OTTAWA — The slower rebound facing women, youth and low-wage workers could pose a threat to a broader economic recovery from the COVID-19 pandemic, Canada’s top central banker said Thursday in a push to find ways to even out an uneven path out of the crisis.
Bank of Canada governor Tiff Macklem warned in a noon-hour speech that uneven recessions that affect some workers and sectors more than others tend to be longer and leave a larger mark on the labour market.
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He noted in the speech to the Canadian Chamber of Commerce that women and young people are more likely now to be permanently laid off from their jobs due to the pandemic.
People permanently laid off take on average twice as long to return to work as people on temporary layoff, Macklem said, risking long-term damage to their job prospects and a creating lasting drag on earnings for youth in particular.
Macklem said the central bank is doing everything it can to support growth and get people back to work.
Getting people back to work is the best way to improve economic outcomes over time, he said, noting that uneven outcomes for some can lead to poorer outcomes for all.
“Striving for equality of opportunity is simply the right thing to do. It’s also good for growth. The loss of jobs for women, youth and low-wage workers is a problem for us all,” he said in his prepared remarks.
“If these workers become discouraged and leave the labour force or lose valuable skills over time, their reduced economic participation will lower our potential growth, limiting living standards for everyone.”
Low-wage earners and women were among the hardest hit when lockdowns in March and April led to three million job losses, and cut hours for 2.5 million more. The unemployment rate rocketed to a historic high from a four-decade low.
The country has gained back nearly two million of the jobs lost, but the pace of gains for women, youth, Indigenous people as well as workers from diverse communities have not seen as sharp a rebound.
Service sectors that require close contact haven’t fared as well as the economy moves from reopening to recuperation, which Macklem said would be followed by a recovery. He said regions reliant on natural resources will continue to be hit by drops in oil prices, which was an important source of employment in many areas and contributed to boosts in incomes.
Prime Minister Justin Trudeau has promised the throne speech later this month will outline a broad and ambitious recovery plan, which is expected to add to the deficit projected in July to reach $343.2 billion.
A group of experts from the Atkinson foundation circulated a memo to Trudeau’s office and other senior cabinet ministers in recent days that called for investments in affordable, quality child care to help women get back into the labour force.
Other recommendations included updating federal labour standards, raising the federal minimum wage, and modernizing the employment insurance system to help more workers at more times in their careers receive supports.
The overall focus on the proposal is to focus on job-creation strategies to avoid what the authors called “economically and politically destabilizing levels” of inequality.
“Ensuring people have decent work in all parts of the economy lays the foundation, both in principle and in the tax base, for investments in incomes and services. Canada’s recovery and future depends on this,” reads the memo, co-authored by economist Armine Yalnizyan, who has advised the Liberals on what’s been dubbed a “she-covery” plan.
Macklem said the bank’s contribution to the recovery has been through keeping its policy interest rate at 0.25 per cent, which the bank held on Wednesday. The rate won’t move from near-zero until a recovery is well underway, and inflation sustainably back at the bank’s two-per-cent target, he said.
He also said that the bank’s bond-buying spree, known as quantitative easing, will be adjusted as required to deliver monetary stimulus as the economy requires. He also said the bank is watching how the unconventional policy tool affects wealth inequality.
“It’s very important that we understand the dynamics of this recession,” Macklem told reporters after his talk.
“The unevenness affects the strength of recovery, it affects the durability of the recovery, and while we can’t target specific sectors or workers, the amount of stimulus we put in place will be calibrated to support the durability of the recovery because that is how you get inflation back to target and keep it there.”
Although Macklem didn’t put a timeline on when interest rates may rise, experts suggest the rate could stay where it is until late 2022 or even into 2023. Next year, the central bank will update its monetary policy framework to determine whether it should continue targeting an annual inflation rate of two per cent.
“With really only one tool at its disposal, this may be a hint that the Bank of Canada would like to see a wider remit as part of its mandate renewal,” wrote TD senior economist Brian DePratto in note about Macklem’s speech. “This could perhaps mean a dual mandate that includes both inflation and unemployment.”
This report by The Canadian Press was first published Sept. 10, 2020.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
