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.)