The wages of blue-collar workers in Canada have been steadily increasing over the years. Will this trend continue? In this article, we’ll gaze into the crystal ball to forecast where wage levels might go from here.
Knowing what to expect from wage levels is important for businesses planning their payroll budgets. Payroll is one of the highest expenses faced by businesses, so it is critical to manage this cost if they are to remain competitive.
Where Wages Are Now
According to the Economic Research Institute (ERI), the average hourly wage for workers in blue-collar industries in Canada in 2023 is $21 per hour. However, this average varies depending on the province, with Alberta having the highest average hourly wage and Quebec having the lowest.
Where are Blue-Collar Wages Headed?
Employers are predicting that, overall, blue-collar wages in Canada will continue to rise in the coming years. The ERI forecasts a 17% wage growth over just the next five years. This is due to several factors, including:
- Labour Shortages: Many industries are facing a shortage of skilled blue-collar workers. As a result, employers are having to offer higher wages and better benefits to attract and retain employees.
- Increased Demand: As the economy recovers from the pandemic, there will be an increased demand for blue-collar workers in industries such as warehousing and transportation. This increased demand will drive up wages.
- Cost of Living: The cost of living and inflation in Canada is expected to continue to rise, pushing wages up as workers demand higher salaries to keep up with higher costs for groceries, transportation, and housing (impacted by higher interest rates).
The region in which one operates is not the only factor that will affect wage levels – projections also vary depending on the industry.
Here are some possible scenarios for where wages for blue-collar workers may head based on the sector employing them:
- Increase in Wages – Industries such as construction and manufacturing are likely to see wages increase. This is because the demand for skilled labour is not expected to decrease, and there will likely be a shortage of blue-collar employees due to aging demographics and fewer new entrants into the workforce. Employers in these sectors may have to offer more competitive wages to attract and retain skilled workers.
- Stagnation of Wages – Blue-collar sectors with low demand or an oversupply of workers will likely see wage stagnation. This could be the case for industries like agriculture, where the demand for blue-collar roles is seasonal and dependent on weather conditions.
- Decrease in Wages – For industries like transportation and warehousing facing intense market competition, companies may have to resort to cutting wages to stay competitive.
Impact on Employers
Employers are concerned about the impact of rising blue-collar wages on their companies, and rightly so. Higher wages mean higher labour costs, which can eat into profits. Some employers may have to increase the prices of their products or services to offset the increased labour costs.
Some proactive employers are taking a different approach at controlling labour costs: flexible staffing. Flexible staffing strategies use a temporary, contingent workforce to meet periods of higher demand and scale back in times of declining demand. This has the benefit of keeping labour costs down without having to pass additional costs ontot he consumer.
Forewarned is Forearmed
Overall, blue-collar wages in Canada are expected to continue to rise in the coming years, driven by labour shortages in the job market, increased demand for blue-collar workers, and the cost of living. However, the direction of wages highly depends on the industry and the region.
Employers must be mindful of the trends for their specific sectors and regions, adjust their compensation strategies accordingly, and explore staffing strategies that offer flexibility and efficient use of payroll dollars.
Payroll will always need to be managed carefully. By understanding the mechanisms that drive wage levels, and implementing flexible staffing strategies to make their workforce deployment more efficient, savvy personnel managers can be prepared for whatever might come.