Heading into another period of economic uncertainty, the Government of Ontario recently released the 2022 Ontario Economic Outlook and Fiscal Review titled Ontario’s Plan to Build: A Progress Update.
As per the Ontario Chamber of Commerce (OCC), Ontario’s economic outlook remains uncertain against a backdrop of higher interest rates, inflation, labour shortages, and supply chain disruptions.
The OCC provided a thorough analysis of the economic update. Here are some key highlights for the business community:
The government announced plans to:
Other Business Tax Measures
The government announced plans to:
The government announced plans to:
The government announced plans to:
Cost of Living
The government announced plans to:
Next week we’ll look at what’s missing from the Ontario Economic Outlook and Fiscal Review and look at what will help create a clear and predictable path towards long-term growth, productivity, resilience, and competitiveness.
Tourism has been one of the hardest hit sectors in Ontario and continues to struggle to rebuild and recover.
It has been impacted by border closures, capacity restrictions, and lockdowns.
The Tourism Industry Association of Ontario (TIAO) and Ontario Chamber of Commerce (OCC) have worked together on the State of the Ontario Tourism Industry Report, which explores a blueprint for growth and recovery of the tourism industry with practical recommendations for immediate and long-term challenges.
Core issues found in the report include labour shortages, regulatory burdens, infrastructure deficits and regional disparities.
While just about every sector is impacted by workforce challenges, few have more issues than tourism. It had to lay off and reduce hours for a significant amount of its workforce. When the borders reopened and capacity limits lifted, that workforce had moved on and taken with it years of experience and expertise. The knowledge gap left behind means that businesses aren’t just looking for whomever is interested in working for them, but they need skilled workers to handle operations and train newer staff.
Adding further challenges is the rural aspect of many tourism operations, especially through the Kawarthas. Access to local labour has dwindled as populations age. Those interested in moving to cottage country are going to struggle to find a home they can afford or even anything to rent. Businesses hoping to attract workers from the city are struggling to find people willing and able to commute since car access is typically the only option.
Lack of adequate high-speed internet is also a significant challenge. It’s more than a convenience for guests — stable and fast internet has become a critical part of business operations. As businesses try to make do with less, they’re turning to technology that can help with overall efficiency including customer relationship management systems, bookkeeping, marketing, scheduling, booking, etc.
Indigenous tourism economies across Ontario have been especially at a disadvantage due to many of these rural challenges.
Even the weather and climate change have impacted tourism in the region with several significant weather events. Some tourism sites are still cleaning up damage from the spring and likely will continue to do so for some time.
The TIAO and OCC report came back with some key recommendations:
• Workforce development initiatives should focus on communicating the business case for careers in the tourism industry, reforming immigration to retain and attract international talent, and optimizing work placement opportunities for post-secondary students.
• Eliminating barriers to growth should involve revisiting taxes for the industry. For example, elimination/deferral of the annual basic beer tax increase, federal excise taxes and revisiting Municipal Accommodation Taxes.
• Emerging markets should be explored, including intercultural exchanges with Indigenous and Francophone tourism sectors, as well as cannabis tourism and agritourism.
• Gaps in public transportation need to be addressed within and between Ontario destinations.
• Access to reliable, high-speed broadband is critical to participating in an increasingly digital economy.
• A provincial strategy should place special emphasis on alleviating regional and sector disparities. Northern Ontario, as well as border cities and the business, events and conference sector, lag significantly behind pre-pandemic levels.
Prior to the pandemic, tourism in Ontario was a $36 billion industry with 200,000 tourism businesses paying more than $5 billion in taxes and directly employing 400,000 people.
It’s going to take a coordinated approach to build back bigger and better. We need all levels of government and their various ministries to communicate and coordinate the recovery of the tourism sector to help our local economy and communities thrive.
Forecasting our economic future is challenging to say the least.
