The Gaping Hole in Canada's Labour Force
Bank of Canada Governor Stephen Poloz, a Queen's University alum, returned to campus this week to deliver a lecture at Smith School of Business in which he said that Canada’s economy is filled with “untapped potential” that could spur more growth without triggering high inflation.
A key source of that potential, he said, is five population segments currently under-represented in the workforce: young people, women, Indigenous people, Canadians with disabilities and recent immigrants.
An increase in the employment rate among these groups could easily add half a million people to the workforce, thereby increasing the country’s economic output by 1.5 percent, or $30 billion per year, he said.
“That’s equal to a permanent increase in output of almost $1,000 per Canadian every year, even before you factor in the possible investment and productivity gains that would come with such an increase in the labour supply,” he said. “Clearly that is a prize worth pursuing.”
Government policies that encourage labour force participation have been shown to work, he noted. For instance, two decades ago Quebec expanded parental leave provisions and lowered the cost of child care to encourage more women to enter the job market. The result: today, 87 percent of prime-age Quebec women work, compared to 83 percent nationally.
Canada’s unemployment rate stood at a record low of 5.8 percent in February, but Statistics Canada data also shows 470,000 unfilled jobs across the country because companies cannot find the right people for them.
“To have companies looking for so many skilled workers is surely a sign of a strong economy,” he said. “It shows the need for more targeted education, as well as on-the-job training programs that the employer tailors to fill a specific need.”
Poloz is the third Queen’s graduate to hold the central bank’s top job. Queen’s Chancellor Emeritus David Dodge, Arts’65, LLD’02, and Gerald Bouey, Arts’48, LLD’81, also led the bank. Poloz was appointed to a seven-year term in 2013.
As governor, Poloz has had to contend with both a surging economy and record-high household debt that has left many Canadians vulnerable to higher interest rates.
The Bank of Canada has hiked its key interest rate three times since last June. But last week it opted to keep the rate unchanged at 1.25 percent while it monitors a slowdown in the housing market and awaits the results of NAFTA renegotiations.
In his Queen's presentation, though, Poloz was mostly upbeat. He noted that new technologies such as artificial intelligence are creating “new types of jobs and entirely new industries” and will invariably have a positive effect on the economy.
“Throughout history, technological advances have always led to rising productivity and living standards, and they always, always created more jobs than they destroyed.”
— Robert Gerlsbeck