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Canada

Canada experienced the biggest employment jump in 40 years in 2019 — and now wages are going up too

Last week Statistics Canada released its monthly jobs report for December. Media headlines tend to focus on the month-to-month changes in employment and unemployment. December featured a decent gain of 35,000 jobs, all full-time — reversing losses recorded in November.

But these monthly fluctuations are notoriously volatile, and must be interpreted with caution. Since this report was the last for 2019, we can now take stock of Canada’s labour market performance for the year as a whole. The news was undeniably positive: not only did the quantity of employment expand strongly, there were also encouraging signs of long-needed improvements in the quality of work.

On the quantity side, average employment rose by 390,000 jobs in 2019, compared to 2018. That’s the biggest annual increment since 1979. The unemployment rate averaged 5.7 per cent for the year, the lowest since Statistics Canada began gathering this data in 1976.

But I am more excited about evidence of a broad improvement in the quality of work. By several indicators, jobs in Canada became better last year: more full-time jobs, less temporary work, growing unionization and rising wages. These improvements in job quality, if sustained, will underpin future improvement in income equality and social well-being.

Consider just some of these indicators:

The combination of strong job-creation with improvements in job security is supporting a welcome pick-up in wage growth. Average hourly wages rose 3.4 per cent in 2019. That’s the best since 2007 (just before the global financial crisis hit). And wage growth accelerated as the year went on, surpassing 4 per cent over the last half of the year.

Average incomes for Canadian workers are therefore growing significantly faster than inflation, generating an improvement in real purchasing power. After many years of relatively stagnant real incomes, this is welcome news indeed.

Sustained low unemployment and strong employment growth help to explain these improvements in the quality of jobs: employers must sweeten the wages and conditions they offer in order to attract and retain workers. But active government policy has also been important: including higher minimum wages in several provinces, expanded public services (sparking more public sector hiring) and incremental measures (for example, by the federal government) to facilitate unionization and collective bargaining.

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Nothing is more crucial to the well-being of society than ensuring that the vast majority of willing workers are able to find and keep decent work. Of course, Canadian economic and social cohesion has been undermined by decades of growing inequality and fragmentation. These recent improvements in the quantity and quality of work won’t be enough to fix those longer-term challenges.

But they do create an economic foundation for social progress that is overdue and promising. A commitment to sustained strong job-creation (as the top priority of macroeconomic and fiscal policy) and stronger policies to support job quality (like minimum wages and collective bargaining) will ensure that those improvements continue.

Jim Stanford is director of the Centre for Future Work and Harold Innis Industry Professor of Economics at McMaster University.

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