{"id":11788,"date":"2018-12-13T08:00:03","date_gmt":"2018-12-13T13:00:03","guid":{"rendered":"https:\/\/www.hiringlab.org\/en-ca\/?p=11788"},"modified":"2018-12-13T08:00:03","modified_gmt":"2018-12-13T13:00:03","slug":"2018-ca-labour-review-2019-outlook","status":"publish","type":"post","link":"https:\/\/www.hiringlab.org\/en-ca\/2018\/12\/13\/2018-ca-labour-review-2019-outlook\/","title":{"rendered":"2018 Canadian Labour Market Review and 2019 Outlook"},"content":{"rendered":"\n

The Canadian labour market is much tighter than it was two years ago. Last year, falling unemployment was the big story, which turned into rising job vacancies this year. While job growth slowed following a banner 2017, these trends suggest continued labour market strength, and that Canada could be running out of workers to maintain the recent pace of employment growth, at least outside of oil-producing regions.<\/p>\n\n\n\n

However, still missing from the story is a pickup in wage growth. All eyes, including the Bank of Canada\u2019s, will be watching for signs of stronger gains in compensation, which are key for improving living standards. What happens on the pay front will help clarify how tight the labour market really is.<\/p>\n\n\n\n

A supportive economy has underpinned these labour market developments, but concerns are growing as we head into 2019. Some Canadian economic indicators have softened of late, the oil sector is troubled, and global financial markets have been volatile in recent months. Hopefully these developments will prove short-lived and won\u2019t reverse the notable progress made in recent years.<\/p>\n\n\n\n

1. Momentum slowed in 2018, but the job market remains in decent shape<\/strong><\/p>\n\n\n\n

In 2017, the Canadian labour market posted its largest annual jobs increase in years. Employment growth cooled in 2018, but the significant progress made last year wasn\u2019t derailed. Moreover, how pronounced this slowdown was depends on which Statistics Canada employment measure you look at.<\/p>\n\n\n\n

The 2018 drop in job growth was immediate and noticeable, according to the widely followed Labour Force Survey (LFS), which polls households. Employment growth hit 2.3% at the end of 2017 before a sharp pullback in January. Even with a record-large jump in jobs in November, the pace has still eased to 1.2%. In contrast, the slowdown in job growth was relatively mild, according to business payroll data tracked by the Survey of Employment, Payrolls, and Hours (SEPH). Year-over-year growth fell from 2.2% in December 2017 to 1.8% in September. This discrepancy between Canada\u2019s two main employment measures makes it tricky to gauge recent momentum, though both show some slowing.<\/p>\n\n\n\n

\"Job
Line graph titled “Job growth slowed more according to households than businesses.” With a vertical axis ranging from 0% to 3%, Indeed tracked year-over-year Canadian employment growth along a horizontal axis ranging from January 2016 to January 2019 with lines representing “Businesses” and “Households.” Year-over-year growth fell from 2.2% in December 2017 to 1.8% in September 2018. Caption added post-publication.<\/figcaption><\/figure>\n\n\n\n

Still, even the weaker LFS numbers suggest the Canadian job market is in decent shape. The share of Canadians age 15 to 64 with a job — the working-age employment rate — dropped at the start of the year, but by November had returned to its all-time high of 74.1% reached last December.<\/span><\/p>\n\n\n\n

\"The
Line graph titled “The working-age employment rate is at its all-time high.” With a vertical axis ranging from 70.5% to 74.5%, Indeed tracked the Canadian employment rate of 15 to 64 year-olds along a horizontal axis ranging from 2004 to 2019. By November 2018, the share of Canadians with a job returned to its all-time high of 74.1%. Caption added post-publication.<\/figcaption><\/figure>\n\n\n\n

The performance of the unemployment rate roughly matched these movements in the working-age employment rate, dipping to its lowest level since data has been consistently recorded. Not only is joblessness down, but the share of part-time workers who\u2019d rather work full-time hours <\/span>has also fallen<\/span><\/a>. Even with job growth slowing in 2018, labour markets in most provinces remain in good shape.      <\/span><\/p>\n\n\n\n

2. Employers reported growing hiring difficulties in 2018<\/b><\/p>\n\n\n\n

With business conditions in the Canadian economy generally solid and an aging population moving into retirement, employers are looking to hire. Job vacancies hit a record high of just under 550,000 in the second quarter, up 19% from a year earlier. The share of full-time job openings also rose to 72.5% in the second quarter from 69.9% a year earlier, a sign that employers have significant hours to fill.<\/span><\/p>\n\n\n\n

\"Job
Line graph titled “Job vacancies hit record high in 2018 Q2.” With a vertical axis ranging from 250,000 to 550,000, Indeed tracked job vacancies along a horizontal axis ranging from quarter one 2015 to quarter two 2018. Job vacancies hit a record high of just under 550,000 in the second quarter of 2018, up 19% from a year earlier. Caption added post-publication.<\/figcaption><\/figure>\n\n\n\n

However, not all these job openings are getting filled. The Bank of Canada\u2019s Autumn Business Outlook Survey found 37% of businesses reported labour shortages affecting current operations, the highest share since the 2008 financial crisis. Moreover, increased hiring difficulty isn\u2019t just confined to certain specialized jobs. The Canadian Federation of Independent Businesses finds a growing share of businesses also identify <\/span>shortages of unskilled and semi-skilled workers<\/span><\/a> as impediments to expansion. How employers navigate this tougher hiring environment is shaping up as a key question for the Canadian labour market in 2019. <\/span><\/p>\n\n\n\n

