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14 charts that shed light on how the economy will recover in the year ahead – The Globe and Mail

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Illustration by DAVE MURRAY

Decoding 2022: The Globe asked dozens of experts — from economists and strategists to investors and academics — to make sense of the economy in the year ahead. These are the charts they think are important to watch and why.


The economy

Canada’s year for catch-up growth

This deceptively simple comparison between the indexed level of real GDP in Canada and the U.S. packs a lot of information and carries an important message for the coming year. First, it’s a reminder of how deep the 2020 downturn was, and the force of the 2021 recovery. Second, Canada fell further and has taken longer to recover – by the end of the third quarter of 2021, Canada was still 1.4 per cent below the prepandemic high. Growth in 2021 was held back by renewed restrictions, the heavy hit to auto production from the chip shortage, and the intense drought in Western Canada. Third, all three of those deep drags on growth are expected to moderate in 2022, setting the stage for another year of solid recovery in 2022. The important message from the chart is that Canada has much more ground to make up in the coming year(s) and is thus expected to see more robust growth than the U.S. in 2022 and 2023.

Douglas Porter, chief economist, BMO Financial Group


Raging infernos and deep freezes

The concept of an aggregate output gap (how much an economy is producing relative to its potential) can be a useful guide for fine-tuning a country’s monetary and fiscal climate. But not right now.


Taking the economy’s temperature

Industry output gap

Variance standardzsed deviation from trend

March 2020

Sept. 2021

Real estate

(above trend)

Professional services

Film, TV, publishing & data hosting

Retail trade

Agriculture

Health care

Wholesale trade

Public administration

Mining, quarrying, oil & gas

Construction

(below trend)

Manufacturing

Transportation & warehousing

Administrative support

Other services

Restaurants & hotels

Arts, entertainment, & recreation

the globe and mail, source: statistics canada

Taking the economy’s temperature

Industry output gap

Variance standardized deviation from trend

March 2020

Sept. 2021

Real estate

(above trend)

Professional services

Film, TV, publishing & data hosting

Retail trade

Agriculture

Health care

Wholesale trade

Public administration

Mining, quarrying, oil & gas

Construction

(below trend)

Manufacturing

Transportation & warehousing

Administrative support

Other services

Restaurants & hotels

Arts, entertainment, & recreation

the globe and mail, source: statistics canada

Taking the economy’s temperature

Industry output gap

Variance standardized deviation from trend

March 2020

Sept. 2021

Real estate

(above trend)

Professional services

Film, TV, publishing & data hosting

Retail trade

Agriculture

Health care

Wholesale trade

Public administration

Mining, quarrying, oil & gas

Construction

(below trend)

Manufacturing

Transportation & warehousing

Administrative support

Other services

Restaurants & hotels

Arts, entertainment, & recreation

the globe and mail, source: statistics canada

I’ve charted output gaps for individual industries to show just how difficult it is for policy makers to set the thermostat to make everyone comfortable. Since the first pandemic lockdown, industries such as real estate, finance and professional services have been on fire. Others, like restaurants, hotels and entertainment, have been on ice.

The Bank of Canada does not have an electric blanket to wrap around diners downtown. Governments can’t brew a warm cup of tea to soothe supply chains. The best both can do is maintain the HVAC while keeping an eye on sectors that run a fever.

Scott Cameron, economist (@twitscotty)


Stagflation, the sequel?

The pandemic has, among many other things, created an array of disruptions in the business sector. These same disruptions are complicating the economic recovery. A case in point: both inflation and real GDP were pushed down by the pandemic, but these two key factors now seem to be on divergent paths.


Real GDP by industry and CPI, annual growth

CPI inflation

Real GDP growth

the globe and mail, Source: Statistics Canada;

ATB Economics

Real GDP by industry and CPI, annual growth

CPI inflation

Real GDP growth

the globe and mail, Source: Statistics Canada;

ATB Economics

Real GDP by industry and CPI, annual growth

CPI inflation

Real GDP growth

the globe and mail, Source: Statistics Canada; ATB Economics

Prices have been soaring with the inflation rate above 4 per cent every month since August. Economic growth, however, has been less ostentatious of late. After a big jump in April, largely driven by weaker activity during the same period in 2020, real GDP growth has slowed consistently and stood at 3.4 per cent in September.

