Treasury Board and the union representing 122,000 striking workers resolved their differences relatively quickly, but perhaps not quickly enough to keep their work stoppage from tipping economic growth into negative territory, Bay Street economists said.
Economy
PSAC strike may have sent economic growth into negative territory, economists say
Eight-day work action will trim 0.1 to 0.3 percentage points off gross domestic product in April
Mona Fortier, the head of Treasury Board, and the Public Service Alliance of Canada (PSAC) agreed to a contract in the wee hours of May 1 that includes a wage increase of 12.6 per cent over a four-year period, retroactive to June 2021. Treasury Board employees work in areas from port inspections to passport offices. Some 35,000 Canada Revenue Agency workers remained on strike.
Economists figure the eight-day work action, which began on April 19, will trim 0.1 to 0.3 percentage points off of gross domestic product in April. The economy was already slowing, so that could be enough to cause overall output to drop this spring, Douglas Porter, chief economist at BMO Capital Markets, said in an email.
To be sure, whatever economic losses come from the strike could be recouped in May — when PSAC members return to work with bigger salaries. “That hit should be more or less fully reversed this month,” Stephen Brown, an economist at Capital Economics, said in an an email, adding that “the hit from the strikes in April still raises the chance of second-quarter GDP growth being negative.”
A little less growth might help the Bank of Canada get inflation under control. Year-over-year increases in the consumer price index peaked at 8.1 per cent in June 2022, the most in four decades. Inflation has been dropping steadily since, but policymakers have been clear that they’re worried that wage increases based on last year’s cost-of-living increases could keep inflation from dropping back to the two per cent target.
Average hourly wages rose 5.2 per cent in March, according to the most recent data released by Statistics Canada. That was higher than headline inflation, which increased 4.3 per cent in March.
But, it was only the second time in this inflationary run that wages outpaced the consumer price index. Nathan Janzen, an economist at Royal Bank of Canada, said wages have been playing catch up, one of the reasons the PSAC agreement doesn’t have him too worried.
We should expect to see more larger-than-usual wage increases coming
Nathan Janzen, economist, Royal Bank of Canada
Brown at Capital Economics said he didn’t think the deal would fuel inflation, as it covers a small number of workers as a share of total employment, roughly 0.5 per cent of the Canadian workforce. “From the (central) bank’s perspective, the key point is that the wage deals for this year, at 3.5 per cent, and for next year, at 2.25 per cent, are consistent with the bank’s two per cent inflation target,” he said.
“Also, by spreading the wage increases on four years rather than three years, you spread the inflation pressures,” St-Arnaud said. “This is much better than if all the adjustment was front-loaded.”
Still, BMO’s Porter said the concern persists that this deal could set the floor for future contract negotiations, thereby complicating the Bank of Canada’s efforts on inflation. “It seems that at the margin, this deal could make the Bank of Canada’s job of getting inflation back down to two per cent and keeping it there will be a bit tougher,” he said.
The extent to which the strike slowed growth could determine the central bank’s response. Statistics Canada issued an advance estimate for March GDP on April 28 that predicted a decline of 0.1 per cent. Statistics Canada said the economy eked out growth of 0.1 per cent in February.
Marc Ercolao, an economist at Toronto-Dominion Bank, noted that the April GST rebate could offset the negative impact from the strike. St-Arnaud at Alberta Central is also skeptical the strike will trigger a decline. While there could be a “drag” from the strike, “at this point, some quick estimates suggest flat growth in Q2,” he said in an email. “It would require much more weakness in the rest of the economy to see negative growth in Q2.”
Continue Reading
OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.
Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.
The change is scheduled to come into force on Nov. 8.
As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.
The program has also come under fire for allegations of mistreatment of workers.
A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.
In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.
The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.
According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.
The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.
Temporary foreign workers in the agriculture sector are not affected by past rule changes.
This report by The Canadian Press was first published Oct. 21, 2024.
— With files from Nojoud Al Mallees
The Canadian Press. All rights reserved.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
The Canadian Press. All rights reserved.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
The Canadian Press. All rights reserved.
News8 hours ago
Mexican schools have 6 months to ban sale of junk food or face heavy fines
Sports8 hours ago
Jays reliever Green and Canadian slugger O’Neill nominated for comeback player award
News8 hours ago
Panthers’ Reinhart named NHL first star after posting nine points over four games
Investment5 years ago
dynaCERT Inc. Invites You to Join Us at the Vancouver Resource Investment Conference | INN – Investing News Network
Sports5 years ago
AP source: Bears acquiring quarterback Nick Foles from Jaguars – Sportsnet.ca
Media1 year ago
12 Bizarre Things People Did Just To Make Social Media Content
-
Sports12 hours agoForward Jade Kovacevic is the first player signing announced by Northern Super League
-
Business9 hours agoWhat Difference Will You Make to an Employer?
-
News9 hours agoSupply shortage for Ontario home care, palliative patients unacceptable: minister
-
News12 hours agoHarris raises $633 million in the third quarter but spends heavily in final push
-
News9 hours agoCarbon monoxide poisoning suspected in deaths of three found in car in Quebec’s Gaspé
-
Health12 hours agoWhite House says health insurance needs to fully cover condoms, other over-the-counter birth control
-
Health12 hours agoPolio is rising in Pakistan ahead of a new vaccination campaign
-
News13 hours agoOntario appoints former federal Liberal health minister as chair of primary care team
