In 2021, base wage increases in Canadian collective agreements were well below inflation for all provinces, falling short by an average of 1.5 percentage points. The gap was smallest in British Columbia, where the average wage settlement increased by 2.2 per cent compared with an annual Consumer Price Index increase of 2.8 per cent. The majority of provinces saw inflation increase close to 2 percentage points above wage growth for the year.
This large gap comes from much higher than expected inflation in 2021, as supply chain disruptions lasted longer than expected and many corporations took advantage of pent-up demand to hike prices. Current forecasts are estimating inflation in most provinces to be around 3 per cent for 2022 as well.
This graph illustrates how a gap between wages and inflation can grow over time. It shows the actual value of the Consumer Price Index from January 2017 to January 2022, alongside two hypothetical wage settlements. It compares a settlement that increases wages by 2 per cent each January with one that increases wages by 1.5 per cent. In the example where wages increase by 2 per cent each January, you can see that while wages fall behind inflation as the months go by, they come close to catching up when the wage increase kicks in at the beginning of the next year. In the example where wages are increased by 1.5 per cent, an amount lower than average inflation throughout this period, workers’ wages fall behind inflation by 2019, and face a significant gap by January 2022.
For many workers, wages aren’t keeping up with inflation. CUPE provides its members with a tool to measure inflation and to check if their wages are keeping up with changing prices in their region. Find it at cupe.ca/cpi-calculator.