While supply chain issues spurred higher costs across the economy, overall activity in Canada remained below its prepandemic level in September. Given this, are we heading toward the early-1980s era of stagnant economic growth combined with hyperinflation known as stagflation?

Going forward, it will be important to watch how soon inflation moderates versus how soon Canada’s GDP picks up steam.

Siddhartha Bhattacharya, economist, ATB Financial


Business sector

Falling behind

There is a broad range of metrics to gauge economic prosperity in Canada. As the Canadian Coalition for a Better Future’s scorecard shows, one critical element of success is our investment in our capacity to produce the goods and services that Canadians need. This is true whether the investment is to help us meet our climate change objectives, to make the most of the new wave of technological change or to fuel sustainable and inclusive growth so that governments have the fiscal firepower to invest in people.

The private sector has long been the main driver of prosperity in Canada, which is why I like to track the share of business investment in our national income (GDP). According to this metric, Canada was doing reasonably well relative to our neighbour south of the border until 2014-15. That’s when the bottom fell out of oil prices, investment in the energy sector fell off a cliff and some structural factors meant that other sectors did not pick up the slack. There very well may be more investment happening than shows up in these data, given measurement issues with the digital economy. But it’s unlikely that mis-measurement can explain all the overall decline in investment as a share of GDP, and the fact we have fallen behind the U.S. I hope that the private and public sectors will work together to find ways to reverse this trend.

Carolyn Wilkins, member of the Coalition for a Better Future advisory council, former senior deputy governor, Bank of Canada


Spenders gonna spend


Boost coming from business spending

Firms expecting higher investment less firms

expecting lower investment (left scale)

Canadian business investment, two-quarter

average contribution to GDP growth (right scale)

THE GLOBE AND MAIL, SOURCE: LUKE KAWA

Boost coming from business spending

Firms expecting higher investment less firms

expecting lower investment (left scale)

Canadian business investment, two-quarter

average contribution to GDP growth (right scale)

THE GLOBE AND MAIL, SOURCE: LUKE KAWA

Boost coming from business spending

Canadian business investment, two-quarter

average contribution to GDP growth

Firms expecting higher investment less

firms expecting lower investment

THE GLOBE AND MAIL, SOURCE: LUKE KAWA

The Bank of Canada recently revised down its outlook for potential growth, taking a more pessimistic view of the Canadian economy’s “speed limit” – as well as capital expenditures in 2022. This despite businesses telling the central bank their investment intentions have never been stronger.

We believe this cycle will be different – and better – than the economic expansion that preceded it, with a longer runway for above-trend growth. Capital spending, in Canada and other advanced economies, is poised to play a key role in the strong handoff from public-sector-supported to private-sector-led activity that we expect in 2022. Our view is that the broad-based inflation experienced globally is in part a function of economies that are maximizing their productive capacity. As such, businesses have an incentive to boost supply against a backdrop of firm demand. Mounting evidence of this better private-sector-growth environment should prove particularly beneficial to cyclically oriented regions and sectors across risk assets, while leading to higher bond yields as well.

Luke Kawa, director/asset allocation strategist, UBS Asset Management Investment Solutions (@LJKawa)


Investment spending runs out of gas

The pandemic swiftly disrupted how businesses operate. They adjusted quickly by increasing their investments in technology as employees were required to work from home. Even though there are fewer pandemic restrictions, pandemic investment spending hasn’t reversed course. The Bank of Canada Business Outlook Survey notes that firms continue to focus on tech spending, which hit a record high in the third quarter of 2021. Additionally, the downturn in truck, bus and other motor-vehicle investment spending began before the onset of the semiconductor shortage. While most attention is focused on consumer purchases of motor vehicles, it also contributed to depressed spending levels on business transportation over the past year. This headwind is another link in the supply chain, and delivery blockages will persist in 2022.

