Justin Trudeau’s Olympic-sized job problem

Last month’s jobs numbers revealed that the Canadian economy didn’t just miss the podium; they showed it’s barely competitive.

Canadian Prime Minister Justin Trudeau looks on as athlete Rosie MacLennan waves the Maple Leaf after being named as the flag bearer for the upcoming Summer Olympics Thursday July 21, 2016 in Ottawa. THE CANADIAN PRESS/Adrian Wyld

Canadian Prime Minister Justin Trudeau looks on as athlete Rosie MacLennan waves the Maple Leaf after being named as the flag bearer for the upcoming Summer Olympics Thursday July 21, 2016 in Ottawa. THE CANADIAN PRESS/Adrian Wyld

Stephen Harper always loved the Olympics, and so does Justin Trudeau. They tweet about our athletes. Wear the colours. Like high school kids who rent cheap prom tuxedos to distract from their pimply faces and gangly limbs, politicians put on the Olympic suit of national pride. And why not? Who doesn’t feel inspired when our Canadian athletes, like the extraordinary women’s sevens rugby squad or swimmer Kylie Masse, stand on the podium and beam out that Canadian spirit. But for prime ministers, it’s also a useful diversion. Their main event is managing the economy, and not even the Olympic costume can hide the giant blemish on the government’s economic agenda. Last month’s jobs numbers revealed that the Canadian economy didn’t just miss the podium, it’s barely competitive. Team Trudeau has an Olympic-sized problem: job growth.

According to Statistics Canada’s monthly Labour Force survey, Canada lost 31,000 jobs in July, while the unemployment rate went up by 0.1 per cent. Worse, 71,000 full time jobs got smoked between June and July, the kind of jobs governments brag about when they actually appear. The only growth was in part-time work, which went up 0.4 per cent compared to this period last year. That’s like getting a bronze medal in juggling. Trudeau promised to create jobs for young people, but according to Stats Can, employment for people between the ages of 15 to 24 actually decreased in July by 28,000.

Lots of this bad news has to do with Alberta, which has been scorched by low commodity prices and now has its highest levels of unemployment since 1994, at 8.6 per cent. But it’s not all to blame. There were heavy job losses in the public sector as well, across the country. Meanwhile, with a low dollar and low interest rates, manufacturing provinces like Ontario were expected to have job growth, but sorry, no dice. Employment in Ontario actually fell by 36,000 jobs while more people simply dropped out of the labour force altogether. B.C. remains a good story, with the country’s lowest unemployment rate and real growth in the jobs number, but still, combined with Canada’s growing trade deficit, July was not an Own the Economic Podium moment for the Liberals.

Related: Canada adds service jobs, loses factory jobs in June

What’s the solution? Well, that is the question of the moment. Some argue the money from those child benefit cheques that just went out will add a bit of a boost, but it is way too early to tell what impact they will have. The huge Budget 2016 deficit spend on infrastructure is a complicated roll-out and will take years to start really moving the economic needle as new projects get under way. Will it work? Economists call the Liberal plan “counter cyclical fiscal policy”—the idea of spending big in down times and raising revenues, i.e. taxing, in boom times. But with the long lag time of the projects and big deficits that mount in the meantime, its efficacy is something of an argument without end, and divides the left and the right. Does fiscal stimulus work alone or are lower taxes and, on the monetary side, low interest rates more effective?

Canada is in a double bind in that we have deployed pretty much every strategy already. We’ve had fiscal stimulus, we’ve spent the last decade lowering tax rates, and, on the monetary side, the Bank of Canada has kept interest rates at historically low levels for years. So, when the hazy daze of Olympic fever burns off, what will the Trudeau government face in the fall?

“The drops in the employment and participation rates over the past year must be a concern to the government,” says Kevin Page, the former parliamentary budget officer who now teaches at the University of Ottawa. His forecast is bleak. “Full-time job growth is negative on a year over year basis—very unusual. Youth participation rates have fallen off, not a good sign when the economy is transitioning through aging demographics. Real gross business investment has been declining since the fall of 2014—not good for [the] future [of the] economy.” So what does Page think the government can do, now that it has already bet its future on the first budget? “A case could be made for the government to come forward with an early fall fiscal update,” he says. “It would be helpful to update Parliament on the economy, the status of Budget 2016 implementation and options to move forward measures to strengthen stimulus over the short term.”

