Harper Job Record Comes Under Scrutiny as Election Looms

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Canadian Prime Minister Stephen Harper may be losing one of his political trump cards -- his record on the economy -- just when he needs it most.

Canada’s job growth, among the strongest in the industrialized world after the global recession, has slowed by about half one year before the country’s next election, even as U.S. employment accelerates. Harper, who won a majority government in 2011 campaigning on his economic stewardship, now finds his record under attack by the opposition.

“It’s actually quite a fine line that Harper has to tread on the economy,” said Nik Nanos, chairman of Ottawa-based Nanos Research. “If the consistent narrative is that Canada is underperforming, especially compared to our key trading partners, then there is no economic track record to fall back on.”

Harper’s government, which announced last month a 15 percent cut in employer payroll taxes for smaller companies to encourage hiring, is counting on a strengthening U.S. economy to lead to more growth and jobs in Canada. Meanwhile, Harper said his administration may take additional steps to boost the labor market in a fiscal update expected in the coming weeks, or in next year’s budget.

The Conservatives under Harper now trail Justin Trudeau’s Liberals by an average of 7 percentage points, while the largest opposition group, the New Democratic Party under Tom Mulcair, has slipped to third place, according to opinion poll aggregator ThreeHundredEight.com. Both parties have criticized Harper’s payroll tax cut, which the Parliamentary Budget Officer said in an Oct. 9 report would create the equivalent of 800 full-time jobs through 2016.

Weakening Trend

Cabinet ministers such as Finance Minister Joe Oliver routinely cite the more than 1 million net new jobs that have been created since the worst of the 2009 slump, calling it one of the best performances among Group of Seven countries.

That record over the past five years masks a weakening since the start of 2013. Canada’s labor market has added an average of 12,200 jobs per month since the beginning of 2013, even after adding 74,100 jobs in September. That compares with the 22,600 average between August 2009, as the recession was ending, and the end of 2012.

“The Canadian labor market is currently experiencing more weakness than is implied” by a drop in the unemployment rate to a six-year low of 6.8 percent, said Toronto-Dominion Bank senior economist Randall Bartlett. He created a labor market index using 14 variables that shows little improvement from early 2013.

U.S. Contrast

Adding to Harper’s challenge, Canada’s labor market has slowed as the U.S. jobs picture improves. Applications for unemployment benefits in the U.S. dropped over the past month to the lowest level in 14 years, an Oct. 23 Labor Department report showed in Washington. When Statistics Canada figures are adjusted to make them comparable to the U.S., unemployment rates in the two countries were both 5.9 percent last month, a contrast with the six-year period that ended in May when Canada’s rate was lower.

Continued stronger performance in the U.S. “inevitably will invite comparisons between the two labor markets, and many Canadians may be distressed,” said Cristine de Clercy, who teaches political science at Western University in London, Ontario. “Certainly the opposition parties will seek to undermine the PM’s reputation as a prudent economic manager.”

Suman Sengupta jokes that it was easier for him to find a job in Afghanistan. The 49-year-old came back to Canada after working there and has used up most of his savings during his job search. He was no longer just looking to use his financial management skills, searching instead for “anything,” including cashier and gas-station jobs, at a job fair at an Ottawa mall last month.

‘Fantastic Experience’

“I have fantastic experience but I can’t find a job,” said Sengupta, who was born in India and is a permanent resident of Canada. “They say I have to work up the system from entry level.” A new government may offer better solutions because “when new people come, new thoughts come,” he said.

Bank of Canada Governor Stephen Poloz said the September job gain doesn’t change his view that slack remains in the job market.

“It’s only the kernel of what we need,” Poloz told reporters Oct. 11 in Washington. “When you start talking about slack, it’s going to take a substantial cumulative series of good reports to begin to put a dent in that.”

Canada’s job market isn’t poised to gain much strength before the election, with unemployment little changed at 6.7 percent in the third quarter of next year, a Bloomberg economist survey shows. Another survey shows the U.S. rate falling to 5.6 percent over that time.

Apprenticeship Training

Some at the job fair credited Harper with taking positive steps. Carman Keyes, 75, a recruiter for Malmberg Truck Trailer Equipment Ltd. in Ottawa, said Harper did the right thing by boosting funding for apprenticeship training. Employment Minister Jason Kenney said Sept. 3 the government had funded 500,000 grants worth as much as C$4,000 ($3,600) to help with apprenticeships in skilled trades under a program the Conservatives created in 2007.

Ontario, Canada’s most populous province, will be key to Harper’s electoral chances given it will have 121 of the 338 districts in the House of Commons after the next election. There have been mixed signs for the province’s manufacturing base, which was battered by the U.S. recession.

While Ford Motor Co. said Oct. 1 it will add more than 1,000 jobs at its plant in Oakville, Ontario, to build the company’s 2015 Edge utility vehicle, Unifor, which represents Ford workers, said Oct. 24 the company decided against investing in an engine plant in Windsor, near Detroit.

Consumer Confidence

Harper isn’t universally seen as vulnerable on the economy. The Bloomberg Nanos Canadian Consumer Confidence Index showed the share of people who described their jobs as at least somewhat secure was at 69.8 percent in the week ending Oct. 24, above the 2014 average of 67.2 percent. Job security held up as the share of people saying the economy will improve over the next six months hit an 18-month low of 16.1 percent.

Some economic weakness could actually benefit Harper, said Darrell Bricker, chief executive officer of Ipsos Public Affairs Worldwide in Toronto.

Harper needs to “re-emphasize how important the economy is and try to create a sense of potential risk” posed by the opposition, Bricker said by telephone. “The one thing he’s well ahead on is sound economic management, especially in risky times.”