Small and medium businesses want a 3.3% increase in wages

Canadian small and medium-sized businesses (SMEs) plan to increase salaries by an average of 3.3% over the next 12 months.

This was revealed by the latest business barometer from the Canadian Confederation of Independent Businesses (CFIB), published on Thursday.

Wage plans will need to be further moderated to bring inflation within the BoC’s target range of 1-3%. However, it is still far from the target and shows that SME owners are adopting a sensible approach in the context of current inflationary pressures,” said Simon Goudreau, chief economist and vice president of research at CFIB.

“Even if the owners of small and medium-sized businesses are raising wages more than usual, they cannot currently be considered major contributors to the significant rise in inflation,” Mr. Gudrault added.

The average rate hike plans remain at 3.5% in April. However, they have continued to show a significant downward trend since they peaked at 4.9% in May 2022.

“Prices tend to fluctuate faster than wages, because wages take longer to adjust. Wages do not increase at the same rate as prices, because the latter may fall before wages adjust,” explained Andrea Bourgeois, director of economics at CFIB.

Note that the CFIB also released a report on Monday estimating that small business owners in Canada were working 59 hours a week to make up for the labor shortage.