The government’s plans, like expanding CPP, putting a price on carbon and investing in infrastructure have to be filtered through the prism of increased global economic uncertainty. The Liberals have big ideas, but no one is sure if they have the right policies to make sure their ideas actually create jobs. Still, Page argues that the government should not abandon their ambitious ideas around things like climate change or pensions, for example, because that would only “kick the can down the road” for future generations. Others, however, disagree.

RELATED: Don’t look now, Canada’s economy is getting ugly

“I have a different take,” says Ian Lee, associate professor at the Sprott School of Business at Carleton University. Lee says that Canada’s demographic challenges, combined with low resource prices and slow U.S. growth are immune to the government’s fiscal interventions. “These structural problems are not affected by stimulus as stimulus will not stop the Boomers from getting older.”

In fact, Lee believes that both the federal government and some provincial governments are actually making things worse, actively dragging the economy down by imposing what he calls “anti-stimulus” measures, like increasing minimum wages, increasing the cost of electricity, increasing premiums for CPP, and preparing for a federal price on carbon. “Not all of these have kicked in yet,” he admits, “but they have influenced the business climate and caused business investment — a critical driver of growth — to decline.” He thinks the government ought to put all those plans on hold.

One month does not tell the whole economic story—it could be, as Conservative critic Lisa Raitt admitted, “a blip”—but long after the gaudy closing Olympic ceremony on Aug. 21 in Maracana Stadium, after the world media departs and leaves Brazil to soak in the muddy mess left by its own burst economic bubble, Team Trudeau will have to deal with hard reality. This will be the main event in the fall, the event that will define the Conservative and NDP leadership races as their candidates pitch their solutions, and then, as the months and years grind on, the event that will decide whether or not Trudeau remains on the podium.


Justin Trudeau’s Olympic-sized job problem

  1. Take a selfie and the economy will take care of it’s self.

    • The economy won’t take care of itself. But you may not like Trudeau’s solutions.

      • Please, enough partisan baloney. Trudeau has no solutions.

        • Harp had ten years. Trudeau has had 10 months

          • That’s all it took him along with Wynne’s policies. Ten months, down we go. “Selfie”!

          • With the economy heading in the direction that it is, it seems likely that he will only get another 38 months. When things turn sour, people tend to not have a lot of faith in a brain dead idiot whose best quality happens to be his hair.

      • You folks aren’t talking economics

        You’re just campaigning….as usual

        However Trudeau warned people about the deficit.,…..and he was not only elected, he’d have an even bigger majority today…… so give it rest

        • EM, he promised a 10 billion deficit and was elected on that promise. He then handed down triple the deficient he was elected on. Remember, his numbers weren’t better than Harp’s. As you Libs always said about Harp, he never got 40 percent of the vote. Neither did Trudeau. Most voters didn’t vote for him. Most voters didn’t want him.

          • Go have some coffee

            Dump the partisanship

          • “Dump the partisanship.” That is really rich coming from the Queen of partisanship.
            I would prefer a doobie to a cup of coffee but your boy can’t get the legalization of cannabis done. Just another broken promise.

  2. Job loss is a global problem…and it will get worse

    • My a different tune this article. What happened to blaming the west and saying if you can’t make it in Canada, you can’t anywhere. Is Evan a “Debbie Downer; Professional Mourner”? It is getting a little harder for you to protect your boy, isn’t it when the numbers keep coming in and JT isn’t looking like a saviour but a goat? Gee, it is great how he approved that big hydro dam in the Peace Country but of course he had to break his promises to the environmentalists and the indigenous people. Is that what you are talking about when you say he would have won by a bigger majority if he could have just made some more promises? You’re right. He has only had 10 months but he has tripled the debt he promised to spend and has been breaking a lot of the 200 promises he made to get himself elected and remember 60 percent didn’t vote for him. He sold himself as doing things a new way but first he actually has to do things. Then comes the new way. Thus far, he hasn’t done things. We are at war. Our economy is in the tank and his plan is spend his way out isn’t working. Libs had no sympathy for Harper in the 2008 global recession so save the excuses. He is creating a country unfriendly to business……and he has broken many promises and is set to break many more. The Syrians he promises a new life to have had no access to services or language classes and their time on the dole is almost up. Yet he gets all his holiday time and beach time and photo time in. There are families that can’t care for their kids and he is off surfing and photobombing peoples beach weddings. A PM to be proud of.