\"Over
Line graph titled “Over a third of firms report labour shortages – highest since 2008.” With a vertical axis ranging from 0% to 40%, Indeed tracked the shortage of labour restricting ability to meet demand along a horizontal axis ranging from 2008 to 2018. In 2018, 37% of businesses reported labour shortages affecting current operations, the highest share since the 2008 financial crisis. Caption added post-publication.<\/figcaption><\/figure>\n\n\n\n

3. Will a tighter labour market finally translate into wage growth?<\/b><\/p>\n\n\n\n

Missing from the current picture is strong wage growth, a theme <\/span>common in several labour markets<\/span><\/a> across the world. Despite spreading reports of hiring difficulties, the Bank of Canada\u2019s wage-common indicator — which provides a unified signal from various hourly wage measures — rose a fairly modest 2.4% year-over-year in the third quarter. This pace roughly matches wage growth seen between 2012 and 2014, even though the labour market is in stronger shape today.<\/span><\/p>\n\n\n\n

\"A
Line graph titled “A tighter labour market hasn’t yet shown up in wage growth.” With a vertical axis ranging from .5% to 4.5%, Indeed tracked the Bank of Canada wage-common indicator along a horizontal axis ranging from 2004 to 2018. The wage-common indicator rose 2.4% year-over-year in the third quarter of 2018. Caption added post-publication.<\/figcaption><\/figure>\n\n\n\n

Both recent and long-term factors appear to be weighing on wage growth in the face of a tighter labour market. These range from lingering effects of the oil price drop to global trends reducing productivity growth, such as <\/span>falling entry rates of new businesses<\/span><\/a>. <\/span><\/p>\n\n\n\n

Still, none of these factors rule out the potential for paychecks to post larger increases going forward. If demand for workers remains high amid a low and stable unemployment environment, something\u2019s got to give. <\/span>Broadening the search for candidates<\/span><\/a> can help employers looking to hire, while further reducing the unemployment rate. Still, some employers will find it tough to find workers without offering higher wages. <\/span><\/p>\n\n\n\n

The Bank of Canada and financial markets will be following wage growth closely in 2019. The Bank currently expects a pickup, which represents an important component in its forecasts. As a result, surprises either way — jumps or a continued flat trend — are likely to influence monetary policy expectations. At the same time, how supportive the current economic environment is for strong wage growth varies by region. <\/span><\/p>\n\n\n\n

4. Labour markets in oil-producing provinces still struggling<\/b><\/p>\n\n\n\n

Jobs might be plentiful in Canada overall, but oil-rich provinces are lagging. Several labour market indicators across Alberta, Saskatchewan, and Newfoundland have barely improved since the 2015 downturn, while job vacancy rates are below the national average.  <\/span><\/p>\n\n\n\n

One of the notable differences across regional labour markets is the <\/span>contrasting trends in average duration of unemployment<\/span><\/a>. Typical jobless spells in oil-producing provinces like Alberta and Saskatchewan used to be the shortest in the country. Now though, they average 21 weeks (on a 12-month moving average basis), six weeks longer than in mid-2014. In contrast, there\u2019s been gradual progress in the rest of Canada, where unemployment duration is down nearly four weeks over the same period. The Canadian labour market won\u2019t be a full good-news story until jobless spells see further reduction, especially in oil-rich regions. <\/span><\/p>\n\n\n\n

\"Jobless
Line graph titled “Jobless spells are elevated in oil-producing provinces.” With a vertical axis ranging from 10 to 24 weeks, Indeed tracked the average duration of unemployment along a horizontal axis ranging from 2004 to 2018 with lines representing “Alberta, Saskatchewan, New Foundland and Labrador” and “Rest of Canada.” 2018 jobless spells in oil-producing provinces average 21 weeks, six weeks longer than in mid-2014. Caption added post-publication.<\/figcaption><\/figure>\n\n\n\n

5. Will the economy support a healthy labour market in 2019? <\/b><\/p>\n\n\n\n

While labour market data isn\u2019t flashing yellow, other Canadian economic indicators have softened of late, including underwhelming third-quarter GDP growth. Combined with recent volatility in global financial markets, these jitters were enough for the Bank of Canada to downgrade the tone of its outlook this month as it kept its policy rate unchanged. Since the financial crisis, global growth has tended to rebound from bouts of uncertainty like the current one. Nevertheless, concerns remain.  <\/span><\/p>\n\n\n\n

One risk to the Canadian labour market is that ongoing challenges in key sectors such as natural resource extraction and housing-related industries could start weighing more heavily on hiring. Both sectors face major headwinds, including a <\/span>widening oil price gap in the resource sector<\/span><\/a>, and slowdowns in home sales and housing starts. So far though, payrolls in these industries are down just slightly from their recent highs, but larger declines are possible in the period ahead.    <\/span><\/p>\n\n\n\n

The Canadian labour market is at somewhat of a crossroads heading into 2019. A nice improvement in job market conditions in 2017 followed by reports of hiring difficulties in 2018 have created an environment that should support wage growth. But will it come? And will the broader economic conditions that have boosted the labour market in recent years persist? These are some of the key themes we\u2019ll be watching in the year ahead.   <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Will a Tighter Labour Market Boost Wage Growth?<\/p>\n","protected":false},"author":38,"featured_media":14057,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"recruiter-hub-blocks.php","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"post_mwm_category":[715],"post_topic":[],"post_content_type":[],"post_duration":[],"post_actions":[],"post_franchise":[],"post_mwm_author":[670],"class_list":["post-11788","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","post_mwm_category-state-of-the-labour-market","post_mwm_author-bbernard"],"acf":[],"yoast_head":"\n2018 Canadian Labour Market Review and 2019 Outlook - Indeed Hiring Lab Canada<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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