Canada Hasn’t Yet Recouped Recession’s Job Losses
Canada’s statistics agency cut its job-creation estimate and erased an earlier finding the economy recouped losses from the last recession, bringing fresh calls from opposition lawmakers for Prime Minister Stephen Harper to rework his stimulus plan.
There are 104,600 fewer Canadians with jobs than previously estimated, Ottawa-based Statistics Canada said today, while the unemployment rate is unchanged at 7.6 percent. The revisions stem from new labor force data that reflect 2006 census figures, the agency said in a statement, versus prior reports based on the 2001 census.
Harper has said Canada has emerged from a global recession faster than other Group of Seven countries because of his government’s two years of deficit spending, and earlier this week his ministers traveled across the country to say corporate tax cuts will also boost employment. An opposition lawmaker today said the weaker job growth suggests there are better job- creation programs.
“Not only did their stimulus fail to create the jobs of tomorrow, it also failed to protect the jobs of today,” Scott Brison, the opposition Liberal Party’s spokesman for finance issues, said by telephone. “Investing in training and education now would do more to create jobs than corporate tax cuts.”
Not Creating Jobs
The figures show that reductions in the business income tax rate are not creating jobs and the economy still needs stimulus, said Thomas Mulcair, the finance spokesman for the opposition New Democratic Party, in a telephone interview today.
According to the revised figures, employment fell 2.5 percent, or 427,900, between its peak in October 2008 and July 2009. Between July 2009 and December 2010, the economy created 398,000 jobs. The changes mean December employment levels were 0.6 percent below the previous estimate. The agency had said before the revisions the economy recouped the recession’s job losses by last August.
The revision today was a “routine” change linked to the census figures and the economy’s overall performance has “not changed,” Finance Minister Jim Flaherty said in an e-mailed statement today. Canada’s job growth still leads the G-7, he said.
“We have always stated that the economic recovery is still fragile,” Flaherty said. “That is why we continue to focus on creating jobs and economic growth.”
Bank of Canada Governor Mark Carney has kept his key policy interest rate at 1 percent since June, saying he would “carefully” consider any future increases as the central bank gauges the strength of the global recovery.
“The reality is in the last six months of the year jobs growth had slowed in any event and overall growth had cooled considerably,” said Doug Porter, deputy chief economist with BMO Capital markets in Toronto. “To some extent policy has already responded to a somewhat more moderate growth background.”
Flaherty has also been scaling back plans to exit Canadian stimulus measures, and has pledged additional measures in his next budget to help sustain the recovery.
Lawmakers return to Parliament Jan. 31 after a six-week break. Flaherty has said he will release his next fiscal plan in March, and its defeat would trigger an election.
Liberal Party Leader Michael Ignatieff has pledged to cancel the reductions if his party wins power, and would spend part of the savings to support people who care for sick and elderly family members at home.
The Conservatives hold 143 of the 308 seats in the House of Commons while the Liberals have 77, the Bloc Quebecois 47, and the New Democrats 36. There are also 2 independents and 3 vacant seats. Harper needs the backing of one of the three opposition parties to pass budgets and legislation, and has turned to all three at various points since taking power in 2006.
Canada cut the federal corporate income tax rate by 1.5 percentage points to 16.5 percent on Jan. 1, and it will fall to 15 percent in 2012 under legislation passed in 2007.