Unemployment Numbers, NAFTA, Canadian Competitiveness
The Quickie on Employment
For the first time in seven months, Canadian unemployment increased ever so slightly in March, putting an end to the strong pattern of job gains that’s occurred since mid/end 2018.
In numbers, we lost 7,200 jobs last month. However, the current national unemployment rate remains sitting at 5.8%, meaning that this decline can be considered relatively minor.
Significant employment gains in Saskatchewan, PEI, and New Brunswick were offset by an employment decline in the more populous Ontario, essentially evening thing out.
Basically, there’s no need to sweat it – economists anticipated that the momentum gained in Canadian job creation was bound to slow down sooner or later, especially considering that certain indicators predicted a significantly weaker picture.
66,800 net new jobs were created in January, and February saw 55,900. Employment-wise, these two months represent the strongest start to a year since 1981.
Here’s a province-by province breakdown of changes in unemployment from February to March:
Pelosi Vs. NAFTA
United States Speaker of the House, Nancy Pelosi, made a statement last week asserting that the “new NAFTA” is not possible in its current form. Pelosi has highlighted various problems with the “new NAFTA” including weak labour laws Mexico, and weak language regarding environmental protections. Pelosi wants to ensure that country members, namely Mexico, have worker’s rights– and is putting a premium on not just the overall language in the deal but in domestic enforcement as well.
Getting this “new NAFTA” passed through, a signature election promise for Trump, is a top priority before the looming 2020 election. And Pelosi’s strong stance makes it clear that she has no issue with extending negotiations past 2019. As of now, Trump has not met with Pelosi to discuss the future of NAFTA.
The outcome of this deal will have major impacts on the U.S, Canadian, and Mexican economies. Trump has threatened to pull out of NAFTA in the past, which would have crushing consequences for a number of businesses, from manufacturing to agriculture. In 2018 alone, trade between Canada, the U.S. and Mexico exceeded $1.2 trillion USD.
Going forward, Mexico has beefed up their proposed labour laws in hopes of passing Pelosi’s standards. This includes enhancing workers’ bargaining rights, establishing independent labour courts, and providing free and fair union elections. Mexican government officials have expressed their hope and expectations of passing labour reform legislation by the end of April.
Why has Mexico been so quick to amend their laws to be compliant? It’s simple – no one wants to re-open negotiations on NAFTA (except maybe Nancy…)
Our Global Economic Spark is Struggling…
According to a top Canadian banking exec, Canada’s economic position on the international stage is slipping – and we’re losing our competitive edge.
In a speech on Thursday, the Royal Bank of Canada’s CEO, Dave McKay, delivered a warning about concerns held by investors abroad about Canada’s position amongst international peers.
“Our competitiveness is challenged. Our capacity to grow and advance our economy is stalling… we need a new approach.”
RBC is Canada’s biggest lender by market value, so it’s safe to say that McKay has his finger on the pulse of our country’s economic prosperity.
McKay noted that, unsurprisingly, the struggling resource sector is crucial point effecting our ability to perform on the economic world stage, specifically when it comes to Canadian energy.
“We must balance the need to reduce our carbon footprint, with the need to produce more energy to supply growing demand globally. Canada has lost $100 billion in energy projects in the last two years alone. We simply can’t afford to lose any more.”
While McKay advocates for Canada’s struggling oil and gas sector, he also makes clear that RBC is keen to invest in clean energy, stating that they’re aiming for $100 billion in financing for sustainable low-carbon sectors by 2025.
Aside from a more ambitious investment plan in Canadian energy, McKay also believes that an aggressive approach to the export of ‘made-in-Canada’ intellectual property, enhanced national data policy, and equipping young Canadians with essential educational tools to thrive in the current economic environment will be key factors in improving our global competitiveness.
Yes, employment is steady (see above), and poverty is decreasing (a big win), but that doesn’t mean all indicators are tip-top shape as well.
Fourth quarter results (ie late 2018) recently published state that Canada’s economy barely grew at all because of sad(!) Canadian crude oil export prices and the lagging labour productivity of Canadian businesses.
Going into this fall’s election, it’s safe to say competitiveness will be a key issue. Expect corporate tax cuts, innovation policy, and natural resource regulations to be hotly debated.
The one thing all parties can agree on? To paraphrase the eternal words of Ciara, it’s time we level the f*ck up.