(Bloomberg) -- A key indicator of Canada’s labor-market health remains depressed, even with the economy producing some of the biggest pay increases in years and the unemployment rate sitting at a four-decade low.
Workers are doubtful switching jobs would leave them better off financially, according to a Nanos Research Group poll conducted for Bloomberg News. Only one in 10 respondents said their wages would increase if they lost their jobs or chose to find a new one, while about seven in 10 said they’d probably be paid the same or less.
The poll suggests Canadians are skeptical the economy can generate the kind of sustained wage gains that would make them consider seeking new employment. That’s inhibiting labor churn, an indicator of a healthy market where workers feel free to leave one job to find something more suitable.
Economists believe job switching is an important source of productivity gains, and it’s a process Bank of Canada Governor Stephen Poloz recently said was worth nurturing.
“The research suggests that job sentiment does not connect with macroeconomic data on the low unemployment rate,” said Nik Nanos, chairman of the Nanos Research Group. “The forward look on wages is three times more bleak than positive and speaks to a significant level of anxiety.”
Workers in the Prairie provinces, still smarting from lower oil prices, reported the lowest levels of confidence in pay gains, along with women and older workers, the survey found.
The state of inertia in Canada’s labor market has become more entrenched since the last recession. The country’s rate of firings is the lowest in 40 years as companies become more reluctant to let workers go.
Voluntary turnover rates are also historically low, partly reflecting the lingering psychological effects from the recession and collapse in oil prices, as well as an aging workforce that may value job security over pay increases.
After a decade of wage weakness, however, the recent pay pick-up should eventually animate the market.
One measure released last week showed average hourly wages in May were 3.9 percent higher than a year earlier, the fastest growth since 2009. So-called wage-common, a composite gauge closely monitored by the Bank of Canada, is tracking annual gains of about 2.6 percent in the first quarter, according to estimates by the Royal Bank of Canada. That would be the fastest since 2015.
While higher pay poses some challenges for businesses and policy makers, there are many reasons to welcome it. For one, higher wages mean higher disposable incomes that would help the nation’s indebted households cope with the effects of rising interest rates. But promoting labor churn is another important reason.
The Nanos poll, however, suggest it may take some time before higher pay translates into a discernible effect on wage expectations.
The poll, a hybrid telephone and online random survey of 1,000 people, was taken between May 30 and June 3. The survey has a margin of error of 3.1 percentage points.
|Question: If you lost your job or chose to find a new job, do you believe your next job would pay: (%)|
|Canada||Male||Female||18 to 34||35 to 54||55 plus|
|Results by region|
©2018 Bloomberg L.P.