Our dollar depreciated more than 2 cents on Wednesday, and is now worth .81 of the U.S. dollar, the lowest level since 2011. The Harper government put all Canada’s eggs in one basket by banking on North American crude oil, our top export, but the commodity has plunged from a high of $85 US a barrel in October of 2014, to a low of $46.US on Tuesday.
Finance Minister Joe Oliver announced this week that he would be delaying his budget from the usual February-March date until at least April, due to “market instability.”
Unable or unwilling to admit Canada’s damaged economy, Prime Minister Stephen Harper told reporters yesterday that “These things are creating some shocks that will impact us but they’re not going to throw us off our fundamental growth path or undermine the very strong fundamentals of the Canadian economy.” He added that “The government has complete confidence in the Bank of Canada in the actions that it has taken.”
The Bank of Canada cut the rate on overnight loans between commercial banks by a quarter point to 0.75% on Wednesday, in a response to the recent drop in oil prices. The previous rate had been at 1% since September 2010.
“The drop in oil prices is unambiguously negative for the Canadian economy. Canada’s income from oil exports will be reduced, and investment and employment in the energy sector are already being cut,” BoC’s Governor Stephen Poloz explained.
Many, including NDP finance critic Nathan Cullen, think Harper is in denial. The Conservatives had hoped to sail into 2015 on a high of oil fumes and the elimination of the$2.9-billion federal deficit , but it looks like their plans may be tanked as predicted federal tax revenues could be reduced by several billions of dollars thanks to global oil price shake-ups.
No worries, though, as Harper is relying on the annual $3 billion contingency fund built into the budget for “unforeseen circumstances.”
Our population of 36 million boasts a 6.6% unemployment rate, with approximately 62% employed (16-64 years of age). (The United States, with 316.1 million, is at 5.6% unemployed, and 59.2% employed, while the United Kingdom, with 64.1 million people, has an unemployment rate of 6.0%, and 73% of people are employed.)
In Canada, wealth inequality, while an issue, is not quite as visible as in America; our Canadian 1% holds 12.5 per cent of Canada’s total income. 29 per cent earn $135,000 or more. But our incomes are generally lower – 95 per cent of working Canadians earn less than $100,000 a year. Our definition of ‘wealthy’ begins at $150,000.00 per year – chump change for wealthy Americans.
One of the reasons Canadians have not felt as impacted by wealth inequality is that, beginning in the late 1970’s, women surged into the workforce in record numbers. A household with two incomes could manage quite well. With the inclusion of children into the family, however, things got shakier financially. If one of the two wage earners has to stay home with the kids, they’ve effectively halved the family income, in order to raise children and run the home. As baby boomers aged, that child care burden lifted for a large portion of the middle class.
Education, and it’s inevitable costs, are a factor. In order to succeed in a technological society, we need workers with complex skills and higher education. 64.1% of adults aged 25 to 64 had post-secondary qualifications in 2011, with women aged 25 to 34 holding a larger share of university degrees. 8 in 10 Registered Apprenticeship certificates were held by men.
In 2011, Almost two-thirds of adult Canadians had post-secondary qualifications, while 2.1 million adults had a post-secondary certificate, diploma or degree in STEM (science and technology, engineering and engineering technology or mathematics and computer sciences) but half of STEM university degrees were held by immigrants who have lived in Canada for many years, and Canadian newcomers.
Unfortunately, Canada has the third-highest proportion of low-paying jobs in the world, with only the U.S. and Ireland having a higher percentage of low-paying jobs. Canada is becoming a ‘nation of part-timers’; part-time employment may still outgrow full-time employment for some years as the baby boomers reduce their working hours or retire.
But the big, well-paying manufacturing companies have left Canada to take advantage of lower labour costs abroad. What’s left for those with or without special skills are low-wage service and retail jobs, which generally lack the benefits associated with higher paying positions, and are becomingly increasingly insecure.
“In December (2014), Canada lost 4,300 jobs as full-time employment rose by 53,500 while there was a decline of 57,700 in part time jobs… Employment gains in 2014 amounted to 186,000 (+1.0 percent), with increases in the second half of the year accounting for most of the growth. Compared with 12 months earlier, the total number of hours worked increased by 0.7 percent.”
“There were 24,000 fewer women aged 25 to 54 employed in December. Their unemployment rate was unchanged at 5.2%, as fewer of them participated in the labour market. Employment among men aged 25 to 54 increased by 23,000 in December and their unemployment rate declined 0.2 percentage points to 5.5%, their lowest rate since 2008.”
This month, however, it was announced that five large retail companies will be closing Canadian operations. Lured to Canada by massive tax breaks, cuts and incentives, they’ll be leaving more than 21,000 unemployed by March or April.
In Alberta’s tar sands, Suncor cut 1000 jobs last week as oil prices crashed. They also announced that they’d decrease their capital spending program by a $1-billion, and reduce operating expense s by another $200 million.
Canada’s largest growth sector in jobs has been in service and retail industries. Only Alberta has seen respectable job growth. Mr. Harper’s blithe suggestion that the current oil crisis will fail to impact the economy as a whole, sounds very much like a man whistling past the graveyard.
Update Jan 24/15: Last week on Global TVs The West Block, Jason Kenny (MP, Canada’s Minister of Employment and Social Development and Minister for Multiculturalism) told host Tom Clark, “We won’t be using a contingency fund. A contingency fund is there for unforeseen circumstances like natural disasters.”
But during an interview for this week’s episode of The West Block, Canada’s Finance Minister, Joe Oliver told Tom Clark, “The contingency fund is there for unexpected and unavoidable shocks to the system and, you know, the oil price decline – which was a dramatic one – would fall in that category. I’m speaking as minister of finance so I’m sort of current on the thinking here.”