Arlene Kish, director, IHS Markit Canada Economics


Alberta oil unbound

The value of oil production in Alberta collapsed during the pandemic, as oil prices tumbled to almost zero and production volumes were drastically reduced. As a result, we estimate that in April, 2020, the value of oil produced in the province was only $1-billion. However, 2021 saw a sharp reversal of fortune for the energy sector, as both prices and production volume surged. As a result, the value of oil produced in Alberta has surpassed its 2014 peak and reached a record of $10-billion in October. This positive terms-of-trade improvement will be a significant tailwind to the sector and the broader economy in 2022, supporting wages, investment and profitability. However, we shouldn’t expect a return to the boom years. Oil producers remain focused on repairing their balance sheets, and tackling the long-term challenges of decarbonization, climate change and energy transition.

Charles St-Arnaud, chief economist, Credit Union Central


Two takes on dynamism as business churn returns to normal after pandemic shocks

Churn, baby, churn

My favourite metric of structural health in the Canadian economy is the number of operating businesses. This number had finally begun to trend gently upward from 2017 to 2019, which was very encouraging. Beneath the surface, few people realize that around 40,000 businesses disappear in Canada every month, and about 40,000 others are born. That sort of churn is a sign of dynamism.

Assuming exits are dominated by low-productivity firms and births are dominated by firms with new potential, churn is generally associated with rising productivity. We of course lost a lot of companies during the early months of COVID, but what I find striking is how quickly the population of companies began to recover. Imagine people deciding to start a new business in the middle of such economic turmoil! We are now close to previous peaks, and the question is, what comes next? Will uncertainty hold entrepreneurs back, or will the Fourth Industrial Revolution foster a wave of new, high-potential companies?

Stephen Poloz, special adviser, Osler, Hoskin & Harcourt, former governor, Bank of Canada


When one door closes, another opens

During 2022 we should be watching for signs of a more dynamic business ecosystem with less reliance on billions of dollars in federal government support, one that fosters the birth and growth of enterprises attuned to the new environment that the pandemic has both created and moved forward. The number of active businesses during 2021, at roughly 900,000, is the same as during 2019, a full recovery from the bloodbath experienced in the first half of 2020, when at its height over 110,000 businesses ceased operations during April. Since that time openings consistently outpaced closures, and by mid-2021 have returned to balance.

But under the surface of this return to normal are clear signs of fluidity and change. Statistics Canada defines business openings as the total of the reopening of firms previously in operation and the birth of new firms. The share of new firms has approached four out of every 10 openings during 2021, significantly higher than prepandemic times. These are the harbingers of more innovation and higher productivity, something that will increasingly be required by all businesses, whether they were continuously in operation or are reopening. The small-business community, in particular, will need to pivot from expecting the federal government to support the bottom line to meeting competitive pressures head-on with more innovative human-resource and supply-chain practices.

Miles Corak, professor of economics, the Graduate Center at City University of New York (@MilesCorak)


Markets

Don’t mind the gap

Never has the gap between the S&P/TSX Composite Index and the S&P 500 Index been wider – at least according to their price-to-earnings (P/E) ratios. As this chart shows, the difference between the two indices’ forward-looking P/E ratios recently exceeded the previous high set during the dot-com bubble. But this doesn’t necessarily mean U.S. equities are expensive while Canadian equities are cheap.


