CLC Pleased That Ottawa Showing Flexibility on Deficit

OTTAWA, ONTARIO--(Marketwire - Nov. 8, 2011) - The Canadian Labour Congress is pleased that Finance Minister Jim Flaherty promises to show some flexibility about deficit reduction targets in the face of a looming economic slowdown, but predicts that unemployment will continue to rise in Canada.

Ken Georgetti, President of the Canadian Labour Congress, was responding to remarks made by Flaherty in Calgary on November 8th. The Minister indicated that Ottawa would extend its deadline to balance the budget to at least 2015-16, a year later than was forecast in the last budget. The Minister also announced that the government will increase Employment Insurance premiums for workers by less than originally planned, and that a job sharing program has been extended allowing workers who would otherwise have been laid off to work part time and receive EI benefits.

"We welcome the fact that Mr. Flaherty is now showing some flexibility over the artificial deadline he set for eliminating the deficit, and is extending the Employment Insurance work sharing program," Georgetti says. "But this is far from the plan that we need to deal with a slowing economy and rising unemployment. Minister Flaherty still plans to cut $4 billion from annual federal government spending, and nothing that he said today will stop unemployment from rising."

Georgetti says he remains concerned that almost six out of 10 unemployed Canadians do not receive Employment Insurance because the program's regulations exclude them.

Quick Analysis from CLC Chief Economist Andrew Jackson

Mr. Flaherty plans to balance the Budget in 2015-16, one year later than was forecast in the last budget. To hit this new target in the face of falling revenues due to a weak economic outlook, he plans full implementation of the already announced plan to cut government spending by $4 billion per year by 2014-15. These cuts will worsen an already deteriorating employment situation.

The new budget forecast is based on private sector projections that the national unemployment rate will average 7.2% in 2012, about the same as today's 7.3% level. The IMF have forecast an even higher national unemployment rate next year.

While the reduction in the planned increase in EI premiums is welcome, we should note that the EI Fund financed by workers and employers had an accumulated surplus of $57 Billion before it was eliminated in 2008.

Continuation of existing work sharing arrangements under EI for up to 16 weeks will support joint actions by employers and workers to avoid layoffs.

The Canadian Labour Congress, the national voice of the labour movement, represents 3.2 million Canadian workers. The CLC brings together Canada's national and international unions along with the provincial and territorial federations of labour and 130 district labour councils. Website: www.canadianlabour.ca Twitter: @CanadianLabour