The combination of a fiercely competitive job market and the still-rising cost of living will likely lead to more companies boosting employee pay this year, experts say.
RBC economist
"Elevated demand for workers is firmly bumping up against limited supply and companies will need to do what they can to compete in an extremely competitive environment. And that includes raising wages," she said.
The latest Canadian jobs report revealed wage gains for permanent workers reached 4.5 per cent in May. When soaring consumer prices are factored in, those gains don't mean all that much, but it is a departure from the wage stagnation
Like its rivals, CIBC is gearing up to raise its base salary by three per cent come July. It is targeting workers in the first six levels of the bank, primarily those who regularly interact with clients face-to-face or through technology.
The bank is also increasing its minimum wage from
"They are the ones that feel the greatest impact from inflation," CIBC CEO
In addition to the
And he doesn't believe the pay boosts will have any sort of negative affect on CIBC's bottom line.
With corporate profits rising by
"Companies should have some buffer to withstand higher wages given extremely elevated consumer demand at the moment which is expected to continue to support business output, at least until the end of year," she said.
"Employers are going to have to shoulder greater risk than they have been if they want to address all the interruptions in services and supply chains we've been seeing," she said. "This is a big departure from the last 40 years, frankly, where many countries' and companies' economic growth strategies have been premised on low wages and precarious work."
She warns, however, that there will be significant negative effects on workers, like layoffs, if the
Wage increases is one of the variables the central bank is watching as it decides how much it is going to raise interest rates next month and beyond.
The
With the
If inflation manages to come back closer to the
"The
"Tighter monetary policy will help soak up that excess demand, and restore some balance into the labour markets such that supply of workers has time to catch up, and wage growth can then be normalized to levels close to the target range."
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