The most important economic problem faced by Canadians today is not government deficits, and solutions are not to be found in returning to balanced budgets too quickly.
The most pressing problems faced by Canadians are a sluggish economic recovery, a stalled jobs market, and record-high levels of household debt, along with inadequate employment insurance coverage and lack of retirement security.
The Canadian Labour Congress believes balanced budgets (even budget surpluses) alone can’t solve these problems. Action is what’s needed and those actions need plans to be effective. Planning comes from a will to act in the first place. And the will to act is what’s missing in Ottawa today.
“Canadians expect their federal government to tackle the big problems in their lives. They are living the reality of an economic recovery that is not as good as they are being told. They see too many young people giving up on finding a job. They see full-time jobs getting replaced with part-time jobs. Most of them think they can never afford to retire. Rather than invest in training or creating jobs, employers choose to sit on $650 billion in dead money. But everything is fine, you see – Joe Oliver has balanced the books,” says Hassan Yussuff.
“I say to Mr. Oliver: you’ve balanced the books, good – now do something to get the economy and job market working for Canadians again,” he adds.
Despite rosy government rhetoric, the overall labour force participation rate and the employment rate have still not recovered to their pre-recession levels. On the contrary, they have stagnated since mid-2012.
The Bank of Canada’s labour market indicator shows that labour market slack is larger than the unemployment rate illustrates. Many economists are concerned about elevated levels of long-term unemployment and involuntary part-time work, as well as high levels of unemployment among vulnerable groups, such as new Canadians and racialized workers.
What can government do to spur economic growth and good jobs? The International Monetary Fund’s (IMF)World Economic Outlook, published in October 2014, suggests that the time is right to make some much needed infrastructure investments. They even go so far as to suggest that clearly identified infrastructure needs could be financed through borrowing without increasing debt-to-GDP ratios, since public infrastructure investment increases growth in both the short term and the long term.
All of the conditions that the IMF identify as ideal for public investment are present in our economy right now. We are experiencing an extended period of labour market slack and low business investment. Canada has a very low level of public debt, borrowing costs for the federal government are and will remain very low, and needed public investments would yield a high rate of return in terms of immediate job creation, public benefits, and growth of private sector productivity.
Skills training and apprenticeship programs are key components of creating good jobs. Canada falls well below the OECD average in the average hours of job-related, non-formal skills training for employees, and in employer investment in skills training for employees. Lifelong learning is critical to a high-skills knowledge economy, and is essential for Canada to remain competitive in the global marketplace.
Instead, this government has slowly strangled public services. Spending cuts announced on an incremental basis add up to a substantial amount – $90 billion between 2012 and 2017.
As long as business and government fail to invest in our economy and well-being, our potential output declines. Rather than laying the groundwork for a more prosperous future that we can all share in, this government has chosen to shrink the federal government and business has decided to hoard profits. This is a no-win situation for Canadians.
