Small businesses expect to increase wages by an average of 3.3 per cent over the next 12 months, according to the latest Canadian Federation of Independent Business (CFIB) Business Barometer®.
While average wage increase plans remain elevated by historical standards, they are down after peaking at 3.6 per cent in June 2022, said the report.
“Wage plans would have to further moderate to bring inflation within the Bank of Canada’s target range of one per cent to three per cent, however they are really not that far off and, quite frankly, show a sensible approach in the current inflationary context. Small businesses, while responding with higher than usual wage increases, are not really the ones fueling the inflation fire at the moment,” said Simon Gaudreault, Chief Economist and Vice-President of Research at CFIB.
“This also puts public sector unions’ current wage increase demands into perspective. Small and medium-sized businesses—the backbone of the private sector and an important group of middle-class taxpayers—simply can’t keep up with such requests, which would also put them at a significant disadvantage as employers in a tight labour market.”
The CFIB is Canada’s largest association of small and medium-sized businesses with 97,000 members across every industry and region.
The CFIB said average price plans remained unchanged at 3.5 per cent in April, but are still on a significant downward path since peaking at 4.9 per cent in May 2022.
“Wages tend to be stickier than prices, so it’s normal for price increases to be ahead of wage increases. It takes more time for wages to adjust. When prices go up, wages don’t go up as much because by the time they do, prices could have already come down. Currently, both price and wage plans seem to be past their peaks and on a general downward trend, which is frankly good news for the economy,” said Andreea Bourgeois, Director of Economics at CFIB.
As for the current business situation and perspectives, slightly more businesses reported their general situation as bad this month (20 per cent), while fewer reported it as good (34 per cent) compared to last month. The long-term small business confidence index in April crept up by less than half a point to 55.7 and, while on a general upward trend in recent months, remains well below its historical average of 61, indicating some way to go before economic perspectives are back to normal on Main Street., said the CFIB.
(Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald, covering sports, crime, politics, health, faith, city and breaking news, and business. He works as well as a freelance writer for several national publications and as a consultant in communications and media relations/training. Mario was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)
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