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Could a 4-day work week boost B.C.'s COVID-plagued economy by spurring more travel? – CBC.ca

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Could a 4-day work week boost B.C.'s COVID-plagued economy? – CBC.ca


As provinces, countries and the world as a whole struggle to re-start economies, some policymakers are pitching a four-day work week as a way to help generate tourism spending.  

New Zealand’s prime minister is recommending a compressed work week as a way to encourage more weekend travel within the country, where about 60 per cent of tourism is domestic.

The theory is that more flexible working arrangements will help promote more staycations that are generally conducive to long-weekend travel.

With Canada’s border still closed to international tourists, longer weekends could spur more regional travel and kick-start stalled economies. And it’s being welcomed by some politicians in B.C.

“It’s a very interesting idea that should be considered,” said Cowichan Valley MLA Sonia Furstenau. “It’s one example of the kind of nimbleness that we need to think about when we approach this COVID-19 recovery.”

Furstenau has long been a supporter of a shorter work week, even highlighting it in her campaign platform to become the next leader of the B.C. Green Party.

In the past, she has praised the benefits of productivity and work-life balance, and says the current pandemic could be the impetus to trigger healthier long-term habits.

A mandatory four-day work week…would increase costs and add regulatory complexity for employers in every sector.– Jock Finlayson, Business Council of British Columbia

“In a suite of possible approaches, this seems to be one that would be well-suited to British Columbia — particularly given our domestic tourism as an important part of our local recovery,” she told CBC News.

Furstenau believes it’s not a policy that should be mandatory, and therefore would not require legislative changes, but rather suggests it be led by employers. Still, she believes government can play a role.

“You don’t want to impose a top-down approach to this, but rather encourage businesses to consider it,” she said. “There could be incentives provided by federal or provincial governments.”

So is a four-day work week something the current NDP government would endorse for British Columbians?

“I think I will leave that up to the entrepreneurial spirit of British Columbian businesses and the workers,” said Labour Minister Harry Bains when asked about it a news conference Thursday.

“Many already have different work schedules; some work four days on, four days off; others have staggered hours,” he said. “At the end of the day, we as a government want to make sure we support those businesses and their initiatives.” 

‘B.C. is not New Zealand’

Some in the province’s business community are not welcoming the idea so warmly — especially if a compressed work week was required, rather than simply encouraged.

“In the current pandemic-driven economic crisis, business does not support government-imposed measures that would further increase operating and labour costs, and thus make it harder for companies to hire back employees,” said Jock Finlayson, chief policy officer of the Business Council of British Columbia. 

He said the approach makes no sense for firms that have seen revenues drop significantly or collapse altogether, adding there is no need at this point for the province to consider ‘drastic steps.’

“B.C. is not New Zealand… A mandatory four-day work week, especially if not accompanied by proportionate pay reductions, would increases costs and add regulatory complexity for employers in every sector,” Finlayson said in a statement.

The B.C. Business Council believes there is currently no need for the province to take ‘drastic steps’ to generate local demand for tourism. (Ben Nelms/CBC)

‘A number of ideas — and that’s a good one’

B.C.’s tourism industry has all but come to a halt since the pandemic hit in March and is looking at its options. 

“There’s a number of ideas — and that’s a good one,” said Walt Judas, CEO of the Tourism Industry Association of B.C., who calls it a novel concept.

He believes extending weekends would encourage people to hop in their car and go further afield than a two-day weekend, so it could benefit some communities as people travel between regions.

“Any initiatives like this we would certainly want to look at to see if it is, in fact, a motivation for people to travel. We’d like to think it is, but on the other hand people may still choose to stay closer to home,” he said in an interview Thursday.

The Tourism Industry Association of B.C. says the bulk of tourism dollars generated in this province are from residents of British Columbia, but hitting the peak summer season is critical. (Roshini Nair/CBC)

However, even if B.C. does benefit from a bump in domestic travellers, many of the most popular outdoor activities in the province are free.

“Having people travel to other jurisdictions is great, but if they’re only on a hiking trail and not spending money at a restaurant or going to an attraction or staying at a hotel — that doesn’t help businesses that are desperate for visitors.”

Judas also wonders whether tourist facilities will be ready to accept an influx in visitors in time to cash in on the peak summer tourism season from May-September. 

