A new analysis suggests Canadian workers' purchasing power in 2022 dropped by the most in over a decade as surging consumer prices far outpaced wage growth.
Oxfam Canada, a non-profit organization focused on inequality, says workers suffered the equivalent of a 3.4 per cent pay cut last year and that purchasing power eroded by an average of $1,992.
"2022 was quite a dramatic year as far as the loss in working people's purchasing power is concerned. When you look back over the past decade, we haven't seen a drop like this," Ian Thomson, manager of policy at Oxfam Canada, said by phone on Monday.
Oxfam says the wage decline in real terms was less severe in 2021, when it fell by 0.4 per cent.
Over time though, one measure from Statistics Canada shows real wages climbed 3.6 per cent as of the second quarter in 2022 compared to the pre-pandemic first quarter of 2019.
The tight job market has underpinned strong wage growth in Canada compared to historical norms, with annualized wage increases hovering around five per cent since June last year.
However, the cost of living persistently outpaced higher wages, despite a more recent moderation in consumer price growth.
CEOs get a pay increase
While workers took a pay cut in real terms, top executives saw the opposite, the analysis says.
Top-paid CEOs from four countries (the U.S., U.K., India and South Africa) saw their pay increase nine per cent last year. Oxfam says comprehensive data for Canadian CEO compensation for 2022 weren't readily available.
The disconnect in compensation for executives and workers is "completely unfair," Thomson says.
"I think we can do a lot to bring inflation under control, but also to ensure that workers are being compensated for the productivity that they're putting into the Canadian economy every single day," he said.
"Getting a cap on this excessive compensation at the top of business executives has to be part of the strategy, and the other part has to be ensuring that the productivity that workers are putting into the economy is fairly compensated. And we're seeing in Canada, neither is happening at the moment."
Data for the report were collected from the International Labour Organization, government statistics agencies, as well as corporate filings and surveys.
Michelle Zadikian is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @m_zadikian.