Editorial: Canada’s full employment status threatens inflation

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It is a common refrain heard amongst the coffee klatch crew: “Why would anyone want to work when the government is giving out free money?” They place blame on emergency supports during the pandemic for the challenges being faced in recruiting workers in many industries. But while that narrative plays well amongst the reactionary crowd, it ignores some very contrary facts.

With the latest surprise boost in Canadian employment statistics, our nation’s unemployment level fell to just six percent. That’s a number most economists consider to be Canada’s full employment line. When we hit six percent, that’s when our workforce is, for all practicable purposes, fully engaged.

That is the number the nation was at pre-COVID, those heady long ago days before lockdowns and social media battles over vaccine policies took over everyone’s Facebook feed. That is also the number unemployment was at pre-COVID, when those in the hospitality industry and specialized trades were scrambling to fill out their rosters.

This all should not be coming as a surprise to anyone in government. The issue has been front and centre for neigh onto two decades as human resources experts, economists and health officials sounded the alarm over the impending crisis as the baby boom generation entered retirement age. A declining workforce and an aging population are putting strains on our economy and there has been little more than lip service paid to it by politicians of all stripes.

Inflation is going to be an issue going forward, but it won’t be due to the influx of dollars desperately needed by struggling families hard hit by the pandemic or the printing of dollars by government (that’s quantitative easing in government-speak). Sorry Pierre Poilievre, we know the temptation to score political points is too hard for an ardent partisan to pass up, but our nation really needs more than bluster and partisan spin to weather the coming storm. 

That storm has the potential to cause major disruptions in Canadian society and our nation’s economy, disruptions that could make the pandemic seem like a quiet, peaceful walk in the park. The baby bust isn’t a bolt out of the blue, it isn’t (or shouldn’t be) any surprise to anyone. It is a storm that has been on the radar for decades and has now heaved into plain view—or would have if not for the pandemic fog.

Some of the answers will lie in increased and innovative use of technology, some of the answers will involve increased immigration (likely focused on skilled trades and other key sectors), but each of these solutions will involve their own confounding challenges. But what we don’t need are politicians, of any stripe, engaging in willful ignorance for partisan purposes. The world has always possessed far too much of that and it is a luxury we all can ill afford.

Our nation’s policymakers must roll up their sleeves and look past the election cycle and inflammatory political talking points to formulate sound economic and social policy that will safely helm our nation through the stormy waters ahead.