S&P/TSX Composite Index vs. S&P 500

Forward P/E ratio

Difference

S&P/TSX Composite

THE GLOBE AND MAIL, SOURCE: REFINITIV;

GLOBEINVEST CAPITAL MANAGEMENT

S&P/TSX Composite Index vs. S&P 500

Forward P/E ratio

Difference

S&P/TSX Composite

THE GLOBE AND MAIL, SOURCE: REFINITIV;

GLOBEINVEST CAPITAL MANAGEMENT

S&P/TSX Composite Index vs. S&P 500

Forward P/E ratio

Difference

S&P/TSX Composite

THE GLOBE AND MAIL, SOURCE: REFINITIV; GLOBEINVEST CAPITAL MANAGEMENT

Comparing the two indices is a bit like comparing apples to oranges. The top eight companies in the S&P 500 are all high-growth tech companies and represent 27 per cent of the index. Among the top companies in the S&P/TSX Composite, only one is a high-growth tech company, and it represents just 7 per cent of the index. Furthermore, the abundance of oil and gas and mining companies in Canada make the S&P/TSX Composite less attractive to ESG investors focused on the environment.

This P/E gap, and whether it reverts to the mean, will be a key metric to watch for Canadian investors when monitoring their international diversification in 2022.

Alexander MacDonald, portfolio manager, GlobeInvest Capital Management (@alex_macdonald)


A rare combination

It’s rare for global stock returns to be positive and bonds negative in any one calendar year – and two years in a row has not happened over nearly five decades. This signals we are entering a new market regime – and why it’s important to cut through the confusion sparked by the powerful restart in 2021.

The restart resulted in severe inflation pressure and supply bottlenecks. Real yields stayed low even as inflation climbed and growth surged. In a stark departure from past practice of preemptive tightening, most developed-market central banks did not respond. The market started to price in higher inflation absent a central-bank response, driving nominal bond prices down. Yet real yields stayed historically low, and corporate earnings surged. This drove big stock gains. The year 2022 is the next phase of this story. Even if new COVID strains delay the restart, central banks are poised to nudge up policy rates because the restart does not require monetary support. Yet we don’t see them responding aggressively to persistent inflation.

The restart in 2022 could be delayed, but weaker growth now means stronger growth later. This supports further equities gains, in our view, if more modest ones than in 2021. We also see another year of negative nominal bond returns. Reasons include slightly higher real yields, another rise in breakeven inflation rates and a return of investors demanding a term premium for the risk of holding long-term bonds.

Kurt Reiman, senior strategist for North America, BlackRock


Future flashpoint

The growth of foreign portfolio investment in China’s onshore equity and bond markets reveals a few key pieces of information. It tells us the status of China’s push to open its financial markets, how attractive foreign investors view China’s prospects vis-à-vis other regions, and China’s capacity to leverage foreign capital to fund its development goals.

Beijing wants this type of investment to go up, but many foreign governments – primarily the U.S. – have grown increasingly wary of capital flows into China, which are coming to be seen as “funding the competitor.” The coming year will give us a much clearer picture of how that tension will play out.

Taylor Loeb, financial markets analyst, Trivium China


Keep it flowing

OPEC+, the extended oil producer group made up of the traditional OPEC members and allied exporters like Russia, rescued the oil market in the pandemic’s opening months with an unprecedented 9.7 million barrel per day production cut – roughly 10 per cent of global supply. Since then, market watchers have been monitoring their compliance and now the proposed easing schedule to bring the withheld crude back to market.

At first easing (i.e., production increases) was sporadic, driven by the jagged and uncertain recovery from the devastating pandemic shock to global oil demand. Ultimately, the group committed to steady production increases of 400 thousand barrels a day each month beginning August, 2021, which will erase the totality of the cut by the fall of 2022.

Focus has now shifted to OPEC+’s recent failure to add the promised barrels each month. There is renewed scrutiny of the group’s true spare capacity, with some sources claiming that the cupboard may be increasingly bare. All eyes will be on OPEC+ in 2022 and their ability to continue returning a steady flow of barrels to the market.”

