Recent Wage Deceleration: Short-Run Response or Structural Change?
Since 1982, wage inflation in Canada has shown a pronounced deceleration. Wage settlements and rates of increase in various measures of earnings have declined to their lowest level in the past 25 years. Wage cuts, wage freezes, de-indexing, and flexible compensation in the form of two-tier wage systems and lump-sum payments in lieu of wage increases have become a frequent occurrence in collective bargaining. This wage experience is somewhat of a novelty for Canada, and is also unique among OECD countries.