The Conference Board of Canada’s latest Labour Relations Data Hub has showed that in 2024, for the first time in three years, wage growth outpaced the Canadian inflation rate, which means that Canada has experienced real wage growth for the first time since the pandemic-era of the country.
In 2024, the average wage increased 3.0%, a figure which is up from the 1.1% that Statistics Canada reported in 2023. Inflation, on the other hand, had a rate of 2.4% in 2024, down from the 3.9% Canadian inflation rate seen last year, and back to a healthy spot for the first time since pre-COVID. Wage growth outpaced inflation by 0.6%, which means that the average Canadian’s wages became marginally more valuable for the first time in a few years in 2024.
The Conference Board of Canada reports that the strongest gains were seen in manufacturing, primary industries, and entertainment and hospitality. The lowest gains in wages were in the sectors of information and culture, education, health, and social services. Quebec and British Columbia saw the nation’s largest wage increases, while Alberta and Nova Scotia were the provinces with the wages that grew the least.
In 2024, labour disputes were still a significant issue, though they’d become significantly better from 2023. In 2023, work stoppages resulted in 6.6 million person-days lost, whereas this figure was just 2.3 million in 2024. Most of these days came from the transportation sector.
What Does Wage Growth vs the Canadian Inflation Rate Mean for Us?
Now that the increase seen in wages has exceeded the inflation rate, and that the Conference Board of Canada has already projected that this pattern will repeat itself in 2025, this means that Canadians are finally once again gaining wealth and purchasing power, rather than staying stagnant or outright losing it as in previous years. There are some more factors at play, and it’s not quite this simple, but the gist of it is that a worker’s wage is becoming more valuable.
This will affect every aspect of Canadian life from housing to grocery bills, to gas, and much more. Adding to this, the housing market is increasing in supply, and prices are showing some signs of stabilizing. All of this means that it is slowly becoming more affordable for Canadians to live once again.
The one factor that will affect 2025 wage growth in Canada which is quite difficult to measure is the looming possibility of numerous strikes and labour disputes in various sectors across the country. There are at least 143 collective agreements set to expire sometime this year in Canada, representing nearly a million unionized workers. Affecting sectors like education, health, and social services, these labour disputes will play a major part in shaping wage growth in Canada in 2025.
If you will remember, education, health, and social services saw the lowest level of wage increases in 2024. What this could mean is that when the time comes to renew collective bargaining agreements across the country, unions in these sectors may have greater demands, which could ultimately result in another year of high person-day losses.
In spite all of this, the Conference Board of Canada still projects wage growth to exceed the Canadian inflation rate in 2025, though they do conceded that this could be affected by the labour disputes. The Board discusses that successful negotiations will need to happen between the Government of Canada and the Public Service Alliance of Canada, as well as with major construction projects across Quebec.
Only time will tell how the relationship between wage growth and the Canadian inflation rate will continue to develop, but with an expected stable level of inflation over the next few years and seemingly comparatively stable wage increases, Canada may have finally seen the worst of its economic woes.