Rory Johnston, managing director and market economist, Price Street (@Rory_Johnston)


Regarding Henry (Hub)

Henry Hub natural gas prices have been on a roller coaster, rising to more than US$6.50/mmBTU before peaking in October and erasing all of their gains in November, falling to near $3.50/mmBTU. Prices continue to come under pressure as this winter is on track to be the second warmest start since 1950. This is in stark contrast to the European natural gas market, which has been trading at more than 10 times Henry Hub, owing to a shortage out of Russia and a cold start to the winter. European power prices have skyrocketed, resulting in a full-blown crisis. If only Europe had more access to U.S. LNG exports, a lot of this regional pain would be dissipated. But the Biden administration is having none of it, even going so far as to threaten an export ban, cutting off vital supplies when most needed.

This underscores the importance of a reliable source of supply and price stability in core commodities like natural gas, especially after a large economic event like the pandemic. The current contraction in both oil and natural gas will help with the North American economic recovery – for the time being, anyway. Longer term, the current U.S. administration is attacking its own energy sector and appears to be going down the same path as countries like Germany. Maybe, just maybe, Canada could be its Russia. But based on the current lack of capital in the sector and continuing pricing volatility, we wonder if one day North America will end up having to build LNG import facilities instead of export terminals.

Martin Pelletier, senior portfolio manager, Wellington-Altus Private Wealth Counsel (@MPelletierCIO)


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Economy

Venezuela Holds Rare Call With Bondholders as Economy Recovers – BNN

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(Bloomberg) — Venezuela’s government is making a fresh attempt to open channels with international investors, presenting potential deals in the oil and tourism sectors and talking up new economic growth data. 

Advisers, led by top economic aide Patricio Rivera, held an hour-long call on Wednesday with at least two dozen bondholders and fund managers from the U.S. and Europe, according to four people with direct knowledge of the conversation. The call was organized by the Venezuela Spain Chamber of Industry and Commerce. 

Rivera, a former Ecuadorian Finance minister who is spearheading reforms aimed at liberalizing Venezuela’s economy, briefed the investors on policy shifts and the government’s commitment to become more market friendly, the people said. He also said the government was open for investments in several sectors, from oil and minerals to tourism, the people said.  

Rivera did not respond to a request for comment. 

Venezuela has had limited contact with debt holders since it defaulted on bonds in 2017. It owes at least $60 billion plus interest on those defaulted notes. The call comes as the country breaks a seven-year recession, posting economic growth of  7.6% in the third quarter of 2021, according to preliminary data, and as it exits a four-year bout of hyperinflation. 

Despite the new outreach, Venezuela remains under U.S. economic sanctions that pose an important roadblock to American bondholders. 

©2022 Bloomberg L.P.

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Xi resets policy priorities to boost economy – The Tribune India

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Yogesh Gupta

Former Ambassador

China’s Central Economic Work Conference (CEWC), held at Beijing from December 8 to 10, 2021, decided that all stakeholders should work actively to maintain stability in the macro-economy in view of new challenges as the country holds the Winter Olympics from February 4 to 20, 2022, and the 20th Congress of the Communist Party of China (CPC) later this year. What made the economic planners to rethink the policy direction was the sharp dip in China’s GDP growth rate from 18.3% in Quarter 1 of 2021 to 7.9% in Q2, 4.9% in Q3 and 4% in Q4.

Structural changes ordered by President Xi Jinping such as reducing loans to the real estate sector, lower emission targets resulting in power cuts and the zero tolerance to Covid-19 had played an important role in decelerating the economic growth. Xi is personally involved in directing the real estate policies as he considers the unchecked growth of this sector as posing a threat to China’s economic stability.

New measures undertaken by the Xi regime included severe restrictions on giving bank loans, allow hugely indebted developers to default to rein in large unproductive expenditure and announcement of a property tax on a trial basis in certain provinces to discourage the purchase of multiple properties to curb speculation. Given that the real estate sector accounts for 29% of the Chinese economy, these measures, according to some economists, may reduce China’s GDP growth by about 0.5% in 2022 and thereafter. These restrictions have strained the local government’s finances, as selling land is an important source of revenue. Several local governments slashed the salaries of their staff, weakening the consumption.

