In this election year, the prime minister has some explaining to do: Canadian labour markets are in worse condition than originally imagined, according to a new report by Statistics Canada.
We knew the Canadian labour market was not in great shape.
After all, in lowering its trendsetting benchmark rate to 0.75, the Bank of Canada last week cited the slack in the Canadian labour market as one of the reasons.
But what we did not know until this week is that it’s actually worse than we thought. Not ‘far worse’, but still worse enough to give us pause and confirm our suspicions that the labour market is actually headed in the wrong direction.
It is quite normal for Statistics Canada to revise data on a regular basis, as new information comes to light. But this is becoming a habit for this once world-respected statistical agency.
So what does the new information tell us?
First, the unemployment rate is not 6.6% but 6.7%. Not a large discrepancy, but sufficient enough to suggest that it is not going down. By now, four years into a so-called recovery, it should be heading down, not up.
Also, the Canadian economy in 2014 only created 121,300 jobs. Initially, we were told that the Canadian economy had created 165,700 jobs. In other words, the number of jobs created in 2014 was actually 35% lower than expected. This is certainly not welcome news. And as the effects of the oil crisis begin to be felt, expect these numbers to change dramatically for the worse.
But more worrisome is the labour force participation rate.
On its own, the unemployment rate tells us very little and can be a misleading guide to the underlying economic forces.
The participation rate tells us how many adults of working age are either working or looking for work. Along with the unemployment rate, it gives us a more complete image of labour market dynamics.
According to the revised figures, it now stands even lower than initially believed and shrank to its lowest since 2000. It is now at 65.7% (revised down from 65.9%). This tells us that the number of adults who stopped looking for work because they are discouraged is on the rise. Consider that at the height of the crisis, it stood at roughly 67.7%.
These numbers are worrisome and reflect a clear, unsettling trend in the wrong direction.
Now let’s step back and look at the bigger picture, and place these revised numbers in the context of the Harper government’s macroeconomic policies over the past eight years.
In power since 2006, Harper has been in office since the beginning of the financial crisis. Yet, his policies have failed to deliver the biggest bang for the Canadian taxpayers’ buck.
Here we are, four years into a pseudo-recovery, and the central bank must resort to some Hail Mary policy of reducing interest rates. In a way, Governor Poloz was left with little choice in the absence of a strong federal government expansionary policy.
And this is the problem.
Since taking office, Harper has failed to present Canadians with an overall vision of the Canadian economy. There is no economic strategy, just a series of piecemeal policies designed for the benefits of the selected few.
But such an approach cannot have a large impact, especially in time of a crisis like this one.
Difficult times require a bold vision and bolder policies. Yet, there are none. It is as if Harper has decided to respond to the ongoing crisis with a shrug and wink.
But Harper must come to the same conclusion as many Canadians and Statistics Canada: His policies so far are a failure. Let me rephrase that: A colossal failure.
In this election year, Harper has a lot of explaining to do; in particular why his policies have failed Canadians who are looking for work.
A policy here and policy there does not amount to a vision, which is what our economy desperately needs right now.
Louis-Philippe Rochon is an associate professor at Laurentian University and co-editor of Review of Keynesian Economics