Economists are using phrases like “there’s no playbook for this.” It’s tough to find data on how global economies will react after going through years of global pandemic, a war in Europe, and record inflation that governments are trying to cool through measures that will likely lead to recession.
What we do know is that many of our current challenges aren’t going away in the short term and new struggles will likely arise in months to come.
On that note, the federal government’s Fall Economic Statement was heavy on supports and vision for building toward future goals.
You can read the full Fall Economic Statement here, but some key takeaways for the business community include:
The Government of Canada is making it clear that our future lies in investments in reaching net-zero. This includes training the workforce for sustainable jobs, attracting private sector investment to projects that reduce emissions and drive innovation in technologies that help achieve Canada’s climate targets, investing in clean technology manufacturing, and building our critical mineral strategy to grow our economic with sustainably developed clean technologies and goods.
Additionally, the federal government plans to roll out a tax credit for investment in clean technology. This refundable tax credit of 30% would offset costs for investing environmentally-friendly electricity generation, storage, heating equipment, industrial zero-emission vehicles.
The government is taking action the National Supply Chain Task Force’s recommendations, including addressing regulatory issues to improve efficiency and resiliency of our supply chains, modernizing cargo and clearance inspection practices, improving data reporting and monitoring, and investing in improving access to our international gateways.
The government plans to launch a Canadian Innovation and Investment agency to work to help new and
established Canadian firms innovate, commercialize research, and create new economic opportunities for workers and businesses in Canada. The government is also planning to modernize the National Research Council’s scientific infrastructure and help continue to propel Canadian innovation.
Investing in Canada Infrastructure Program is providing $33.5 billion for public infrastructure across Canada. Under this program, provinces and territories prioritize and submit projects to Infrastructure Canada for review.
The federal government is looking to boost immigration to 500,000 immigrants in 2025 with a focus on skilled labour sectors that are struggling with workforce shortages, including healthcare, manufacturing, and the building trades.
The government is looking to create a Scientific Research and Experimental Development tax incentive program, introduce a corporate-level 2% tax that would apply on the net value of all types of share buybacks by public corporations in Canada, and reaffirmed its commitment to the global minimum tax on large corporations.
The quarterly economic statements are a tool to highlight the previous budget allocations in more detail while hinting at what is to come in the next year’s budget.
For the upcoming 2023 federal budget, the Ontario Chamber of Commerce has set out some priorities for the federal government:
• Increase Ontario’s allocation of economic immigrants under the Ontario Immigrant Nominee Program, address the backlog of immigrants, and streamline recognition of foreign credentialing for sectors with pressing labour shortages.
• Invest in supply chain infrastructure to address bottlenecks along the supply chain, especially at ports.
• Protect Canada’s clean energy advantage by optimizing existing assets – such as nuclear and hydroelectricity – as well as incentivizing long-term investments in emerging technologies such as carbon capture and zero-emission vehicles.
• Modernize regulatory frameworks to enable growth in industries like mining and cannabis.
• Prioritize working with provinces and territories to remove barriers to interprovincial labour mobility and trade.
• Increase Canada Health Transfer Payments to meet the current and future pressures facing Canada’s universal health care system.
• Reform the federal tax system to attract foreign direct investment, drive domestic business growth and innovation.
It’s hard to predict what exactly will unfold in coming months. Whether we’re in recession, recovery, or growth — investing in the private sector is crucial to our success in moving toward goals of reducing greenhouse gas emissions and generating economic prosperity across Canada.
When it comes to investing in our businesses, some areas are easier to convert to dollars and cents return on investment.
In a time when many businesses are struggling to attract talent, it’s critical that we invest in the workforce we have. According to JobSage, 28% of surveyed workers left their jobs due to poor mental health.
According to a report from the Canadian Mental Health Association (CMHA), it’s estimated that 12 billion worked days are lost every year to depression and anxiety, costing about $1 trillion US in lost productivity.