In the last two years, China has undertaken several measures to reduce its greenhouse emissions, including controlling of its coal-fired power plants to meet its targets of peaking carbon dioxide emissions by 2030, lower the carbon dioxide emissions per unit of GDP by over 65% (from 2005 level) by 2030, increase the share of non-fossil fuels and forest stock. Decrease in power generation by coal-fired plants and rationing since September 2021 disrupted industrial production in many provinces as several industries were forced to cut production and reduce jobs. Recurrent outbreaks of Covid in some areas and China’s zero tolerance approach again forced several businesses to close and confined about 20 million people at home. The working of several companies in technology, education and gaming sectors was adversely impacted due to the regulatory actions, resulting in lower earnings and loss of jobs.

At the CEWC, it was felt that new external challenges had arisen as President Biden had not only continued the policies of his predecessor but also taken a harder line with his allies towards China. The Comprehensive Investment Agreement with the EU had remained frozen and China’s relations with Australia and Japan had deteriorated. These countries had become more vociferous in criticism of China’s human rights record and applied a number of sanctions against the Chinese companies and individuals for investments and exports. Several Chinese leaders appeared nervous about the slowing of economic growth in 2022 as Xi is expected to seek an unprecedented third term as President. They advised him that priority should shift to maintaining growth and stability so that the Chinese economy could convey a picture of strength.

Amid deterioration in China’s external environment, the conference identified securing supplies of primary products such as food, soybean, minerals and energy as a priority to prepare for the post-Covid world. “The Chinese people’s rice bowl must be firmly held in their own hands at all times,” Xi emphasised. He underlined the need to establish a strategic materials reserve to secure minimum needs at critical moments and work on a comprehensive conservation strategy. Other four priorities agreed were “common prosperity, capital regulation, defusing major financial risks and carbon neutrality. Concerns were expressed at the high level of unemployment among the migrants, the youth and possible outflow of foreign exchange as the US dollar strengthened following rise in the interest rates.

In view of these reasons, it was agreed that the government would have to give bigger policy support to the economy. China’s central bank had also conveyed dovish signals, cutting the reserve requirement ratio to the banks in a departure from central banks in the developed countries. Though the policymakers remained committed to structural reforms, it was agreed to slow down the regulatory crackdown and provide targeted support to SMEs, first time homebuyers, more funding for technology innovation and green investments.

China’s foreign trade made impressive gains in 2021, reaching $6.05 trillion as it functioned as a supply house to the rest of the Covid-stricken world. Trade with the US soared by 28.7% ($755.6 billion) and India by 43.3% (total $125.66 billion, Indian exports $28.14 billion, imports $97.52 billion). The increased global demand was chiefly responsible for 8.1% growth of China’s economy in 2021.

Chinese leaders are worried that external demand may not sustain as other major economies come out of Covid and start exporting this year. Consumption in China has not moved beyond 55% of the GDP (54.3% in 2020) in recent years due to the saving habits of the Chinese people for expenditure on health, education and old age. The government is, therefore, forced time and again to resort to big investments to drive up the growth rates.

It is now trying to increase investments in research and innovation (its R&D expenditure reached 2.4% of GDP in 2020), adoption of intelligent technologies and digital economy. While these technologies will yield efficiencies and mitigate to some extent the adverse impact of declining workforce, these will not lessen the latter’s adverse impact on lowering consumption. China will, therefore, be forced to accept sub-5% economic growth in the coming years as it rebalances its economy away from non-productive expenditures and starts experiencing the negative effects of population decline.

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The so-called 'gig economy' is on the rise — here's what that means for Alberta workers – CBC.ca

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They’re the people who pick you up in an Uber or deliver groceries to your door — so-called gig workers, referred to as “independent contractors” by the companies for which they work — and across Canada, there’s an ongoing debate about the future of their industry.

Last month, a report from the Ontario Workforce Recovery Advisory Committee recommended that those who work in the “gig economy” — for example, working for apps such as Uber and Skip The Dishes — should be guaranteed a minimum wage, along with some other protections.

