Recession’s impact still being felt in Quebec

In many ways, Quebec was spared the worst of the recession’s impact. The province had a comparatively small increase in unemployment, higher than average Employment Insurance coverage, and a relatively low increase in social assistance cases. But despite these general trends, Quebec families still found themselves confronted with greater economic insecurity thanks to the impact of the recession. Cost of living rose sharply, forcing families to stretch their incomes farther, and bankruptcies and food bank use increased.

Standard measures of poverty are published with a two year lag time. But while we need to wait until 2011 to see the recession’s effect on those measures, new research by Citizens for Public Justice, with funding from World Vision Canada, already reveals the impact of the recession on key economic indicators and poverty trends.

Bearing the Brunt: How the Recession Created Poverty for Canadian Families details the growing economic insecurity in Canada and the rise in the national poverty and child poverty rates. Our trend analysis projects that the poverty rate in Canada has risen from 9.2% in 2007 to 11.7% in 2009, an increase of over 900,000 Canadians. The child poverty rate has likely risen from 9.5% in 2007 to at least 12% in 2009, an increase of 160,000 children.

According to some key indicators, Quebec avoided the worst effects of the recession, but other indicators show that the province couldn’t escape the recession’s effects entirely.

Quebec had a comparatively low rise in unemployment, as unemployment increased from 7.2% in October 2008 to 8.5% in October 2009. Quebec lost 62,100 jobs in this period, or 1.6% of its total jobs. This job loss was low compared to neighbouring Ontario, which lost 3.1% of its jobs.

While Quebec’s EI coverage was not as high as the Atlantic provinces, it still benefited from comparatively high EI coverage. The rate of EI Beneficiaries to Unemployed workers rose from 52.3% in October 2008 to 58.6% in October 2009. Over half of the unemployed were at least receiving benefits, which was not the case for all provinces west of Quebec.

As a result of the fairly high EI coverage, Quebec had one of the smallest increases in social assistance cases during the recession. Between October 2008 and December 2009, the number of Last Resort Financial Assistance cases rose 2.7%, reaching 335,070. However, this is the highest welfare caseload in the country, nearly 100,000 cases more than Ontario despite Ontario’s larger population.

Unlike most provinces, whose caseloads increased throughout the course of 2009, peaking in December, Quebec experienced its peak caseload in March. However, in January and February 2010, the caseload surpassed the March peak, suggesting that EI recipients may be exhausting their benefits without finding new work. In February 2010, there were 339,083 cases of LRFA.

While the province didn’t have to contend with the same increase in unemployment or skyrocketing social assistance caseloads as other provinces, it was confronted by a significant rise in the cost of living.

Food prices rose 5.2% in 2009, compared to inflation of 0.6%. The price of fruit (5.9%) and vegetables (10.7%) increased more than 5%.

Average rent for a two-bedroom apartment increased 2.8% between October 2008 and October 2009. Both Gatineau and Quebec City saw a decline in rental affordability as a result. However, Quebec is still the most affordable province in the country when it comes to rental housing. The lowest rent for a two-bedroom apartment in the country is in Saguenay, with an average monthly cost of $518.

Because of the rising cost in living, low income families faced a greater challenge in stretching their incomes to pay for rent, food, utilities and other necessities during the recession.

The increasing poverty and economic insecurity was visible in rising bankruptcies and food bank use. Bankruptcies increased 26.9% between the third quarter of 2008 and the third quarter of 2009.

Food bank use climbed 8%, as 137,464 people needed to use a food bank in March 2009. 78% of food banks experienced an increase in demand in 2009. Many of them could not keep up with the growth in demand – Quebec food banks were only able to meet 1/3 of demand in 2009, meaning there was a large growth in food insecurity that was not met with assistance.

Food bank clients also reveal the challenge of working poverty, as 11.5% report employment income as their primary source of income. 4% of food bank users are EI recipients.

While Quebec may have avoided the worst of the recession, these trends of increased economic insecurity are still a cause for concern. After the last recession, it took almost 8 years for the unemployment rate in Canada to return to its pre-recession rate. It took 14 years for the poverty rate to decline to its pre-recession rate. So far, despite the increase in economic production, Canada’s unemployment scenario has barely budged.

If the Quebec government and federal government ignore the increase in poverty and economic insecurity, many families could suffer from the recession’s effects for years to come.