Canadians will see wages pick up as immigration slows, Conference Board argues

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OTTAWA — The Conference Board of Canada expects wage hikes will pick up speed in the coming years as the pace of population growth slows down. 

The think tank said in a new economic forecast Monday that Canada’s labour market has been “resilient” this year despite tariff pressures from the United States. 

The national unemployment rate ticked up to seven per cent in May, though the Conference Board noted overall employment is still 0.3 per cent higher than it was at the end of last year. 

The report expects hiring demand will remain muted for the rest of 2025 as trade uncertainty weighs on business confidence. 

But the board also said the federal government’s efforts to throttle immigration levels are starting to show up in the labour market. 

The labour force grew at a slower pace than total employment in the first quarter of 2025, the report noted, the first time that’s happened in more than two years. 

Businesses are going to struggle more to find talent in the coming years as a result, which the Conference Board said will force employers to hire more from Canada’s existing labour pool. 

More competition among businesses for scarce workers will drive up Canadians’ pay, the think tank argued. 

“This shift in labour market dynamics — from excess labour supply to growing labour shortages — will put upward pressure on wages over the next few years, keeping wage growth above the inflation rate,” the report said. 

Average hourly wages rose 3.4 per cent year-over-year in May, Statistics Canada said, unchanged from the pace seen in April. 

The Conference Board expects that will drive the unemployment rate lower in the coming years, down to 6.2 per cent in 2026 and 5.8 per cent in 2027. 

Meanwhile, it forecast the economy will grow by 1.5 per cent this year as uncertainty surrounding U.S. trade policies continues to weigh on business and consumer confidence. 

Cory Renner, the board’s associate director of economic forecasting, said in a statement the economy outperformed expectations in the first quarter, but the momentum is quickly fading. 

The report notes the housing market remains under intense pressure, while the trade sector is also in for a rough ride. 

Renner said trade disputes are casting shadows over multiple sectors of the economy and are expected to dampen growth throughout the remainder of the year.

While Canadian exporters have turned to new markets with some success, the gains have been insufficient to offset the decline in exports to the U.S., the report said.

It also said business investment is expected to suffer, with concerns over the Canada-U.S. trade relationship keeping spending subdued.