Canada's unemployment rate falls to 8.4%

[Shady]

OTTAWA - Canada's unemployment rate fell for the first time in nearly a year to 8.4 per cent last month, in perhaps the clearest indication the hard-hit labour market may be recovering sooner than expected.

The September jobs pick-up of 30,600 was five times larger than the economist consensus forecast of 5,000 and - along with a slight decrease in the number of workers looking for jobs - helped drop the national unemployment rate by 0.3 percentage points.

Link

Looks like things are getting better. Please Iggy, engineer an election, I dare you!

Edited October 9, 2009 by Shady

[Shakeyhands]

that is indeed good news, lets see if it can be repeated next month.

[Molly]

To the folks who are still unemployed, it ain't better yet.

Good news, yes, but an awful lot more good news is needed before anyone can say the hard times are over.

[Wild Bill]

To the folks who are still unemployed, it ain't better yet.

Good news, yes, but an awful lot more good news is needed before anyone can say the hard times are over.

I'm wondering if once again do the stats tell the whole story?

After all, it's been about a year since the start of the huge layoffs. EI benefits must be tapped out for a large number of those people. So they go off EI and we say "Yay! Fewer people on EI! The jobless rate is dropping!"

[Topaz]

Exactly, those people went from EI to welfare or to a live of crime to fed their families. I just wonder how many people in the Tories riding are out of work, out EI, and losing thier homes, families? The Tories keep talking about lower corporate taxes and they have and companies are still moving to Mexico, China and India. So all this is doing is taking more money out of the pockets of Canadians who have to pay more.

[Shady]

To the folks who are still unemployed, it ain't better yet.

Well, that can be said of any time someone is unemployed. Even when unemployment rates were at 5%, there is always some people who can't find work. But it doesn't mean things aren't getting better.

So they go off EI and we say "Yay! Fewer people on EI! The jobless rate is dropping!"

That's not how the unemployment rate is calculated.

[Triple M]

What companies have moved to China, Mexico, and Inda???

Anyways this is good news hopefully it gets other canadians confident in the economy but many of us know it is going to take a lot more for the economy to fully bounce back. Also what types of jobs are being created? is it temporary low wage work or long term employment.

[jdobbin]

Looks like things are getting better.

From your link:

If there was a downside to the Canadian jobs data for September, it was that hourly wage growth slowed to 2.5 per cent, the lowest year-over-year wage gain in 2 1/2 years, and that all and more of the net job growth was in the public sector.

It is hard to pat yourself on the back for growth of the public sector.

We'll see if we can't make some gains in private sector job growth over the next while.

[madmax]

I'm wondering if once again do the stats tell the whole story?

After all, it's been about a year since the start of the huge layoffs. EI benefits must be tapped out for a large number of those people. So they go off EI and we say "Yay! Fewer people on EI! The jobless rate is dropping!"

What is happening is that the the Joblosses started in 2005 and began to pick up momentum. By 2007 the economy of Ontario was in serious trouble and was masked by the increase of part time jobs. THerefore the job loss rate never looked as bad as it was.

By 2008 many people were enrolled in retraining or obtaining employment in companies who ramped up production in order to build hedges before leaving for good. There was alot of short term decent paying work available. As these winddowns continued, those who fell through the cracks started showing up on the church suppers and foodbanks. Assets were liquidated and these people became either working poor or maintained their interest in the job market.

In about two years the welfare ranks started to swell as many people found themselves facing the unthinkable.

Also to be taken into account.

If you enroll in retraining, you are out of the job market, even if collecting EI.

Retraining swelled to such a degree that the PRovince of Ontario was unable to fullfill its skills development and 2nd Career solution. There were more takers then money and space available. This alone took 20,000 people out of the labour market for 2nd career and roughly 50,000 in skills development.

That adjusts the numbers by 70,000.

Self employment masked the numbers over the summer. The rate of failure is very high.

New jobs with sustainable incomes are few and far between compared to the demand.

Many people off EI and without a job do not state they are still in the labour market seeking work.

Many people who are in and out of the labour market because work is precarious, are not listed in the Unemployment stats as their is a significant population that does not qualify for EI.

8.4% sounds about right with another 4% lost between the cracks of the system.

It is just a statistic. Thus they have always been a ballpark figure, but it is a steady measure of unemployment and job creation in the past 13 years. I do not put alot of value in comparing the loss of a full time job and replacing it with a part time job as job creation or job surplus. But it is a job nonetheless. How should it be measured?

Edited October 9, 2009 by madmax

[Shady]

It is hard to pat yourself on the back for growth of the public sector.

We'll see if we can't make some gains in private sector job growth over the next while.