According to Occupational Health and Safety Canada Magazine, mental health services cost Canada $50 billion annually, with $20 billion stemming directly from workplace trauma. Deloitte found poor mental health accounts for 30 – 40% of short-term disability claims and 30% of long-term disability claims.
Poor work environments, including discrimination, inequality, excessive workloads, low job control and job insecurity all pose risks to mental health. This all comes on top of stresses from home and more than two years of dealing with a global pandemic.
While mental health struggles happen outside of the work environment, the nature of our place of work being where many of us spend more waking hours than anywhere else means that whether or not the workplace is contributing to the situation, it certainly plays a role in how someone is able to deal with it.
According to the Mental Health Commission of Canada:
Workplaces can play an essential part in maintaining positive mental health. They can give people the opportunity to feel productive and be a strong contributor to employee wellbeing. Yet it can also be a stressful environment that contributes to the rise of mental health problems and illnesses. No workplace is immune from these risks and we cannot afford to limit our definition of occupational health and safety to only the physical.
The CMHA offers a number of workplace mental health solutions for employers across Canada:
Not Myself Today: Through this employee wellness platform, employees can access helpful tips, learning modules and other resources to improve their mental health at work. The platform helps to build an open and supportive workplace by cultivating meaningful conversations and deeper understanding about mental health and wellness in the workplace.
Customized Training: CMHA offers in-person or virtual workshops based on the needs and interests of your employees. From building resilience and managing stress, to returning to work and coping with change, their facilitators can work with you to deliver the right workplace mental health training for your team.
Psychological Health & Safety Courses: Psychological Health & Safety training is designed for individuals who are working to improve psychological health and safety in their workplaces and/or to implement the National Standard of Canada for Psychological Health and Safety in the Workplace.
It’s often easier to see the direct results of investing in skills, training and the physical health of our workforce. But mental health is too big of a deal not to invest in. These investments can lower turnover, increase productivity, and reduce absenteeism. A mentally healthy workplace is not just going to show up, but be there ready to engage, innovate, and help a business thrive.
As our economy shifts into recovery mode, so have the funding lifelines
We’ve moved from emergency funding to get through shutdowns to investing in what our businesses need to deal with current challenges and position them for the future.
Here is a brief rundown of some of the programs available:
Talent Opportunities Program (Up to $7,000)
Are you an employer hiring post-secondary students on work-integrated learning (WIL) placements, such as cooperative education and internships? If so, you may be eligible for a wage subsidy of up to $7,000 per student!
The Talent Opportunities Program (TOP) is an initiative of the Ontario Chamber of Commerce designed to help employers located anywhere in Canada hire college and university students on WIL placements. Employers hiring eligible students may receive a wage subsidy up to 50% of the wages (to a maximum of $5,000) for each ‘net new’ placement or 70% of the wages (to a maximum of $7,000) for each ‘net new’ placement for the following under-represented groups: Indigenous people, person with disabilities, newcomer to Canada, first year student, visible minority and/or women in STEM.
Grow Your Business Online Grant (Up to $2,400)
As part of the Canada Digital Adoption Program, the Government of Canada has partnered with the Ontario Chamber of Commerce to deliver the Grow Your Business Online grant.
Through this program, small business owners can receive a micro-grant worth up to $2,400 to help get their business online, give their e-commerce presence a boost, or digitalize business operations. Grant recipients must commit to maintaining their digital adoption strategy for at least six months.
Boost Your Business Technology (Up to $15,000 + 0% loan)
Eligible businesses can leverage the grant to pay for the services of a digital advisor. These advisors will work with companies to recommend digital pathways and strategies that will help them achieve their business goals and increase their competitiveness in the digital economy.
The grant covers up to 90% of the eligible cost of retaining the services of a digital advisor, up to a maximum grant value of $15,000 per SME, to develop a digital adoption plan.
Businesses also have the opportunity to secure a 0% interest loan from the Business Development Bank of Canada (BDC) to facilitate the acquisition of new technology. In addition, applicants can leverage the help of talented post-secondary students and recent graduates through subsidized work placements.
