The loonie in employees’ pockets is becoming less and less valuable as a result of inflation, which is why salary expectations are undoubtedly increasing rapidly. According to Carolyn Rogers of the Bank of Canada, we must endeavor to keep wages under tight control while maintaining our competitiveness and retaining the skills our firms require.
The bank’s 2% target for inflation has been far exceeded by inflation, which was running at 7.6% in July and is now at 8.1%. As Rogers stated last week, the bank is concerned that a wage-price spiral could cause inflation to become entrenched in the Canadian economy as businesses raise prices to offset pay increases.
A day after the bank raised interest rates by 0.75%, Rogers told reporters that workers are “looking at the pace of inflation and what it’s doing to their buying power, their budgets, and they’re looking at the same tight labor markets and they’re thinking “I need a raise.”
Rogers, the bank’s senior deputy governor, has previously made remarks that some have taken to mean encouragement to keep wages low. She warned the Canadian Federation of Independent Business not to expect high inflation to linger for very long in mid-July. Don’t include that into longer-term agreements, she said. “Don’t include that in salary agreements. Although it will take some time, you can be sure that inflation will decrease.