  3. Some people will be quick to defend Trudeau, suggesting that it is too early into his term for any of these problems to be attributed to him. While there is some truth to this, there is also truth to the fact that implementing a carbon tax and increasing CPP contributions (not to mention other anti-competitive measures being posed by the provinces at the encouragement of Trudeau) discourages investment. These are measures that make it more expensive to do business in Canada, and what Trudeau has to realize is that sipping champagne in the White House, and telling everyone that he is a feminist does nothing to alleviate this problem. To the voting public, I would suggest that at the next election, people take their vote a little more seriously.

    • It’s going to take a while to work through the bumpff in those ‘omnibus bills’ Harpergovermint dropped on us. Or, indeed, even to find it.

      • That is really rich. You can’t blame Harper because Trudeau has reversed almost everything Harper put in place. He has busy this 10 months. He has spent a lot of money just not creating any jobs.

  4. One thing *not* to do is lower the overnight interest rate any more (currently 0.5%). Artificially low interest rates have done nothing positive for any country that employed them, but instead have distorted the economy, and hurt savers and those retirees who live off of defined contribution pensions, and resulted in a record level of Canadian household debt.

  5. Every poverty line family in Canada will soon have $5 000 to put into the economy that they have never had before. While it isn’t on the same scale as an industrial bailout, when it comes to actually doing something – even if it’s only tricking from our import cities – it’s going to have an effect on the domestic economy – and employment.

    Smart move kiddo! If it turns out positive – as it almost certainly will – maybe there are more such things to try. Giving the wealthy another tax break or increasing job-creating incentives for industry – haven’t helped.

    • Kevin,

      Clearly you are of a “progressive” bent. I do agree that giving low income families more money will help the economy to some extent, but do you know what would be better?

      Letting everyone keep more of the money THEY HAVE EARNED. Folks wouldn’t be hurt so badly financially if they were given more choice in where their money goes. It isn’t a personal slush fund for Trudeau’s ego.

      The article notes:
      Meanwhile, with a low dollar and low interest rates, manufacturing provinces like Ontario were expected to have job growth, but sorry, no dice. Employment in Ontario actually fell by 36,000 jobs”

      Well, what did you expect with the Liberals in charge? They are the ones who brought in the Green energy act, resulting in outrageous energy prices. And guess what? It is only going to get worse. Why would a company (a potential employer) invest, or start up in Ontario? As long as Wynne and her “progressive” ideologues are in charge……the jobs will still keep leaving.

      If the folks in Ontario feel the pain…so be it. Consider it a lesson learned, and don’t make the same mistake the next timie you have a chance to decide who becomes Premier.

      Wynne is incompetence personified. And those who voted for her party…..are solely to blame for their resulting welfare or unemployment cheques.

      • Generally, tax cuts have very little effect on stimulating the economy (especially if they’re coupled by corresponding service cuts). Taxes in this country are the lowest they’ve been since before WWII… if cutting them as far as we have hasn’t spurred decent growth, more cutting isn’t going to help.

        In terms of growth, no, giving money to low income families will be significantly more stimulative than cutting taxes, because low income families are more likely to use this money for consumption, whereas the high income families who benefit from tax cuts are more likely to use it for investment or debt repayment–both perfectly useful actions from a personal finance point of view, but not actions that have a great return in terms of economic activity.

        • It is a strange thing though that a low Canadian dollar and low interest rates have not caused a stimulus in business growth in Ontario. What is going on in that province to make it unfriendly to small business; large business. Even Alberta has some growth in the tech business. We also have agricultural business, although we have the retched NDP government which is no friend to business,

  6. Wynne and the Ontario Liberals have fatally destroyed the long term prospects of a manufacturing recovery in Ontario with their policy of sky high electricity prices, and selling electricity at bargain basement prices to their competitors in Michigan and New York.

