BC wages expected to rise 4% in 2007

Wage gains in B.C. will average a strong four per cent next year, with many firms forced to put growth on hold as they redirect revenues toward employees, the Conference Board of Canada says.

There will also be a growing realization that the tight labour market is a structural change in the economy that's here to stay, said Prem Benimadhu, the non-profit board's vice-president of human resources.

"Some people may be dreaming in technicolor if they think this, too, will pass," Benimadhu said in an interview Monday. "It is not something that is going to go away as the business cycle changes, because it is widespread -- with the possible exception of the manufacturing sector. We simply don't have enough people to replace the retiring baby boomers."

Non-union employees across Canada can expect wage increases averaging 3.9 per cent in 2007, according to the board's annual compensation outlook. Average gains of 5.1 per cent are projected for Alberta, and 4.0 per cent for B.C.

Surprisingly, the board says, wage settlements for unionized workers are expected to average just three per cent.

Lower union settlements are primarily blamed on the downturn in the heavily unionized manufacturing sector in Central and Eastern Canada, which is being threatened with job losses to foreign competition.

"Normally, you would expect labour to get more militant in a tight labour market," Benimadhu said. "We actually don't foresee many strikes. A lot of collective agreements will be signed without a whisper of discontent."

On top of the relative weakness of manufacturing, he said unions are being undercut "in the war for employees" by non-union employers offering job security, higher pay and flexible hours -- benefits that unions have traditionally fought to win.

"The unions aren't as militant as they have been in the past," agreed David Fairey, director of B.C.'s Bureau of Trade Union Research. "I think we have yet to see unions take advantage of the pressures in the marketplace."

The Conference Board survey shows even the unionized public sector is raising its game, with four-per-cent increases in base pay expected in 2007. As well, 8.2 per cent of public-sector salary budgets are allocated as bonuses to attract and retain employees in the face of accelerating baby boomer retirements.

Labour shortages traditionally force companies to invest in machinery and equipment to improve efficiency, "but there comes a time when you need the people, and the people are simply not there with the skills you want," Benimadhu said.

"Despite substituting capital for labour, firms continue to face a difficult choice between paying to retain their employees and putting off longer-term investments."

While workers are moving to places like Alberta and B.C., he said labour shortages exist across the country, and are being intensified by skills shortages in the emerging economies of China and India, which undercut traditional remedies such as immigration and outsourcing.

Almost three-quarters of 279 employers surveyed across Canada said recruitment challenges are intensifying, not only among their top performers but throughout their workforces.

B.C.'s high housing costs are making it harder for companies to recruit, and some may have to move to other jurisdictions, said Werner Knittel, vice-president Canadian Manufacturers and Exporters.

In addition to improving internal processes to free up cash flow, Knittel said B.C. companies are lobbying both levels of government for faster writeoffs on new machinery and technology, while pushing for improved training tax credits to upgrade the skills of existing staff.

Statistics Canada released figures Monday showing that average weekly earnings in B.C. were $731.05 in August, up 4.3 per cent in the first eight months of the year, compared to the same period last year. That compares to $799.11 in Alberta, up 4.6 per cent over the first eight months, and $783.49 in Ontario, up 2.7 per cent over the same period.

(prepared by Michael Kane/Vancouver Sun)

WESTERNERS TO GET MORE JINGLE IN THEIR JEANS

Non-unionized Canadian employees can expect wage increases averaging 3.9 per cent in 2007, according to the Conference Board of Canada, but Western Canadians will outpace their Central and Eastern counterparts.

Average non-union wage gains, 2007

B.C.: 4%
Alberta: 5.1%
Sask./Man.: 3.8%
Quebec: 3.7%
Ontario: 3.5%
Atlantic: 3.1%
Canada: 3.9%

(Source: Conference Board of Canada's 25th annual Compensation Planning Outlook/Vancouver Sun)