From my link...

The biggest jobs gains came in industries that have been hardest hit by the recession. Manufacturers added 26,000 workers last month, and the construction trade, which may have been boosted by federal stimulus money, picked up 25,000 workers, the second consecutive gain.

Those are PRIVATE SECTOR JOBS.

[jdobbin]

Those are PRIVATE SECTOR JOBS.

Net job growth was responsible for most of the jobs. That was in your link too. And those came from the public sector.

Look, if you want to disagree with me, fine. But it is what all the business channels are talking about right now. Public sector growth.

Edited October 9, 2009 by jdobbin

[madmax]

Exactly, those people went from EI to welfare or to a live of crime to fed their families. I just wonder how many people in the Tories riding are out of work, out EI, and losing thier homes, families? The Tories keep talking about lower corporate taxes and they have and companies are still moving to Mexico, China and India. So all this is doing is taking more money out of the pockets of Canadians who have to pay more.

There are a few people on this forum who do not see it this way. But the fact is we have been reducing corporate taxes year after year after year, and it has been a failed policy for retention. It may be a good tax policy, but it isn't keeping anyone here.

I still recall being in a meeting with a corporation that paid $35,000/year in taxes on their $86 million business.

They had a meeting with the government that I attended and wanted that monies forgiven. It wasn't possible. They had to pay.

I couldn't believe they were squabbling over such a petty amount of tax. They drove to the meeting in Lincoln Navigators, Hummers, One Viper, and a nice BMW convertable. Times were tough indeed.

That evening they blew $2700 in a fine dining venue with only 4 people in attendance.

[jdobbin]

There are a few people on this forum who do not see it this way. But the fact is we have been reducing corporate taxes year after year after year, and it has been a failed policy for retention. It may be a good tax policy, but it isn't keeping anyone here.

What would be a good tax policy that encourages people to employ more workers?

[madmax]

What would be a good tax policy that encourages people to employ more workers?

There is nothing in tax policy that would encourage more employees, nor is there really a need for a "tax policy" to be created around employing more employees. Often companies are lean, want to remain lean, and there is no need for 1 xtra body. Nor should there be.

Tax policy is about taxes. Industrial policy is about Industry. Its just one small variable in the big picture. For some people they believe it is the only policy. It has been a failed policy for quite some time. Its good for the company while the company is here, but tax policy is not about retaining the company.

Look.....

Reduce corporate taxes and say it saves my company $200,000 per year.

However, the cost of my deregulated hydro just went up $150,000 per month. You purchase in packets with overlap and bring those costs down to $75,000/ month. That is called competition. Prior to this the cost of hydro was

$75000/month lower, but you have managed to keep your cost increases down 100%.

Say I run a company and I source my parts locally and that my company employees 1200 people in 3 cities. I source hydraulic valves.

The company I purchase from also supplies my competitor also located in the province. One company is American, the other is Canadian.

The American Company with 1800 employees just got back $80,000 Extra in tax break this year, $400000 over the past 6 years, and is relocating their operations to Mexico. This company also got a $250,000 technology grant. Canadian company has received nothing.

The Canadian company that sells the Hydralic valves is going to lose 55% of the business from the US operation. The Canadian Competitor company is going to face HIGHER PRICES because of decreased volume of the said hydraulic part.

The Canadian Valve company announces months later it will be relocating operations to Mexico. Canadian company was PROFITABLE and Received a tax break. Explain to me how this tax break could possibly keep this company in Canada, let alone, as you suggest employ more people? Its not possible. It makes no business sense. 80 People of valving company are told they will be unemployed by year end.

Canadian rival company, loses valve supply, and pays higher costs during transistion. Canadian Company struggles to maintain operations in Canada. New Mexican Valves are cheaper and but defect rate significantly higher. Industrial Teams are sent across the world to replace failing valves.

Canadian Company 18 months later announce closure and relocation plans. 1200 people out of work. Canadian Company made profits of 22 Million on$600 million of business.

Net loss 3,750 jobs between three companies.

All these companies made money, showed profit, but this is the domino effect. Lower taxes are not going to change the fundamentals or global business decisions.

Ok scenario #3

Company has operations in Canada with 65 Employees. This company makes 4 Million in profit on 65 million in business. Not bad.

Sister plants in various locations make .... Net loss of 12 Million on 60 million in business, as well as net gain of $1.1 Million on 72 million in business.

However, the two plants have 250 employees and 280 employees respectively.

If you lay off 16 people in Canada, then reduce operation capacity and volume, you can avoid all severance pay legally. Or if you divert the work to the other operations, you can eliminate the Canada jobs and slide the company into bankruptcy and not pay.

