COVID-19 ‘deep effect’ transforms Canadian labor market
There are signs that the Canadian employment landscape is undergoing a transformation that will affect us all, but with the country in the midst of an election, many of the complex issues have been difficult to resolve.
Employment figures released Friday morning show the Canadian economy created 90,000 new jobs in August, bringing the unemployment rate to 7.1%.
Despite signs of an economic slowdown in late spring, it was another month of job gains, after Statistics Canada announced that the economy created 94,000 jobs in July, pushing the unemployment rate down to 7.5%.
Towards full employment
But regardless of the near-term progress in job creation, many connoisseurs, including Bank of Canada Governor Tiff Macklem, see the Canadian economy returning to full employment this year and next. , as the central bank plans to cut stimulus and increase interest. rates.
Speaking in French on Thursday before the Quebec Chamber of Commerce, Macklem described both a strong recovery in jobs hit hard by COVID-19 and at the same time a complicated change in the way Canadians work.
“It is clear that the pandemic has had a profound effect on the job market,” Macklem said in a question-and-answer session after his speech. He described the impact as complex.
As many reports have suggested, despite high unemployment, employers are complaining that many jobs remain vacant. The K-shaped recovery meant that some of the lowest-paid workers were hit the hardest, especially those in retail and restaurants. Macklem has said he expects the recovery in these sectors to lead to a “reduction in these inequalities”.
In the current election campaign, all candidates know that employment remains an important issue. An overview of the parties’ positions on jobs is summarized in this Overview of the CBC platform (scroll down or click on “Jobs” in the directory on the left).
But as former Progressive Conservative leader Kim Campbell once hinted, it is sometimes difficult to tackle issues in all their complexity when you’re on the stump. Some of the deep effects that Macklem mentioned are still not understood and do not lend themselves to sound bites at election time.
In an effort to understand the confusing state of the current job market, the Bank of Canada is currently working on an upcoming research paper titled Assessing the loosening of the labor market for monetary policy.
Labor slack, not unemployment, is key
The “labor slack”, although it includes the unemployed as measured by the number of jobs on Friday, is much more than that. It includes all the people who would really like to work more but for various reasons disappear from the unemployment figures.
This is a concept familiar to Jim Stanford, the well-known labor economist who now heads the Canada-Australia Association. Center for Future Work.
As he said in an email conversation, an unemployment rate of 7.5% is just the tip of the iceberg.
“That doesn’t count people who work very short hours, who want and need more work,” Stanford said, noting that Statistics Canada counts you as an employee if you work only one hour per week. “It also excludes people who want to work but are not actively looking for it to meet Statistics Canada’s definition.”
According to the definitions of “slack labor”, there are over three million Canadians who want more work, which represents a labor underutilization rate of about 15%.
These kinds of numbers – rather than just the unemployment rate we see in the headlines – is why Macklem insists the central bank must continue to stimulate the economy with low interest rates and bond purchases.
“The [Bank of Canada’s] The Governing Council considers that the Canadian economy still has considerable excess capacity and that the recovery continues to require extraordinary monetary policy support, “the central bank said in its monetary policy report on Wednesday, a point reiterated in Macklem’s speech on Thursday.
4th wave danger
One of Macklem’s fears for the economy is that a fourth wave will result in more labor. The more people are unemployed or underemployed in jobs that do not use their skills, the more these skills will lose their value in the labor market.
In the United States, analysts are trying to understand a labor market where there is 10 million jobs begging and eight million people begging for work. In Canada, the difference is not that marked, but employers in many parts of the country continue to complain that they cannot find workers in a post-pandemic world. It remains an enigma.
Many small businesses and their representatives at the Canadian Federation of Independent Business (CFIB) have blamed government handouts. Last month CFIB Senior Vice-President, National Affairs Corinne Pohlmann told me, “People shouldn’t be better off with a government assistance package than they would be when they were working. “.
Stanford, a longtime advocate for a living wage, dismisses the CFIB complaint, saying it’s clear the market is telling us that companies that can’t find workers should pay more. American studies, mentioned above, indicate that the pandemic has shown people that there is more to life than working long, unpredictable shifts at unpleasant work. Others took the opportunity to change careers and look for better jobs.
“Better wages will help. Better, more regular working hours are even more important, I would say,” Stanford said, returning to the workforce argument. “Inadequate hours are a greater source of low income than low wages.”
He said training and providing a true career path – rather than expecting an endless supply of disposable workers – is more likely to attract employees at this point.
Stanford said it has seen evidence that many smart employers are already trying to do this.
For the Governor of the Bank of Canada, while the pandemic may help transform our economy and our labor market, its disruption to workers and employers is not over.
“The virus and the disruptions associated with the pandemic have not gone away, and they will continue to disrupt our lives and weigh on economic activity,” Macklem said.
Follow Don on Twitter @don_pittis