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The Progressive Economics Forum

Austerity Bites? Public-Sector Implosion Hits Canada’s Job Market

Statistics Canada reported a loss of 39,000 jobs in July, even as Canada’s working-age population grew by 39,000. As a result, unemployment rose and many Canadians withdrew from the labour market altogether.

The decline reflected a loss of 74,000 public-sector jobs, which was only partly offset by modest growth in private-sector employment and self-employment. There have been some doubts about erratic employment changes in educational services reported by the Labour Force Survey during summer months. However, July’s public-sector plummet was driven more by healthcare, social assistance and public administration than by educational services.

One month does not make a trend, but an obvious question is to what extent July’s Labour Force Survey reflects government cutbacks. Austerity has clearly had a negative effect on employment prospects, but did it take such a large bite out of Canada’s job market in a single month?

UPDATE (August 13): I was interviewed on CBC Toronto’s Metro Morning yesterday about why Canadian unemployment is worse than the official rate of 7.2%. The supplementary measures of unemployment that I mentioned are available on Statistics Canada’s website.

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Comments

Comment from Richard Frisby
Time: August 21, 2013, 5:21 pm

ps IT IS ABOUT TIME .HPOE THERE IS MORE TO COME.

Comment from Larry Kazdan
Time: August 28, 2013, 3:25 am

Government austerity is a bad idea for Canada and its seniors
Vancouver Sun August 25, 2013

Re: With unavoidable costs looming, it’s time to re-examine seniors’ expendable perks, Don Cayo, Aug. 19

Whether or not our senior citizens are enjoying “expendable perks” is a reasonable debate, but it should never be based on the false premise that the Canadian government is running out of funds. We know that whenever big banks or corporations get into trouble, the federal government can always bail them out because it owns the Bank of Canada, and is the issuer of Canadian currency. Yes, the government can spend too much causing inflation, or spend too little (leaving over a million unemployed as is the case today), but what the Feds can never do is run out of Canadian money.

There are two ways to deal with an aging population.

The responsible path is to use our fiscal capacity and resources to the full today, putting young people to work so that they can make the false teeth, hearing aids and prostheses older people will use, and can offer the medical and physiotherapy services that seniors will need. The irresponsible path is to cut job opportunities and education today through policies of austerity, to fail to build the future medical and health infrastructure, and by pleading penury, to begrudge our seniors a comfortable life by cutting back small privileges and by forcing them to wait longer for their old age pensions.

What slice of the economic pie do our senior citizens deserve? A slice can always be made bigger or smaller through political decision; it has nothing to do with the red herring of what the federal government can afford.

Larry Kazdan

Vancouver
© Copyright (c) The Vancouver Sun
http://www.vancouversun.com/life/Government+austerity+idea+Canada+seniors/8832258/story.html

Comment from Larry Kazdan
Time: August 28, 2013, 3:45 am

Here are the footnotes sent with the original letter to the Vancouver Sun:

Footnotes: (Note: Canada and U.S both have fiat currencies.)

1. Current Governor of the U.S. Federal Reserve Ben Bernanke, speech in 2002 – Deflation: Making Sure “It” Doesn’t Happen Here.
http://www.federalreserve.gov/boardDocs/speeches/2002/20021121/default.htm

The Governor said:

But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.

2. http://www.usnews.com/debate-club/was-the-treasury-and-the-fed-right-to-to-take-the-1-trillion-coin-off-the-table/the-power-to-mint-a-trillion-dollar-coin-has-always-existed

\”[A] government cannot become insolvent with respect to obligations in its own currency. A fiat money system, like the ones we have today, can produce such claims without limit,\” said former U.S. Federal Reserve Governor Alan Greenspan in 1997.

3. Growth and jobs are things governments can buy and summon
http://bilbo.economicoutlook.net/blog/?p=23104

> But the starting point is to remember that unlike the clown’s claims that governments are powerless to anything but impose austerity – growth and jobs are things governments can buy or summon.

4. http://bilbo.economicoutlook.net/blog/?p=19887
> The challenge facing the US is not financial. It is to ensure productivity grows fast enough to meet the challenge of the rising dependency ratio and the political demands required to divert real resources from one generation to another. But the political challenge is no different to diverting current resources between competing groups.

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