According to the latest data from the Canadian Federation of Independent Business, workers in small businesses can expect a 3.3% wage increase over the next 12 months.
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While this is a long-demanded hike, it represents a 0.5% decline from last June’s estimates.
“Obviously, when people see inflation falling, employers and the labor market are affected, too,” said Simon Gaudreault, chief economist and vice president for national research at the Canadian Federation of Independent Business. That’s why we’ve passed the peak of the big gains.
Again, this is an increase well below inflation.
Result: The purchasing power of these workers will continue to fall unless the consumer price index (CPI) falls further.
By 2022, the inflation rate rose to 6.8%.
In March 2023 it was set at 4.3%.
“Salaries will always follow with some lag,” added Simon Gaudreault. For what? Since it is much faster to increase prices, we can adapt. On the other hand, if you go there with a salary increase, you have to be careful that this price increase is long-term, because it could go down again.
The past three years have not been easy for companies.
Currently, 20% of small business owners believe their business’ overall health is bad.
And only 34% would say the situation is fairly good, according to a survey by the Canadian Federation of Independent Business (CFIB).
In addition, Quebec’s confidence index is the lowest in Canada.
“In Quebec, we are more affected by labor shortages. More and more companies are reporting that they are struggling with the negative effects of labor shortages. In view of rising interest rates, we have to finance our activities. It’s starting to make a difference,” the CFIB said.
Statistics Canada is expected to publish the new inflation rate next Tuesday.
The Bank of Canada will announce its new policy rate in June, subject to change.