Bringing Unemployment Down: One Step Forward, Two Steps Back

Katherine's picture

Jobe: newspaper section

This is the second feature in a series of highlighting CPJ’s recommendations for the 2013 federal budget in Promoting the Common Good. Last week we explored the need for an economic recovery that includes all Canadians. This week, we discuss the need for government action to encourage the creation of high-quality jobs.

The promising news on the job front in the spring was sidelined in July as Statistics Canada reported the loss of 30,000 jobs. This has been the pattern of Canada’s halting economic recovery – one step forward, two steps back.

It is now three years since unemployment peaked in the summer of 2009 and the individuals and families who bore the brunt of the recession face continuing uncertainty, including high levels of unemployment and precarious employment, and low wages. Many youth, new immigrants, Aboriginal people, single-parent families, and disabled people are being left behind.

Immediate action is needed to bring unemployment down and to create good employment opportunities for all. This was one of the key messages in the CPJ’s brief to the House of Commons Finance Committee, Promoting the Common Good.

Canada’s Halting Recovery

The economic recovery has stalled. Unemployment remains stuck at about the 7.5% mark. And it is taking longer for those who are unemployed to find work. The average length of unemployment was 14.8 weeks back in 2008; it was 21.1 weeks in 2011. The rate of long-term unemployment (the proportion of the unemployed who have been looking for work for over a year) has almost doubled from 7.1% in 2007 to 13.0% in 2011.

Long-term unemployment is strongly associated with social exclusion and growing income inequality. It is especially significant for vulnerable workers who are at high risk of losing marketable skills and dropping out of the labour market altogether.

And that is what we have seen. Unable to find work, a significant number of Canadians have dropped out of the labour market since the recession. Overall labour force participation has declined from 67.8% in spring 2008 to 66.7% in June 2012. This represents a loss of over 325,000 potential workers from Canada’s labour force.

Employment Opportunities for All

Promoting the creation of stable, high-quality jobs is a key way to help lift people out of poverty into a life of dignity. The government’s current job creation strategy is centered on corporate tax cuts and stimulating resource development – heedless of the potential environmental cost. Yet, in addition to diminishing federal revenues, these tax cuts are failing to create quality jobs.

Indeed, no less than the Governor of the Bank of Canada, Mark Carney, has stated that corporations aren’t doing enough to stimulate growth and create new jobs. They are sitting on the sidelines, on massive cash reserves (an estimated $526 billion), the result of the government’s continuing drive to lower corporate taxes.

We believe that immediate action is needed to promote job creation in Canada, including:

  1. New measures such as a tax on excessive corporate cash reserves in order to generate needed revenues to invest in job creation, education and removing barriers to workplace entry;
  2. Investments in cleaner energy alternatives, re-directing these funds to a “green” job strategy that would create thousands of new jobs and promote environmental responsibility; and
  3. Investments in affordable housing. A national housing strategy and long-term, stable funding commitments from the federal government would help create thousands of jobs while alleviating a national housing crisis that is having a direct impact on productivity and competitiveness.

The government rightly notes that there is still a great deal of economic uncertainty such as the simmering debt crisis in Europe, the high Canadian dollar, and competition from a number of developed and developing countries. Which is why action on the jobs front is critical.

The high volatility of recent job market statistics can make any observer dizzy, but the impact of unemployment and the churn of temporary work is very real for too many families in Canada.

Check back in the next few weeks for details on our other recommendations!

Katherine Scott is CPJ's Research Associate.

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