Labour Shortages, Higher Wages for New Hires Could Fuel Inflation, Economist Warns

Labour Shortages, Higher Wages for New Hires Could Fuel Inflation, Economist Warns
A sign outside a building at Statistics Canada in Ottawa on March 12, 2021. The Canadian Press/Justin Tang
Andrew Chen
Updated:
Canada’s labour market surge and drop in unemployment over the past few months have driven up wages, which in turn could bring negative economic impacts like higher inflation, lower productivity, and increased cost of labour per unit of output, a prominent economist warns.
In November 2021, as Canada’s labour market continued its return to something resembling pre-pandemic levels, employers came up against a shortage of qualified workers. This led many to raise wages in order to entice new hires.