There are signs that the Canadian jobs landscape is currently going through a significant transformation process—but with the country in the midst of an election, many of the complex issues have either fallen off the radar or been hard to address.
Jobs numbers out Friday morning show the Canadian economy created 90,000 new jobs in August, bringing the unemployment rate to 7.1 per cent.
Despite signs of an economic slowdown in late spring, it was another month of jobs gains, after Statistics Canada reported the economy created 94,000 jobs in July, driving the unemployment rate down to 7.5 per cent.
But whatever the short-term progress on job creation, many see the Canadian economy charging back toward full employment both this year and in 2022, as the Bank of Canada considers cutting back on stimulus and raising interest rates.
Speaking Thursday in French to the Quebec Chamber of Commerce, head of the central bank Tiff Macklem described both a strong recovery in sectors hit hard by COVID-19 and at the same time a new shift in the way Canadians work.
“It is clear that the pandemic has had a profound effect on the labour 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 complain that many jobs remain vacant. The K-shaped recovery has meant that some of the lowest-paid workers have been the most affected, including those in retail and restaurants. Macklem said he expects the recovery in those sectors to lead to a “reduction in those inequalities.”
In the current election campaign, all of the candidates know that jobs remain an important issue.
But as former Progressive Conservative leader Kim Campbell once famously said, it is hard to address issues in all of their complexity while on the stump. Some of the profound effects that Macklem mentioned are still not understood and won’t be resolved by election campaign sound bites.
In an effort to get a handle on the confusing state of the current labour market, the Bank of Canada is currently working on a forthcoming research paper titled Assessing Labour Market Slack for Monetary Policy.
‘Labor slack,’ not unemployment, will be key moving forward. “Labor slack,” while it includes the unemployed people measured by Friday’s jobs numbers, is much more than that. It includes all of the people who would really like to work more but for various reasons disappear from the jobless numbers.
According to “labor slack” definitions, there are approximately three million Canadians who want more work, representing a labour underutilization rate of about 15 per cent.
These kinds of numbers—rather than just the unemployment rate we see in news headlines — are why Macklem insists the central bank must continue to stimulate the economy with low interest rates and bond purchases.
One of Macklem’s fears, however, is that a fourth wave could lead to more labor slack. The longer people are unemployed, or underemployed in jobs that don’t use their skills, the more those skills will lose their value in the labour market.
For the Bank of Canada governor, while the pandemic may be helping to transform our economy and our job market, its disruptions for workers and employers is not over.
“The virus and pandemic-related disruptions have not gone away, and they will continue to disturb our lives and weigh on economic activity,” Macklem said.
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