Almost two-thirds of Canadians earn less than
the average wage
TORONTO, Nov. 28, 2016 /CNW/ - More Canadians could have
trouble weathering future economic downturns than in the past due
to a steady decline in job quality over the last 20 years, finds a
new report by CIBC Capital Markets.
"Is the quality of employment in Canada on the decline? We think so," says
Benjamin Tal, Deputy Chief
Economist, CIBC Capital Markets, who authored the
report, On The Quality of Employment in Canada. "The share of low-paying jobs in
Canada has been on the rise in the
past two decades and might provide some insights on the ability of
workers, in aggregate, to absorb future economic shocks."
Mr. Tal looked solely at wages in his analysis, using
unpublished data from Statistics Canada.
The report finds that the share of Canadians making less than
the average wage each year has crept up to nearly 61 per cent from
about 58 per cent over the last 20 years. The average wage today is
about $25 an hour.
"Lower quality employment might help explain the sluggish growth
in personal income," Mr. Tal says.
The report digs deeper to rule out demographic issues that can
skew job quality trends, in particular, the declining share of
young Canadians and the rising share of older Canadians. For
Canadians in their prime working years (age 25 to 54 years), 53 per
cent make less than the average wage today, up 3 per cent from 20
years ago.
"The story is the same: The share of lower-paying jobs has been
on the rise," Mr. Tal says.
Interestingly, the most significant increase in the
below-average paying jobs category occurred among those in the wage
range of between 50 per cent and 100 per cent of the average wage
in a given year. That group has seen its number rise by close to
two million since 1997. No less than 6.7 million workers fall into
that wage category.
The report also looks at wage growth by wage percentile and
found further evidence of a widening income gap.
"The good news is that those at the lowest end of the wage
spectrum are seeing relatively healthy wage gains – not due to
bargaining power but mostly due to policy changes regarding minimum
wages," Mr. Tal says. "But the group closer to the middle of the
wage spectrum has seen sub-par growth."
Mr. Tal also examined three alternative proxies of job quality,
part-time and full-time paid-employment and self-employment.
The share of Canadians working in part-time employment made an
"unmistakeable jump" to 20 per cent during the 2009 recession from
its more-consistent 18 per cent level in the previous decade,
the report notes. Mr. Tal highlights that the share of part-time
workers has yet to return to pre-recession levels, sitting
currently at 19.5 per cent.
The report says that from a full-cycle perspective, the rise in
part-time employment probably reflects some demographic forces as
the majority of this increase was among workers above the age of
55.
"However, the fact that half of the increase in part-timers
among that age group accrued during the recession suggests that
beyond pure demographics, there is an element of fragility here,"
Mr. Tal says.
About CIBC
CIBC is a leading Canadian-based global financial institution
with 11 million personal banking and business clients and three
major business units – Retail and Business Banking, Wealth
Management and Capital Markets. CIBC Capital Markets provides
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Visit www.cibccm.com for more information on CIBC and CIBC Capital
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www.cibc.com/ca/media-centre/.
SOURCE CIBC - Economic Research