Or you can payout the 65 employees and move the profitable work elsewhere and close down one operation with little cost in comparision of the other two. Its not about how much they make, its about how much it costs to close the operations.

How about this scenario.

Its just fresh too.

I have a company that was slovenly and poorly run. It is American branch plant in Canada. It has 500 employees and makes 60cents/unit.

Joint Japanese partner comes in with 5S vision and lean production.

Staff now down to 180 people and operation makes $1.00/ unit. Partner is 49% japanese, 51% US.

After 2 years, American plant in US is about to close.

It has a staff of 300 people and no future orders.

Corporate Decision says to move work to empty plant from Canadian operations.

Work is relocated and Canadian Operation is liquidated.

Corporate operations make .60/ unit. That is 9 cents/unit more then corporate receives via sharing with Japanese.

Sorry, but there is no "tax solution" to this and to think that cutting taxes creates work hasn't proven true for over a decade.

Of course these are the simple ones, I could get further into details with regards to various groups with no industrial backgrounds buying and liquidating or flipping companies like stocks, with no intention to run a business or use sound manufacturing practices.

But certainly happy to take any money the government gives them, via grants, or non repayable loans, and tax cuts.

In the meantime, that Canadian Companies have not been able to receive loans from the banks. A tax cut does not help this company out. It requires the same cash flow or liquidity as the Bank. We gave the banks money and they held onto it.

The are so many problems and such a total disconnect from the real world that most people believe in the myths and by believing these myths companies have decided to leave this country for good.

Edited October 9, 2009 by madmax

[Wild Bill]

The are so many problems and such a total disconnect from the real world that most people believe in the myths and by believing these myths companies have decided to leave this country for good.

I tend to agree with you, MM! I'm appalled at the outcome but it's at least refreshing to see a 'real world' analysis instead of jingoism and 'rah-rah'.

I think the single biggest factor is the value of a country's currency! Taxes and tax breaks are usually too similar between countries to matter. Cheap labour is often cited but automation has leveled much of that out too.

Take a country like China that has kept its currency artificially low deliberately, refusing to allow it to float to a natural level and it gets a HUGE cost advantage! Parts and labour are in low value currency and the goods are paid for in U$ funds. What a sweet setup!

[jdobbin]

There is nothing in tax policy that would encourage more employees, nor is there really a need for a "tax policy" to be created around employing more employees. Often companies are lean, want to remain lean, and there is no need for 1 xtra body. Nor should there be.

Tax policy is about taxes. Industrial policy is about Industry. Its just one small variable in the big picture. For some people they believe it is the only policy. It has been a failed policy for quite some time. Its good for the company while the company is here, but tax policy is not about retaining the company.

I certainly don't think it is the only policy but I do think it can be an issue about where a company locates. I also believe it can be an issue in how governments fund legitimate services for the country. In short, the tax is a component of a healthy economy and functioning government.

It is why I believe the NDP policy of reducing small business tax down to zero is un-wise. First, some people are taking advantage of it as a tax dodge. I am seeing more of that all the time here in Manitoba.

Next, for the businesses who do grow with the help, they hit a huge wall that they get hit with a very large bill when they meet a certain threshold.

It has been shown a few times here that it is a myth that small businesses fuel the most job growth.

The tax policy has to be balanced. High enough that it funds a well functioning government, low enough that it encourages businesses to stay, progressive enough so that it doesn't come as a huge shock as businesses grow and smart enough that it doesn't give tax breaks to businesses that don't need it.

But certainly happy to take any money the government gives them, via grants, or non repayable loans, and tax cuts.

I read your examples and I agree.

It is why I don't advocate just a tax policy. It has to come with an industrial policy.

In the meantime, that Canadian Companies have not been able to receive loans from the banks. A tax cut does not help this company out. It requires the same cash flow or liquidity as the Bank. We gave the banks money and they held onto it.

I'm still not quite sure why Harper used government money for the banks when they really didn't need it.

The are so many problems and such a total disconnect from the real world that most people believe in the myths and by believing these myths companies have decided to leave this country for good.

We need an open debate in industrial policy in Canada and what we hope to achieve.

We can't be chasing the latest thing like what has happened in Manitoba when tax money was used to chase down call centre jobs, Internet pharmacies or the hog industry...all of which proved to be wasteful spending.

[jdobbin]

I think the single biggest factor is the value of a country's currency!

I agree. We are now headed for parity again.

If you want to see where Harper might face a square kick in the jaw is if the dollar is par and our exports bottom out even more. That popularity he has right now might go in a similar direction.

The Bank of Canada and the government of Canada will have to do more to work on the rapidly escalating currency.