.