Canadian wages plummet
Canadian workers are failing to keep pace with the rising cost of living as average real wages continue to shrink dramatically, according to new data from Statistics Canada.
Real after-inflation wages have been dropping since the summer, and in September the average paycheques of Canadian workers declined outright — by 0.3 per cent to $872.75.
That means less money in Canadian pockets for Christmas gifts, but also for other necessities as workers cope with an uncertain economy, rising business pessimism and government restraint.
"The nominal wage gains being as soft as they are has created a condition where the average Canadian isn't keeping up with the cost of filling their grocery carts, filling their cars and heating their homes," said Derek Holt, a senior economist with Scotiabank.
Recent surveys suggest Canadians are still planning to spend pretty much as they have in the past this Christmas season, although more will seek out bargains at U.S. stores along the border.
But economists say that can't keep up and point out mostforecasts project consumers cutting back in the next year.
NDP finance critic Peter Julian called the loss in purchasing power outlined in the Statistics Canada report a "serious problem" and accused the federal government of indifference.
"They just don't seem to care," he said. "What we're seeing is lower paying jobs replacing higher paying jobs, we're seeing more part time jobs, we're seeing more and more levels of indebtedness — that's a toxic mess and should be no surprise to the government."
Living standard falls
With income from investments also soft because of the volatility in equity markets, analysts said it is fair to assume Canadians' average standard of living is also falling.
Finance Minister Jim Flaherty was not available to the media to discuss the earnings report. But in responding to questions in the Commons, Flaherty defended his policies, saying 600,000 jobs had been added to the economy since the recession.
The job creation record, however, gives only half the picture.
About one million more Canadians have entered the workforce since the recession, meaning there are close to 400,000 more unemployed, contributing to the still high 7.3 per cent unemployment rate.
CIBC economist Benjamin Tal noted that the recent downward trend in wages also coincides with weak jobs growth over the past four months. His own research suggests many of the jobs recovered since the recession have been of the low-paying variety.
"The composition of jobs is getting worse, namely you have more jobs in low-paying jobs," he explained.
"There's clearly a movement from high-paying professionals, public sector and construction jobs to low-paying service and retail. Even within manufacturing, there's a movement from high-paying manufacturing jobs to lower-paying."
Aside from how weak income growth affects individual Canadians, the trend is a worrying signal for the economy overall, the analysts said. Consumers represent a major component of the Canadian economy and any slowdown in spending will depress growth.
Tal said Canadians can always dip into savings to compensate, but that is also problematic because household debt is already at record levels relative to disposable income. "The consumer is starting to slow down and we also see consumer credit is softening," he said. "What we are going to see is that business investment is the only (driver) of the economic expansion."
The Statistics Canada data puts in context a new outlook by the Conference Board and the Business Development Bank of Canada that projects industries dependent on consumer spending will experience sluggish growth and profits over the next five years. The industries analysed were retail sales, accommodation, food and beverage manufacturing, restaurants and catering, transportation and warehousing, and wholesale trade.
"Several industries profiled in this outlook have recovered from the 2008-09 recession, but the prospects for continued growth are muted because of weak consumer and business confidence, as well as high household debt levels," explained Michael Burt of the Conference Board's industrial economic trends division.
The Bank of Canada has projected growth in the economy overall will slow to 1.9 per cent next year, after expanding by 2.1 per cent in 2011 and 3.2 per cent in 2010.
Canadian wages plummet - Business - CBC News
Gonna be pretty hard to make that delayed budget projection Flaherty just announced.
Canadian workers are failing to keep pace with the rising cost of living as average real wages continue to shrink dramatically, according to new data from Statistics Canada.
Real after-inflation wages have been dropping since the summer, and in September the average paycheques of Canadian workers declined outright — by 0.3 per cent to $872.75.
That means less money in Canadian pockets for Christmas gifts, but also for other necessities as workers cope with an uncertain economy, rising business pessimism and government restraint.
"The nominal wage gains being as soft as they are has created a condition where the average Canadian isn't keeping up with the cost of filling their grocery carts, filling their cars and heating their homes," said Derek Holt, a senior economist with Scotiabank.
Recent surveys suggest Canadians are still planning to spend pretty much as they have in the past this Christmas season, although more will seek out bargains at U.S. stores along the border.
But economists say that can't keep up and point out mostforecasts project consumers cutting back in the next year.
NDP finance critic Peter Julian called the loss in purchasing power outlined in the Statistics Canada report a "serious problem" and accused the federal government of indifference.
"They just don't seem to care," he said. "What we're seeing is lower paying jobs replacing higher paying jobs, we're seeing more part time jobs, we're seeing more and more levels of indebtedness — that's a toxic mess and should be no surprise to the government."
Living standard falls
With income from investments also soft because of the volatility in equity markets, analysts said it is fair to assume Canadians' average standard of living is also falling.
Finance Minister Jim Flaherty was not available to the media to discuss the earnings report. But in responding to questions in the Commons, Flaherty defended his policies, saying 600,000 jobs had been added to the economy since the recession.
The job creation record, however, gives only half the picture.
About one million more Canadians have entered the workforce since the recession, meaning there are close to 400,000 more unemployed, contributing to the still high 7.3 per cent unemployment rate.
CIBC economist Benjamin Tal noted that the recent downward trend in wages also coincides with weak jobs growth over the past four months. His own research suggests many of the jobs recovered since the recession have been of the low-paying variety.
"The composition of jobs is getting worse, namely you have more jobs in low-paying jobs," he explained.
"There's clearly a movement from high-paying professionals, public sector and construction jobs to low-paying service and retail. Even within manufacturing, there's a movement from high-paying manufacturing jobs to lower-paying."
Aside from how weak income growth affects individual Canadians, the trend is a worrying signal for the economy overall, the analysts said. Consumers represent a major component of the Canadian economy and any slowdown in spending will depress growth.
Tal said Canadians can always dip into savings to compensate, but that is also problematic because household debt is already at record levels relative to disposable income. "The consumer is starting to slow down and we also see consumer credit is softening," he said. "What we are going to see is that business investment is the only (driver) of the economic expansion."
The Statistics Canada data puts in context a new outlook by the Conference Board and the Business Development Bank of Canada that projects industries dependent on consumer spending will experience sluggish growth and profits over the next five years. The industries analysed were retail sales, accommodation, food and beverage manufacturing, restaurants and catering, transportation and warehousing, and wholesale trade.
"Several industries profiled in this outlook have recovered from the 2008-09 recession, but the prospects for continued growth are muted because of weak consumer and business confidence, as well as high household debt levels," explained Michael Burt of the Conference Board's industrial economic trends division.
The Bank of Canada has projected growth in the economy overall will slow to 1.9 per cent next year, after expanding by 2.1 per cent in 2011 and 3.2 per cent in 2010.
Canadian wages plummet - Business - CBC News
Gonna be pretty hard to make that delayed budget projection Flaherty just announced.
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