“It’s the nearby, short-haul travel market that is your bread and butter,” he said, adding the bulk of tourism dollars in the province are generated from residents of British Columbia.

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Economy

Canadian regulator lifts banks’ capital buffer to record, priming for post-pandemic world

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Banks in Canada

Canada‘s financial regulator raised the amount of capital the country’s biggest lenders must hold to guard against risks to a record 2.5% of risk-weighted assets, from 1% currently, in a surprise move that could pave the way for them to resume dividend increases and share buybacks.

The new measures, which take effect on Oct. 31, is a sign that the economic and market disruptions stemming from the coronavirus pandemic have abated and banks’ capital levels have been resilient, the Office of the Superintendent of Financial Institutions (OSFI) said in a statement.

But the regulator acknowledged that key vulnerabilities, including household and corporate debt levels, as well as asset imbalances caused by steep increase in home prices over the past year, remain.

In a sign of concern about the housing market, OSFI and the Canadian government raised the benchmark to determine the minimum qualifying rate for mortgages, starting June 1.

The increase in the Domestic Stability Buffer (DSB) to the highest possible level raises the Common Equity Tier 1 (CET1) capital – the core bank capital measure – to 10.5% of risk-weighted assets; a 4.5% base level, a “capital conservation buffer” of 2.5%, and a 1% surcharge for systemically important banks, plus the DSB.

The change “gives OSFI more leeway to loosen a restriction down the road, namely the freeze on buybacks and dividend increases,” National Bank Financial Analyst Gabriel Dechaine said.

OSFI felt it was “useful for the banks to understand what our minimal capital expectations are and to give them time to adjust to that… ahead of any lifting of the temporary capital distribution restrictions,” Assistant Superintendent Jamey Hubbs said on a media call.

Even with the higher requirement, Canada‘s six biggest banks would have excess capital of about C$51 billion, dropping from C$82 billion as of April 30, according to Reuters calculations.

That was driven in part by a moratorium on dividend increases and share buybacks imposed by OSFI in March 2020, although a pandemic-driven surge in loan losses has so far failed to materialize.

The Canadian banks index slipped 0.25% in morning trading in Toronto, while the Toronto stock benchmark fell 0.1%.

The increase is the first since the last one announced in December 2019, which did not come into effect as planned in April 2020, as OSFI made an out-of-schedule change https://www.reuters.com/article/canada-mortgages-regulation-idUSL1N2B636J that dropped the rate to 1% in March. It has maintained that level at its twice yearly reviews.

Prior to that, OSFI had raised the required level by 25 basis points at every twice yearly review since it was introduced at 1.5% in June 2018.

($1 = 1.2326 Canadian dollars)

 

(Reporting By Nichola Saminather; Editing by Marguerita Choy and Jonathan Oatis)

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Economy

Canada Economic Indicators

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Fed to focus on next steps to save economy – BNNBloomberg.ca

The economic indicators used to gauge the performance of an economy and its outlook are the same across most nations. What differs is the relative importance of certain indicators to a specific economy at various points in time (for instance, housing indicators are closely watched when the housing market is booming or slumping), and the bodies or organizations compiling and disseminating these indicators in each nation.

Here are the 12 key economic indicators for Canada, the world’s 10th-largest economy:1

GDP Growth

Canada's GDP grew by 3% in July as more sectors reopened – CBC.ca

Statistics Canada, a national agency, publishes growth statistics on the Canadian economy on monthly and quarterly bases. The report shows the real gross domestic product (GDP) for the overall economy and broken down by industry. It is an accurate monthly/quarterly status report on the Canadian economy and each industry within it.2

 

Employment Change and Unemployment

Key data on the Canadian employment market, such as the net change in employment, the unemployment rate, and participation rate, is contained in the monthly Labour Force Survey, released by Statistics Canada. The report contains a wealth of information about the Canadian job market, categorized by the demographic, class of worker (private sector employee, public sector employee, self-employed), industry, and province.3

Consumer Price Index

Statistics Canada releases a monthly report on the consumer price index (CPI) that measures inflation at the consumer level. The index is constructed by comparing changes over time in a fixed basket of goods and services purchased by consumers. The report shows the change in CPI monthly and over the past 12 months, on an overall and core (excluding food and energy prices) basis.4