    Trudeau and his gang of Queens Park Liberals that he brought with him to Ottawa are going to do the same thing nationally. Higher payroll taxes which offset any benefit from the enhanced child benefit at lower incomes. And the massive deficits (without a recession) scare away any private investment, because massive deficits represent future tax increases.

    • There isn’t going to be any ‘manufacturing recovery’…..no matter what party is in power, or any playing around with deficits or electricity bills.

      • So says the economic think tank known as “Emily”


        thanks for proving what most of us already know about your faulty thought process. I would explain why you are wrong, but frankly you wouldn’t be able to grasp the concept. And in case you are wondering……no..this comment was not for your benefit or enlightenment.

        • I’m a Development Analyst James,and make a good living in economics …..have done for years

          Now go mop floors or dig ditches or whatever it is You do

          • You can’t be that stupid. There are certain businesses that a country like Canada is ripe for. Food is one of those businesses. Children’s items is another. People want safe food supply and safe children’s items. They are also happy to pay to eat off safe dishes and cooking utensils. The world trusts countries like Canada to supply these things. Other, cheap places have been shown that they are not trust worthy. Germany is a country that has capitalized on people’s fears. France is another. Canada is already making baby blankets,etc. Lulujo is one of those companies, Wyne, Notley, Trueau and others just need to clue in.

          • Gage….forget the coffee. Just go back to bed

          • Em, are you saying that the German company “Dr. Utger’s Pizza” is not a winning manufacturing enterprise in Canada? Are you saying that Canada doesn’t have a booming export business in food stuffs and couldn’t expand on that? Are you saying people are willing to buy food stuff from China or even toys after the melamine in the baby formula and the lead paint on the dolls? Do you know anything about a baby toy from France called “Sophie” the giraffe? As a 70 year old specializing in economic development, you should realize that with the low Canadian dollar, Canada’s strict rules with regard to safety in foodstuffs and children’s items, we are ripe for creating a specialized manufacturing hub for these kinds of items.

  7. Ian Lee is spot on. Many of the people who make the major decisions that lead to wealth creation expect the federal Liberals to enact damaging policies just like their Ontario pals. Pessimism is the enemy of a good economy. Self inflicted wounds like carbon taxes and higher deficits will do far more harm than increased baby bonus cheques will help (what % of the retail sale of a big screen TV or a trip to Vegas stays here?)

  8. Trudeau is globalist, he doesn’t care if anything is “Made in Canada.”
    He is also all into a global school agenda for our children. In other words, he doesn’t care our young are being dumbed down. Another generation, we’ll have the mind control led zombies displayed in Switzerland’s High Profile Train Ritual after the Gotthard Tunnel was completed.

    Canadian public better wake up and “smell the bacon.”

  9. Trudeau is a global elitest, and as media outlets throughout the country try to contact him for comment on said issue, he’s busy delivering the Shahada at one of our many Megamosques….Shirtless, of course….

  10. Gerald Lanouette and DeeTinDoll…kindly leave the Dark Ages and Illuminati out of it. .

  11. Fear mongering seems to be the normal impulse at Maclean’s when they talk matters economic. The concerns raised in the article are irrelevant. Fact is all unemployed resources denominated in Canadian dollars can be hired immediately by our federal government and used to advance broad public purpose (infrastructure, environment, education). Our government has no financial constraints and can guarantee that all who want to work can have a job at a living wage; just “use the computer” as we saw during the financial crisis. Conventional can’t do arguments are a cruel smoke screen for supporting a status quo that deprives millions of our fellow citizens from a full and active participation in our society.

  12. The reality is that Ontario’s non-competitive manufacturing economy would have long ago jointed Detroit’s if not for the wide variety of protection, subsidies (ie auto industry), monopolies and captive markets it receives within Canada.

    You want to make Canada innovative and productive? Force Canadian companies to actually compete in the real world. Start with Bombardier and the auto industry

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