After 2 years of record job gains, Ontario's labour market calmed down in 2023

Ontario's labour market calmed down in 2023 but saw a growth in average hourly wages that was higher than the rate of inflation, according to a new reportWednesday fromthe province's financial watchdog.

The market's tempering comesafter two years of record job gains during the COVID-19 pandemic, said the Financial Accountability Office of Ontario (FAO). Last year,Ontario added183,200 jobs a decrease from 338,300 in 2022 and 367,400 in 2021.

"In those years, the economy was rebounding from the pandemic and re-opening, and so we had very strong job growth," saidPaul Lewis, the FAO's chief economist and deputy financial accountability officer, at a news conference Wednesday.

The annualunemployment rate inchedup to 5.7per cent in 2023compared to 5.6per cent the year prior. However, the FAO saidOntario's job gains were broad across most demographic groups, types of employment, industries and major cities, withcore-aged workers between 25 to 54 years old recording thefastest pace of job gains at 2.7 per cent, and their labour market participation rate reachinga record high of 88.3 per cent.

Additionally, the FAO said job vacancies trended lower in 2023, declining 24.9 per cent compared to the previous year. Utilities was the only industry to report an increase in job vacancies at 43.9 per cent.

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Workers shifted to permanent work

In2021 and 2022, the FAOsaid wagegrowth lagged behind inflation. But in 2023, wage gains above inflation took placefor all major demographic groups and types of employment except for part-time workers.The average hourly wage of Ontarians increased5.1 per cent to $34.63, which isabove the 3.8 per cent average annual consumer price indexinflation rate.

Wages inindustry groupssuch as agriculture, forestry, fishing, mining, quarrying and oil and gas increased the most.

Meanwhile, wages increased less than the rate of inflation for those inaccommodation and food services which, according to the FAO, has the lowest average hourly wage rate among all industries historically while wages for workers in the information, culture and recreation industry declined by 1per cent.

The FAOalso said more workers are flocking topermanent positions compared to self-employment, particularly among those whowere unincorporated and had no paid help.

Last year, the share of workers employed in permanent positions increased to a record high of 76.6 per cent in 2023, while the share of self-employed workers fell to 13.6 per cent, the lowest since 1991. Last year marked the third drop in the past four years.

Lewis said the office is still monitoring the effects of interest rates and consumer spending on specific sectors, particularly as more and more people renew their mortgages at higher rates. The FAOforecastweaker job gains this year as a result.

"That's something we're still watching and waiting to see... will there be job losses that would spread to other sectors?" said Lewis.