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 report Wednesday from the province's financial watchdog.

The market's tempering comes after two years of record job gains during the COVID-19 pandemic, said the Financial Accountability Office of Ontario (FAO). Last year, Ontario added 183,200 jobs — a decrease from 338,300 in 2022 and 367,400 in 2021.

The annual unemployment rate also inched up to 5.7 per cent in 2023 compared to 5.6 per cent the year prior. However, the FAO said Ontario's working age population, comprised of those 15 and older, increased at the fastest pace on record at 2.3 per cent, with the labour market participation rate edging up to 65.5 per cent — the highest since 2015.

Alongside the slower pace of employment gains, 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. 

In 2021 and 2022, the FAO said wage growth lagged behind inflation. But in 2023, job gains were broad across most demographic groups, types of employment, industries and major cities, with the average hourly wage of Ontarians increasing 5.1 per cent to $34.63, which is above the 3.8 per cent average annual consumer price index inflation rate.

Wages in industry groups such as agriculture, forestry, fishing, mining, quarrying and oil and gas increased the most. Wages increased less than the rate of inflation for those in accommodation 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 1 per cent.

The FAO said more workers are flocking to permanent positions compared to self-employment. 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.