No exact analog to that committee currently exists in Alberta. A spokesperson for Tyler Shandro, Alberta’s minister of labour and immigration, said the provincial government’s primary commitment is to support workers as the economy continues to recover.

“Alberta’s government continues to monitor the gig economy, as it is an evolving sector with unique needs,” said Joseph Dow in an email.

According to a study released by Statistics Canada in 2019, around eight per cent of all workers in Canada participated in gig work in 2016, up from 5.5 per cent in 2005. 

Uber Eats courier Spencer Thompson is shown in Toronto in a 2021 file photo. On the heels of new recommendations being made for gig workers by the Ontario provincial government, an Alberta labour leader says a conversation needs to be had around the future of gig work in the province. (Frank Gunn/The Canadian Press)

Efforts to update laws around how gig workers are paid and what benefits they are entitled to has been a contentious issue over the past few years. 

During the last federal election campaign, Conservative Leader Erin O’Toole said that the 1.7 million Canadians working in the gig economy were “left behind” during the pandemic.

An Alberta labour leader says despite the same issues existing for those participating in Alberta’s gig economy — low wages, insecurity and lack of benefits — no conversation is being had provincially about the supports available for these workers.

“I’m profoundly concerned about the shift towards gig work,” said Gil McGowan, president of the Alberta Federation of Labour.

“It’s bad for individual workers. But I would argue that it’s just as bad for the economy, because when people are faced with that kind of insecurity, they can’t participate in the economy in the same way as workers in other sectors.”

Brandon Mundy, a delivery driver with Instacart in Calgary, says working in the gig economy has helped him through some difficult times — but he’s hoping changes are introduced to mitigate the risks of working in a competitive and saturated market. (Helen Pike/CBC)

Brandon Mundy is a delivery worker with Instacart, a grocery delivery service.

He previously delivered with food delivery platform DoorDash, but said he stopped working for that service due to long periods of delays between orders.

“It can get incredibly competitive these days, because of how saturated the delivery driver industry is right now,” he said.

Even though Mundy said he tends to make more working with Instacart, he’s noticed smaller payouts recently. Plus, he’s been putting significant wear and tear on his vehicle.

“I would sure hope [Alberta] introduces support for gig workers,” Mundy said. “Especially with how popular it is now, especially through COVID.”

Efforts to unionize and departures of platforms

Those gig workers completing tasks for apps like Uber and Lyft are considered independent contractors by the companies. 

Therefore, the company isn’t obliged to pay minimum wage or other protections — but that is a “smoke screen,” said Jim Stanford, economist and director of the Vancouver-based Centre for Future Work.

“Courts and labour regulators in many countries around the world are recognizing that and saying, no, just because you assign the work over a smartphone doesn’t mean they’re not your effective employee,” Stanford said.

Brandon Mundy, a delivery driver with Instacart, says the time it takes to buy groceries from a store, and then deliver them to a home, isn’t always translating into reliable profits these days. He said an oversaturated market and mitigating concerns like vehicle repair can make things more challenging. (Helen Pike/CBC)

Uber Canada previously referred CBC News to a proposal that would provide a benefit fund to workers, adding that the company attempts to prioritize “what drivers and delivery people want: flexibility plus benefits.”

Efforts by workers to secure more benefits have also led to certain app-based platforms reconsidering their availability within Canada.

In 2020, food delivery service Foodora announced it would leave Canada in the wake of workers attempting to unionize. 

Stanford said such moves suggested that business models of gig platforms depended on the “exploitation of gig workers.”

“That should really be a warning sign for us that this is not a business model that we should encourage in Canada. We have to make sure that they’re subject to the same rules and responsibilities as any other employer,” he said. 

“Otherwise, this cancer, which is spreading through the labour market, will continue to undermine wages and working conditions in all kinds of industries.”

Ontario’s recent proposal did not include everything the union-backed group Gig Workers United called for, including for gig workers to receive full employee protections.

In early December, the European Union announced draft legislation that would provide employee rights to gig economy workers, a move that would affect millions of workers.

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