International Merchandise Trade

This monthly report from Statistics Canada shows the nation’s imports and exports, as well as the net merchandise trade surplus or deficit. The report also compares the most current data with that for the preceding month. Exports and imports are shown by product category, and also for Canada’s top ten trading partners.5

Teranet – National Bank House Price Index

This composite index of house prices across Canada was developed by Teranet and the National Bank of Canada and represents average home prices in Canada’s six largest metropolitan areas. A monthly report shows the change in the index monthly and over the past 12 months, as well as monthly and 12-month changes in Canada’s six and 11 largest metropolitan areas.6

RBC Manufacturing Purchasing Managers’ Index – PMI

Released on the first business day of each month, this indicator of trends in the Canadian manufacturing sector was launched in June 2011 by Royal Bank of Canada, in association with Markit and the Purchasing Management Association of Canada. RBC PMI readings above 50 signal expansion as compared to the previous month, while readings below 50 signal contraction. The monthly survey also tracks other information pertinent to the manufacturing sector, such as changes in output, new orders, employment, inventories, prices, and supplier delivery times.7

The Conference Board’s Consumer Confidence Index

The Conference Board of Canada’s Index of Consumer Confidence measures consumers’ levels of optimism in the state of the economy. It is a crucial indicator of near-term sales for consumer product companies in Canada, as well as an indicator of the outlook for the broad economy since consumer demand comprises such a significant part of it. The index is constructed on the basis of responses to four questions by a random sampling of Canadian households. Survey participants are asked how they view their households’ current and expected financial positions, their short-term employment outlook, and whether now is a good time to make a major purchase.8

Ivey Purchasing Managers Index – PMI

 An index prepared by the Ivey Business School at Western University, the Ivey PMI measures the monthly variation in economic activity, as indicated by a panel of purchasing managers across Canada. It is based on responses by these purchasing managers to a single question: “Were your purchases last month in dollars higher, the same, or lower than in the previous month?” An index reading below 50 shows a decrease; a reading above 50 shows an increase. Panel members indicate changes in their organization’s activity over five broad categories: purchases, employment, inventories, supplier deliveries, and prices.9

Housing Starts

Canada Mortgage and Housing Corporation (CMHC) issues a monthly report on the sixth working day of every month, showing the previous month’s new residential construction activity. The data is presented by region, province, census metropolitan area, and dwelling type (single-detached or multiple-unit). The indicator is an important gauge of the state of the Canadian housing market.10

Home Sales

This key indicator of housing activity is compiled by the Canadian Real Estate Association (CREA) and is based on the number of home sales processed through the MLS (Multiple Listing Service) Systems of real estate boards and associations in Canada. The monthly report from the CREA shows the change in home sales across Canada, as well as for major markets, from month to month. The report also includes other important housing-related information, such as the change (as a percentage) in newly listed homes, the national sales-to-new listings ratio, months of housing inventory, the change in the MLS Home Price Index, and the national average price for homes sold within the month.11

Retail Sales

Statistics Canada releases a monthly report on retail sales activity across Canada, with changes shown on month-over-month and year-over-year bases. The headline number shows the percentage change in national retail sales on a dollar basis; the percentage change in volume terms is also shown. The retail sales figures are shown by industry and for each province or territory, and provide insights into Canadian consumer spending.12

Building Permits 

The building permits survey conducted monthly by Statistics Canada collects data on the value of permits issued by Canadian municipalities for residential and non-residential buildings, as well as the number of residential dwellings authorized. Since building permit issuance is one of the very first steps in the process of construction, the aggregate building permits data are very useful as a leading indicator for assessing the state of the construction industry.13

The Bottom Line

The 12 economic indicators briefly described above show the health of key aspects of Canada’s economy: consumer spending, housing, manufacturing, employment, inflation, external trade, and economic growth. Taken together, they provide a comprehensive picture of the state of the Canadian economy.

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Economy

Canada adds jobs for fourth straight month in May

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B.C. saw close to 55000 new jobs in Septmber

Canada added 101,600 jobs in May, the fourth consecutive month of gains, led by hiring in the education and health services sector as well as in professional and business services, a report from payroll services provider ADP showed on Thursday.

The April data was revised to show 101,300 jobs were gained, rather than an increase of 351,300. The report, which is derived from ADP’s payrolls data, measures the change in total nonfarm payroll employment each month on a seasonally-adjusted basis.

 

(Reporting by Fergal Smith; Editing by Alex Richardson)

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