Canada-Ontario Job Grant (Up to $10,000)
The Canada-Ontario Job Grant provides direct financial support to individual employers or employer consortia who wish to purchase training for their employees. It is available to small, medium and large businesses with a plan to deliver short-term training to existing and new employees.
Businesses can get some assistance from local employment organizations.
Digital Main Street (Up to $2,500 + free training)
Peterborough and the Kawarthas Chamber of Commerce has partnered with acorn30 to provide local businesses with a Digital Main Street Digital Service Squad. Squad members are available for free one-on-one assistance to small businesses to assess their digital needs and create plans to meet digital goals. The squad can also help businesses apply for a $2,500 Digital Transformation Grant to put toward digital marketing, website work, software, training, and hardware.
For more info, contact Clarance D'Silva email@example.com or visit https://digitalmainstreet.ca/ontariogrants/
Government of Canada Business Benefits Finder
The Government of Canada now has a business benefits finder to help businesses find the right programs and services, whether you’re starting out or scaling up. Enter some details about your business and it will pull up all the available federal programs.
Available funding opportunities from the Ontario Government
The Government of Ontario has a single-point access page listing current business support programs for various sectors, skills, and workforce investments.
Community Futures Peterborough (Micro Loans up to $20,000, Small Business Loans up to $250,000)
Community Futures Peterborough offers a range of supports for small businesses, including counselling, training, and loans.
This is by no means an exhaustive list. As a Chamber, our role involves helping businesses overcome barriers. Sometimes this involves sorting out bureaucracy and cutting red tape. Other times it involves advocating for funding to help specific sectors get the boost they need to ensure they aren’t being left behind. Our region needs businesses of all sizes and sectors thriving for an effective and efficient economic recovery.
Canada’s employment situation remains fickle.
We’ve added more jobs and the unemployment rate has declined, but people are working fewer hours and the overall labour shortage still sits at more than 1 million unfilled jobs.
According to Canadian Chamber of Commerce Chief Economist Stephen Tapp:
“At first glance, it looked like we finally received good news from Canada’s Labour Force Survey for September: after three months of declines, employment was up by 21,000 jobs, while the unemployment rate dropped back to 5.2% after unexpectedly spiking to 5.4% last month. Digging beneath the headlines, however, shows emerging signs of an underlying “cooling-off” period. First, hours worked are down over 1% since June. Second, labour force participation has sagged over the course of this year, and third, it’s the public-sector, not the private sector, that continues to push up employment. That said, Canada’s labour market remains historically tight. It’s remains difficult for businesses to fill the nearly one million vacant positions they’re seeking. And, though, wage growth exceeded 5% for the fourth month in a row, this still isn’t enough to boost workers’ purchasing power, as it’s below the highest rates of inflation seen in a generation.”
Overall, the public sector added 35,000 jobs, compared to 9,000 from the private sector while self-employment dropped by 22,000. The increase in employment is being driven by education and healthcare at 46,000 and 24,000, respectively. This offset declines from manufacturing (-28,000); information, culture and creation (-22,000); transportation and warehousing (-18,000), and public administration (-12,000).
Wage growth is being led by professional services, up 9.1% year-over-year, followed by accommodation and food service at +8.7% over last year. On average, wages are up 5.2% over last year.
Adding further pressure to workforce challenges is the trend toward retirements shows no signs of slowing, with 1 million of the 5.2 million Canadians aged 55 -64 already retired.
Overall, Ontario and PEI are the only provinces seeing a decline in employment.
