2017 Trends and the Impact on Workforce Compensation

This year brought a rise in Canadian employment. According to Statistics Canada’s October 2017 Labour Force Survey, on a year-over-year basis, total employment rose by 308,000 (+1.7%), with full-time work increasing by 397,000 (+2.7%) and the number of people working part time declining by 89,000 (-2.5%). On a year-over-year basis, total hours worked were up 2.7%.¹

It is undeniable that 2017 has brought much change to Canada’s labour market. From increasing pressure to raise minimum wage, the evolution of Bill 148 in Ontario, developments in globalization, potential changes in NAFTA, and the rise of virtual workers- the intricacies related to the manner in which we work, and are compensated have been impacted.

Change in Minimum Wage

October 1, 2017 marked the fourth consecutive year of minimum wage increases. Minimum wage now ranges from $10.35 to $13.60 across Canada. With continuing pressure to increase the minimum wage as high as $15/hour by 2019, as an employer, it’s essential to assess your current staffing levels and create a compensation strategy that works with the inevitable labour cost increases.

Bill 148 – Fair Workplaces Better Jobs Act

Bill 148 has now passed third reading which means that it is in the final stages of being enacted into law. It will cause substantial changes to compensation and staffing requirements in Ontario. The impetus for this change is the influx of economic change within society has put an economic strain on Ontario households.²

Amongst the list of items, this bill will:

• Increase the minimum wage to $15/hour by 2019
• Require equal pay for full-time, part-time, contract, temporary and seasonal labour
• Provide for scheduling, vacation and personal emergency leave entitlements

Economists predict a minimum wage increase to $15/hour will create a ripple effect for employees who already earn wages in that bracket. Also, the increase in wage means employers will pay more for items calculated as a percentage of pay, such as, payroll, taxes, CPP, EI, benefits and company pension attributions.

Globalization

Globalization is a trend that has influenced the Canadian Manufacturing sector for many years. Tariff Reductions, Free Trade Agreements and, reductions in transportation and communication costs, have fueled the growth of this trend.³ Manufacturing industries within Canada have faced intense international competition, especially from imports from low-wage developing countries. The 2017 increase in minimum wage, and the potential minimum wage increase only widens this gap in competition - making it difficult for Canadian manufacturing companies to compete.

In addition, the internet, technology and computer networking facilitates the outsourcing of other employment sectors such as Business, IT and Customer Service. As an example, it isn’t uncommon to contact a Canadian company’s help desk and be assisted by a representative in another country.

The increase in these globalization trends continues to affect the Canadian marketplace, and inevitably, the workforce’s compensation in these sectors.

The Re-Negotiation of NAFTA

The 2017 administration change in the United States brought the imminent re-negotiation of the North American Free Trade Agreement. A result that has brought the possibility of increased border taxes on goods imported to the United States. This pending change would have a huge impact on how Canadians trade, forcing us to consider trade options with Europe and Asia, and, putting Canadian Businesses in direct competition with American business.⁴

The Rise of Virtual Workers

One growing trend in the 2017 Canadian labour market is the rise of virtual workers. The global digital marketplace for workers, with online platforms such as Freelancer.com and UpWork, allow candidates from all over the world to create profiles, advertise their skills and bid on work. This trend is causing the dissemination of a variety of traditional labour positions such as administrative assistants, copywriters and marketing assistants. Employers are now able to source out projects to these sites where the cost of labour is cheaper - ultimately increasing their bottom line and affecting compensation.

Need help building a compensation plan that considers trends? Not a problem, we’ve done it for you! Adecco’s 2018 Compensation Guide provides insights into Canadian compensation data that’s segmented by role, province and company size. Contact your local Adecco branch to receive your complimentary copy.

¹ Labour Force Survey, October 2017
https://www.statcan.gc.ca/daily-quotidien/171103/dq171103a-eng.htm?HPA=1

² Bill 148: Fair Workplaces, Better Jobs Act, 2017, September 2017
http://www.occ.ca/wp-content/uploads/2013/05/Proposed-Changes-to-Ontarios-Employment-and-Labour-Laws-CANCEA-Final-September-2017.pdf

³ The Changing Workplaces Review – Final Report – Chapter 3, May 2017
https://www.ontario.ca/document/changing-workplaces-review-final-report/chapter-3-changing-pressures-and-trends

⁴ The Changing Workplaces Review – Final Report – Chapter 3, May 2017
https://www.ontario.ca/document/changing-workplaces-review-final-report/chapter-3-changing-pressures-and-trends