Citizens for Public Justice

Citizens for Public Justice

May 04, 2010 10:30 ET

Citizens for Public Justice: Recession Increases Poverty

New Report Details Increase in Economic Insecurity

OTTAWA, ONTARIO--(Marketwire - May 4, 2010) - The 2008-2009 recession created poverty for hundreds of thousands of Canadian families, according to a new report released by Citizens for Public Justice (funded by World Vision Canada).

Bearing the Brunt: How the 2008-2009 Recession Created Poverty for Canadian Families reveals the deep impact of the recession by examining key economic trends, comparing them to the baseline of 2007 – the last year for which we have poverty measures available. This trend analysis projects that the poverty rate in Canada rose to 11.7% in 2009, an increase of over 900,000 Canadians compared to 2007. The child poverty rate has likely risen to at least 12%, an increase of 160,000 children compared to 2007.

Unemployment rose as hundreds of thousands of Canadians lost their jobs during the recession. Those already vulnerable before the recession began suffered disproportionately, as 1 in 4 workers making $10 an hour or less lost their job. As unemployment increased, the number of Employment Insurance recipients increased, but so did the number of unemployed not receiving EI benefits. In fact, nearly half of the unemployed did not receive EI in October 2009.

"One of the clear patterns we've seen across the country is that EI was totally inadequate in responding to the depth of the recession," said Chandra Pasma, a policy analyst with Citizens for Public Justice and author of the report. "A lot of Canadians have suffered as they've been forced to live off of credit or turn to welfare as a result."

Welfare caseloads across the country rose, with the largest increases coming in provinces with the lowest EI coverage. Caseloads have continued to rise into 2010. People living on welfare are living in poverty, as welfare rates across the country are below the poverty line.

The recession also increased the proportion of precarious work, as part-time jobs replaced full-time jobs and temporary jobs replaced permanent jobs. At the same time, cost of living outstripped inflation, with food prices rising 4.9% and average rent increasing 2.3%.

The impact of the recession on Canadian families was immediately visible in rising debtloads, growth in bankruptcies and skyrocketing food bank use. Average debt per household grew 5.7% between the third quarter of 2008 and the third quarter of 2009. Bankruptcies increased 36.4% over this period. The number of food bank users jumped 18% in 2009, the largest recorded year-over-year increase.

Evidence from previous recessions suggests that this recession will have increased Canada's already large income gap between low income and high income Canadians.

The report also counsels caution as the economy recovers, noting that after the last recession it took unemployment nearly 8 years to return to its pre-recession rate and poverty 14 years to return to its pre-recession rate.

"If we don't pay attention to high unemployment and poverty now, we could see people suffer the consequences of the recession for years to come," cautioned Kathy Vandergrift, chair of CPJ's Board. "We need a federal poverty elimination strategy."

Bearing the Brunt: How the 2008-2009 Recession Created Poverty for Canadian Families is available at www.cpj.ca/bearingthebrunt. A summary document is also available.

Contact Information

  • Citizens for Public Justice
    Chandra Pasma
    Policy Analyst
    1-800-667-8046 ext. 223
    613-218-8091 (cell)
    chandra@cpj.ca