Recovery? What recovery?
PURCHASINGB2B MAGAZINE, OCTOBER 2010: I’ve been hearing for a long time now that the economic recovery is “well in hand.” If I go to the websites of any of the chartered banks and read their economic research, I see rosy scenarios that suggest economic growth in 2010 will be very strong. For example, the Bank of Montreal is looking for robust three percent growth next year and two and a half percent growth in 2011.
But when I hear anecdotal evidence, particularly from small business owners, I hear that things remain slow. And I know lots of talented people who have been out of work for a long time–with no particular hope in sight.
So what’s really going on? I saw a recent analysis in the Globe and Mail newspaper that did a wonderful job of cutting through the noise and getting to the truth of the matter.
The writer of the piece, Tavia Grant, did some good old-fashioned digging, laced with critical thinking, and came up with a very grim picture of the job market in this country.
Yes, unemployment is coming down. Yet at the same time, there is huge under-employment in this country. In excess of one million Canadians who are working part-time would prefer full-time hours, but they can’t get them. And opportunities with other employers are very limited.
Moreover, there is a great deal of misunderstanding about what it means to be “unemployed” in Canada. It doesn’t just mean you are out of work. It means you’re out of work and you’ve actively sought work in the past month.
So if you’ve just given up because it seems hopeless to try, you’re no longer “unemployed” even though you’re not bringing in a paycheck. Now you’re considered a discouraged worker, and you don’t count in the official stats.
But here’s the problem. When the labour market was at its absolute worst last year, the combination of unemployed and discouraged workers was 12 percent. Now it’s 11.6 percent, clearly an improvement, but nothing to celebrate.
What all of this means to me is that the talk of a recovery is more myth than reality. In this world, you can’t be too skeptical.
The people who have been touting the recovery are politicians who fear voter wrath if people figure out how bad things really are, and civil servants–like Bank of Canada governor Mark Carney–whose pride won’t allow him to recognize the obvious: that the prescription for a turnaround was an abject failure.
I hear some folks worrying about a double-dip recession. Maybe what is closer to the truth is that we never emerged from the original recession in the first place.
Toronto-based Michael Hlinka provides daily business commentary to CBC Radio One and a column syndicated across the CBC network.