Locally, jobs in demand largely hit sectors that have struggled heavily over the last two years, especially the service industry. According to the Workforce Development Board, the top 10 local job postings are for:
1. Retail salespersons
2. Food counter attendants, kitchen helpers & related support occupations
3. University professors and lecturers
4. Home support workers, housekeepers & related occupations
5. Other customer & information services representatives
6. Retail & wholesale trade managers
8. Social and community service workers
9. Post-secondary teaching & research assistants
10. Light duty cleaners
Employment data will continue to fluctuate, as it always has. But it reveals the harsh reality that some sectors are rebounding well while others are going to continue to struggle. Those who regularly had to cut staffing levels due to public health restrictions are struggling to hire enough staff despite being leaders in increasing wages. There is no large pool of workers waiting to return and fill the vacancies across the country. It’s going to take creativity, investment, and vision for local businesses to modernize, automate, and adjust how they operate to make do with less access to labour.
Climate change is a pressing business issue.
We’re dealing with the effects on a regular basis with extreme weather events happening far more frequently than decades ago. Referring to disasters as once-in-a-century events has lost its relevance. Floods, wildfires, wind storms, and hurricanes have shuttered businesses, cut off supply chains, spoiled goods, and taken lives. And we’re paying the insurance premiums to prove it.
All levels of government have pledged some form of commitment toward reducing greenhouse gas emissions and tackling the effects of climate change.
The federal government has established its goal of creating net-zero emissions by 2050 with Environment and Climate Change Canada supplementing it with the 2030 Emissions Reduction Plan. It established the Net-Zero Advisory Body in 2021 as a group of independent experts to provide advice on pathways for Canada to achieve net-zero emissions. The Canadian Chamber of Commerce (CCC) Net-Zero Council is part of this advisory body.
The CCC along with partners at PwC Canada have put together a report titled How We Get There Matters: Establishing a Path to Net-zero in Canada. It has four core principles:
1. The 2030 roadmap must firmly position Canada to achieve its net-zero target for 2050
This means that a key goal of actions taken between now and 2030 should be to enable delivery of the 2050 target, rather than short-term measures that may help deliver on 2030 targets but cannot be leveraged thereafter. These actions may consist of pilot programs, feasibility studies and consultations to position initiatives for major emissions reduction in the coming decades. In the absence of this, we risk our ability to reach our net-zero goal and/or risk needing to resort to extreme measures in later years.
2. Canada’s net-zero plan must be tightly coupled with its economic goals
This will ensure that fulfilling Canada’s commitment to contribute to the global fight against climate change and maintaining/improving our standard of living will not be seen as either/or.
3. Canada’s economic plan and the net-zero transition plan must consider the global context
This consideration is necessary to protect competitiveness of Canadian businesses and avoid carbon leakages to other countries.
4. Canada’s net-zero plan should deliver an orderly and inclusive transition
This is critical to avoid economic crises and energy crises and to ensure the ongoing support of Canadians for Canada’s commitment to net-zero.
Among its key recommendations are that Canada should:
• Increase overall net-zero funding and do more to de-risk and address barriers to private
• Adopt a common definition for what constitutes investment that supports net-zero
• Consider a holistic picture of emissions
• Design policy options to incentivize emission reductions in Canada’s international
• Develop a detailed net-zero skills plan to unlock the opportunities that net-zero will bring
• Develop a plan for funding decarbonization equitably
• Develop a public engagement and information strategy
It’s going to take intentional investment from both the private and public sector to tackle climate change and make meaningful reductions in greenhouse gas emissions. At this point, all options involve significant investments and costs — including inaction. It’s critical that we work as effectively and efficiently together across sectors to make the best use of time and money and position us to be competitive now and in the future. As the report says right at the start — how we get there matters.
Elections are a crucial time for engaging with our future leaders and sharing our ideas and vision for what the future should look like.
No government has more of a hands-on impact on our day-to-day lives than our local municipalities.
Election campaigns are often viewed as a one-way message — what will you (or your party) do for us? What really sets municipal campaigns apart from federal and provincial candidates is the community-level engagement. Many council candidates will knock on every door in their ward — some more than once. They are there just as much to hear what you have to say as they are to spread their message about their platform.
It's also representation on a whole different scale. We currently have 113 candidates vying for 51 elected positions in the City and County, a notable increase from the three MPs and MPPs that cover our region (and beyond).
