HomeMarket NewsMiningLabour Costs in Canadian Mining Industry Show Modest Pay Raises

Labour Costs in Canadian Mining Industry Show Modest Pay Raises

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The recent surge in inflation in Canada has impacted various sectors, including mining. According to Statistics Canada, inflation reached a 40-year high of 6.8% on an annual average basis last year. Although it has eased this year, with a rate of 4% in August, the impact of higher prices continues to affect consumers and wage negotiations. While recent wage increases in the Canadian auto sector have received attention, the mining industry is facing different labor challenges primarily focused on skill availability rather than pay concerns.

Doug Groh, a fund manager at Sprott Asset Management, highlights that the main challenge in the mining industry is finding skilled workers who are dependable and capable of performing the necessary tasks. This labor shortage has forced mining operators to rely more heavily on outside contractors, which not only adds extra costs but may not be the most efficient way to improve long-term productivity.

Salaries Experience Modest Increase

Table Salaries Canadian Mines 2023

A survey conducted between March and August this year, which included responses from 76 mines (59 union and 17 non-union), found that average wages increased by 3% across 62 mines in the 12 months prior to the survey. The wage increases ranged from 1.5% to 12.5%. Interestingly, there were no reductions in wages reported among the surveyed mines. Notably, one gold mine paid its underground miners CAD 100 per hour, significantly higher than other mines.

According to Michael Gray, a mining analyst at Agentis Capital, employee retention has become a problem for some northern Canadian mining projects, leading to salary inflation. Several British Columbia projects have had to pay up to 50% more than expected to attract skilled workers.

Table Surface Mine Wages Canada 2023

Perks Offered to Attract and Retain Talent

The survey also revealed that many mines are implementing various incentive programs to attract and retain employees. Out of the 76 surveyed mines, 43 reported using some form of incentive bonus plan, while 30 had employee retention plans in place. These programs often focus on safety, profitability, production, and cost savings.

Krista Noyes, Costmine’s business manager and cost estimator, explained that cash bonuses for good safety performance are a common practice, with fixed bonuses awarded for achieving accident-free records over specified time periods. Some mines also tie bonuses to improvements over historical averages or to production quantities. In addition to bonuses, mining companies offer a range of standard employee benefits, such as transportation, daycare facilities, travel expenses, retirement plans, insurance, stock purchase plans, safety equipment, tool allowances, scholarships for dependent children, and education and training opportunities.

Table Surface Mine Wages Canada 2023

Efficiency Challenges Ahead

Amidst difficult equity markets, mining explorers are expected to tighten their belts on bonuses and salaries. Experienced mining staff are being offered substantial compensation packages to work in certain countries with challenging mining environments, such as Pakistan.

Although the average salaries for mine engineers fell by 3.1% to CAD 105,800, and environmental coordinators remained unchanged at CAD 93,400, Costmine suggests that these declines do not reflect the wider rising trend in pay and may not be evident in a multi-year analysis. Mining companies are concerned not only with labor costs but also with energy costs. While energy costs are more predictable, labor roster changes and skill set requirements pose longer-term challenges for mine management.

Safeguarding productivity and increasing operational efficiency are top priorities for mine operators. However, becoming overly reliant on outside contractors can hinder these efforts. While labor costs remain a concern in the mining industry, it is crucial for companies to strike a balance between cost management and attracting and retaining skilled workers for sustainable growth and profitability.

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