Canadian Labour Congress

Canadian Labour Congress

April 05, 2007 09:38 ET

Labour to the Bank of Canada: Don't Hike Interest Rates

OTTAWA, ONTARIO--(CCNMatthews - April 5, 2007) - Statistics Canada's Labour Force Survey for March appears to show an economy that is growing even though most of the new jobs are not necessarily full-time, permanent and well-paid. "As long as this remains the case, the Bank of Canada should resist the calls from Bay Street traders to raise interest rates," says Ken Georgetti, president of the Canadian Labour Congress. "This would have a crippling effect in the sectors that provide good jobs with good wages." (Check below for the detailed analysis of the Canadian Labour Congress' Chief Economist Andrew Jackson.)

"Over the last four years, high-energy prices, a high dollar, and worsening trade deficits with Asia have caused many Canadian plants to reduce output, lay off workers, or close altogether. On average, these plants offered good jobs with family-supporting wages of $21/hour. The new jobs being created usually offer much lower wages. We estimate that about $2.5 billion doesn't get spent into the domestic economy across the country because of these losses of good jobs," explains Georgetti, who met last week with the prime minister and asked him to appoint a high-level task force to develop a national plan to maintain and build a strong manufacturing sector.

"The relative good news of these jobs' numbers must not blind the Bank of Canada to the fact that practically half of the new jobs are part-time and in sectors where wages are low," concludes Georgetti.

The unemployment numbers - More people entered the job market in March 2007, and that kept the unemployment rate at 6.1% despite the creation of 55,000 new jobs. The employment rate for women reached a record high of 59% as adult women, age 25 and over, got 39,000 of the new jobs created in March. Last month, the number of Canadians who wanted to work but did not have a job stood at 1,094,400.

Chief Economist Andrew Jackson's Analysis

- Today's job numbers are good news in that they strongly suggest the economy is growing rather than slowing. Employment is up by a strong 55,000 jobs, the national unemployment rate remains at a relatively low 6.1%, and real wages are modestly rising. The overall jobs' picture is a bit stronger than expected, and women are doing particularly well. A record-high rate of employment for adult women was reached in March.

- The bad news is that there is now a real danger that the Bank of Canada may decide to hike interest rates to deliberately slow the economy. This would boost the already-high Canadian dollar, and deepen the ongoing manufacturing crisis. Governor David Dodge and Bay Street bond traders should take note of some signs of labour-market slack hidden in the overall numbers.

- Almost half of the new jobs created last month were part-time, and they were concentrated in generally low-paid parts of the private service sector such as retail trade.

- The ongoing crisis of the manufacturing sector continues, with another 5,000 jobs lost in Ontario in March, and little improvement in Quebec from last month's massive manufacturing job loss.

- Adjusted for inflation, hourly wages rose by less than 1% compared to a year ago, hardly a sign of a very tight job market.

Modest good news should not set off fears that our economy is truly operating above capacity.

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 136 district labour councils. Web site: www.canadianlabour.ca

Contact Information

  • Canadian Labour Congress
    Jean Wolff
    Communications
    613-526-7431 and 613-878-6040
    or
    Canadian Labour Congress
    Andrew Jackson
    CLC Chief Economist
    cell 613-240-3869