Some may have party affiliations and political leanings, but that’s as far as it goes. Each candidate fundraises for themselves, sets their own platform, and represents their own ideals. This type of campaign offers a high level of flexibility. The questions you ask are just as important as the answers they provide. It sets the tone for what our community values.
That’s why we at the Peterborough and the Kawarthas Chamber of Commerce decided to go all-in this municipal election in terms of engaging both candidates and the community. We are strictly non-partisan in terms of promoting any specific candidates or ballot questions. Our goal is to engage candidates and the public to be informed on local business issues that will guide the future of our region for years to come.
Watch Peterborough County township debates:
If you are a resident of a township in the County of Peterborough or just want to get up-to-date on local issues and candidates, last week we hosted debates via Zoom in all eight townships. You can view all of these recorded debates here: https://www.peterboroughchamber.ca/2022-municipal-election.html
City council questionnaire:
All candidates running for positions on council were sent a questionnaire with 10 questions relating to local business and community issues. We began publishing their responses yesterday on our website: https://www.peterboroughchamber.ca/2022-municipal-election.html
City mayoral debate
Join us Thursday, Oct. 6 for a City of Peterborough mayoral candidates debate at Market Hall. Doors open at 6:30 and the debate will start at 7 pm. Please note that seating is limited and first come, first served. We will also be live streaming it on our YouTube channel, which will later be published on our website and aired on YourTV.
An engaged and informed community is most effective when people vote. For details on how to vote in your municipality, go to:
• City of Peterborough
• Township of Asphodel-Norwood
• Township of Cavan Monaghan
• Township of Douro-Dummer
• Township of Havelock-Belmont-Methuen
• Township of North Kawartha
• Township of Otonabee-South Monaghan
• Selwyn Township
• Municipality of Trent Lakes
Election day is Monday, Oct 24. Internet voting is open in the City of Peterborough and elsewhere with advanced polls starting Saturday, Oct. 8.
Please take the next few weeks to ask questions, let your local candidates know what you would like to see, learn more about their plans, and b
Facing the highest inflation in 40 years, businesses continue to face obstacles that are holding back growth.
The Canadian Survey on Business Conditions Report for the third quarter of 2022 from the Business Data Lab of the Canadian Chamber of Commerce surveyed 17,000 businesses.
Part of the research is aimed at identifying obstacles to business.
Businesses rated the following as obstacles over the next three months:
• Rising inflation – 60%
• Rising input costs – 47%
• Recruiting skilled employees – 39%
• Transportation costs – 38%
• Shortage of labour force – 37%
• Rising interest rates and debt costs – 37%
• Cost of Insurance – 32%
• Retaining skilled employees – 31%
• Difficulty acquiring inputs, products or supplies from within Canada – 27%
• Rising costs in real estate, leasing or property tax – 26%
Key findings from the report include:
Inflation: Canadian businesses identified inflation as their biggest near-term obstacle: 60% of firms expect this will be a challenge, representing the highest level of concern in the survey’s history. One glimmer of hope is that a shrinking share of businesses expect to raise prices over the next quarter, consistent with inflation decelerating in the second half of the year.
Rising costs: Rising input costs are the second biggest near-term obstacle, cited by almost half (47%) of firms, down only slightly from the last survey (50%). Cost pressures are highest in agriculture, manufacturing and accommodation and food services.
Labour challenges: Labour challenges intensified, with 36% of businesses expecting labour difficulties next quarter. These concerns are most acute in accommodation and food services, construction, health care and retail.
Debt constraints: Businesses’ ability to take on debt remains constrained. More than half of businesses (52%) reported they either cannot take on more debt or do not know if they can, unchanged from the previous quarter, and still a bigger worry for small firms and high-contact services.
Supply chain: Supply chain issues have improved, consistent with recent global trade developments. However, most Canadian businesses experiencing supply chain problems expect them to persist well into 2023.
