The Causes and Consequences of Low Wage Growth in Canada

In a recent Economic Viewpoint, we did a review of wage growth in Canada. We have determined that wage developments may not be as worrying as elsewhere, but we can hardly say that it is vigorous. This Economic Viewpoint follows up on this analysis and discusses, among other things, the outlook for wage growth. In the near term, the rebound in productivity observed recently in Canada bodes well for wage growth. In the longer term, the effect of new technologies, which are increasingly becoming labour-saving, will have to be monitored closely, even in sectors that were thought to be safe from this phenomenon. The persistence of such a situation could maintain downward pressure on the share of GDP that goes to compensate the labour force. Such dynamic would have ramifications for inflation, financial stability, the finances of households, and also those of governments.