OTTAWA—Nearly two-thirds of Canadian workers’ wages are falling behind rising inflation, leaving them increasingly in a pressure cooker situation, according to a new report from the Canadian Centre for Policy Alternatives (CCPA).
The report, Pressure Cooker: Declining real wages and rising inflation in Canada during the pandemic, 2020-2022, examines wages across all industries and finds 64 per cent of Canadian workers have experienced real wage losses over the past two years, after adjusting for inflation.
“Contrary to suggestions that workers’ rising wages are contributing to rising inflation, the opposite is true: most Canadian workers’ wages are falling behind the rising cost of living,” says David Macdonald, CCPA Senior Economist.
One key finding in Pressure Cooker is that public sector workers’ wages over the past two years have grown at a slower pace than the 3.4 per cent average annual inflation: those who are working in public administration only had a 1.5 per cent a year pay increase; workers in education services only had a 1.6 per cent a year pay increase; workers in health care and social assistance only had a 2.1 per cent a year pay increase.
“Some provincial governments froze the salaries of nurses, PSWs and teachers, despite many of them working on the front lines of the COVID-19 pandemic,” Macdonald says. “The folks trying to keep us all safe should be first in line for a raise, certainly one that at least keeps pace with inflation. Unfortunately, they’ve been at the back of the line.”
The report finds that workers in some key industries fared better: Workers in information, culture and recreation had the biggest wage gains of all workers, at 5.2 per cent a year, driven by the demand for IT workers helping businesses adjust to working from home. Workers in manufacturing non-durables, like food and beverages had wage gains of 4.7 per cent a year. Wholesale trade and real estate workers both saw average gains of four per cent a year.
“Where we saw real wage gains in the past two years, it was for pandemic-related reasons: real estate agents benefiting from skyrocketing home prices, IT workers helping people work from home and wholesalers working through supply chain issues,” Macdonald says. “The theory that workers’ wages are driving inflation does not apply here. Rather, inflation is being driven primarily by rising commodity prices, excess corporate profits, supply chain issues and geopolitical disruptions with workers getting run over just like everyone else.”
Pressure Cooker: Declining real wages and rising inflation in Canada during the pandemic, 2020-2022, is available for download on the policyalternatives.ca website.
For more information and interviews please contact: Jolson Lim, CCPA Communications Specialist, at [email protected] or 613-413-0945.
The CCPA is an independent, non-profit charitable research institute founded in 1980.