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The Progressive Economics Forum

Memo to Ministers: The Issue is Unemployment Not Labour Shortages

The federal government is basing labour market policy on the belief that,  as Jason Kenney pithily puts it in today’s Globe, there are “large and growing labour shortages.”  Hence moves to bring in even more temporary foreign workers at lower than average wages, and to push EI claimants into supposedly available jobs.

Not that the facts appear to matter, but it is surely notable that – even after two months of strong job growth – we still have an unemployment rate of 7.3%. The “real” unemployment rate in April – which includes involuntary part-time workers – was 10.7%, down only marginally from 11.3% a year earlier.  The “real” unemployment rate for youth is still 20.4%, down a tad from 21.2% a year ago.

The most recently released Statscan data on job vacancies – for the three months ending in January, 2012 – show that there were 6  unemployed workers for every reported job vacancy. That is actually worse than the previously reported number for September when there were 5.4 unemployed workers for every reported vacancy.

Further evidence of labour market slack and high unemployment is the fact that average hourly earnings in April were up 2.3%  compared to a year earlier, barely matching inflation.

Even the Bank of Canada argues in the current Monetary Policy Report that there is “excess supply”and “unused capacity”  in the job market.

“Developments in labour market indicators have been consistent with the persistence of a slightly greater degree of excess supply. Despite notable improvements in March, both employment and the unemployment rate are little changed, overall, from their levels six months ago (Chart 22). Similarly,the proportion of involuntary part-time workers has only partially recovered from its sharp rise during the recession, pointing to the persistence of unused capacity in the labour market. The proportion of firms reporting labour shortages in the Bank’s spring Business Outlook Survey also remained below its historical average.” (p.22.)

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Comments

Comment from Paul Tulloch
Time: May 16, 2012, 9:44 am

What ever happened to that vacancy rate measure? It showed quite clearly that the actual number of vacancies in Canada (minus the public sector) was like 0.3. (V-U rate). This by all factual empirical evidence suggests that we have a very low vacancy rate and hence shortages are not a factor. Albeit, if you are looking for a pipe fitter in North Edmonton, you may find yourself with an extra vacancy or two.

I guess that is where debate in our policy circles are going- right into Tea party mode- you do not need facts. I recall recently in an email exchange with Doug Henwood, of LBO fame, who was in Calgary to debate a certain right wing economist, ( I will not mention names) and I said to Doug, something like, wow that dude is pretty right wing,how did you make out. He replied that, it was not that bad, as the guy actually had a couple of numbers and facts to support his argument. He said that was a big change from the tea party types he had been debating in the US, that just make stuff up as they go.

So it seems as though Harper is closing in on mission critical, dumb down the policy debates in Canada.

I mean yesterday’s claim that ‘all jobs are the same, from Flaherty was quite insulting for many workers. Just a nasty bunch that crew, I do think the tories have begun to take the veil off and show themselves as the Tea Party north that we all feared they would, once the got that prize of a majority. These have been some of the most upside down days I have ever witnessed in Canadian policy circles. Just a real lack of legitimacy yet filled with the brute force of the velvet policy gloves.

I would like to say that the EI changes announced recently are some of the most regionally divisive policy set backs I have seen in a while. Again Harper picks on those that are being victimized by the recessionary winds. Economic bullying for sure!

Comment from Doc Manderly
Time: May 17, 2012, 11:26 am

This is is a blame the victim approach to distract from the fact that the government is doing nothing to help…

In fact they are making things far worse…

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