Interprovincial trade: More than half of all Canadian businesses conducting interprovincial trade experienced obstacles over the last year, such as differing certification and licensing requirements for goods, services and labour as well as taxes.
Environmental practices: Most businesses have or plan to implement environmental practices over the next year, with reducing waste being the most prevalent. Customers’ unwillingness to pay higher prices is the top perceived barrier to businesses’ green efforts.
Businesses have been on an economic rollercoaster lately with new challenges arising as others start to fade. It appears that inflation may have peaked in July, but it’s still well above “normal” and we’ll be dealing with the implications for a while.
In fact, we’ll be dealing for a while with all of the obstacles highlighted. A report on the obstacles to business was never going to be particularly positive, but it lines up with much of the current advocacy program from our Chamber and the rest of the chambers and boards of trade that make up the Canadian Chamber of Commerce. We’re working to reduce bottlenecks and increase the security of our supply chains, relieve COVID-related debt repayment terms, finding solutions to barriers to interprovincial trade, and working with educational institutes and employment training agencies to address workforce shortages. Reports like this help us focus our efforts and work together on issues that affect the larger business community.
We’re clearly not out of the woods yet. These are big issues that require big partnerships. But Chambers are at our best working together, building partnerships and tackling the issues holding back businesses across the country.
After a surge in the first half of the year, Canada’s economy is slowing.
For the first half of the year, the economy grew at a rate of 3.3%, but slowed to 0.1% between June and July. A big part of this has been the Bank of Canada’s plan to tackle huge increases in the price of homes and overall inflation by hiking overnight interest rates from 0.25% to 3.25%.
While the overall purchase price of a home locally may still be out of reach for many first-time buyers, there’s no question the market has cooled. The Peterborough and the Kawarthas Association of Realtors reported the average home price in August dropped to $689,437, down from its peak of $885,153 back in February.
According to the Business Development Bank of Canada (BDC), the job market has cooled off as well with Canada losing 113,500 jobs over the last three months. This is partly due to the imbalance between the supply and demand of workers. Unemployment increased from a record low 4.9% to a still historically low 5.4%. But it’s still estimated that there are more than 1 million job vacancies right now.
While there are fewer jobs out there for workers, so far it hasn’t eased hiring woes by any significant degree. With that, the trend toward higher wages is expected to continue along with inflation.
As noted by BDC “The scale that wage increases have taken in 2022 is significant. Hourly wages have increased on average by 4.0% year-to-date, compared to the historical pre-pandemic average of 2.7% growth. Moreover, in August 2022, wage growth was 5.4% year-over-year. This is the largest annual change in the last 20 years outside of the pandemic period.”
According to Statistics Canada, 64% of businesses have boosted wages for current staff and 46% say they have increased salary offers for new hires.
While a slowing economy is expected to eventually bring wage increases back down, BDC notes the demands of an aging workforce will add further pressure as we struggle to replace retirements.
Another key driver of inflation has been the price of fuel. Oil prices have been dropping since July to the point that the price at the pump is back to the level it was before the war in Ukraine. A few months ago we were paying more than $2 per litre, but now that has dropped to under $1.40.
It’s not just easing the cost of life for people, but it’s having an effect on supply chains. From trucks to mining to agriculture — the drop in fuel prices should filter down through lower input and transportation costs to lower prices of goods.
According to BDC, the main factors still causing uncertainty for fuel prices are further fallout from the war in Ukraine and the prospect that OPEC and its allies are looking to cut oil production to keep prices up.
Cooling off inflation will hold back the overall economy. The big question is whether we can manage what the Bank of Canada calls a ‘soft landing’ or whether the economy will begin to decline and enter a recession. If we enter a recession, it will likely be part of a global event as governments around the world have implemented similar strategies.
Making it easier for people to afford the cost of living and for businesses to be able to hire will have other economic consequences. What’s critical for the success of businesses is planning for the storms ahead as we continue dealing with unprecedented challenges