The first indicator of the need for change, comes from manufacturing outputs. Canada’s biggest client is the US, which has been displaying sustained, albeit fragile, economic growth for 7 years now. The overwhelming assumption when oil prices plummeted was that the Canadian Dollar will weaken, incentivizing US purchases of Canadian goods. The numbers show that although US consumers are spending more, and the economy south of the border is still growing, the weakness in the Loonie is not bringing in more US orders. In fact, manufacturing in Canada fell by 1% in May, which is a dismal result for all the experts and policy makers who were counting on a sharp currency depreciation – a depreciation of more than 30% from where it was 2 years ago – to become a magic fix for falling oil revenue.
The truth of the matter is that manufacturing is not the bread maker it used to be 40 or 50 years ago. The name of the game nowadays is high tech. Nevertheless, Canadian leaders keep peddling manufacturing as a savior, so much so, that the overwhelming assumption of job creation in traditional manufacturing strongholds like Ontario, has also proven to be a mirage. The latest job report shows that the province of Ontario – despite its premier’s praises for outgrowing the OECD – lost 36,000 jobs in the month of July. The only province that added jobs and reduced unemployment was in fact British Columbia, which is not known as a manufacturing hub, but does possess a budding high tech sector.
These facts and numbers are troubling enough. Clearly Canada is moving in the wrong direction. However, when the data is coupled with the fact that Canada possesses the most educated labor force in the world – by percentage of the population with university and post-secondary degrees – the situation is even more baffling. Rising unemployment in Canada thus shows that its labor market lacks flexibility. People cannot shift their careers easily, and it seems that companies lack the willingness to turn to unusual prospects to hire or to develop their businesses in different directions.
It is possible to teach an old dog new tricks, but it seems that Canada refuses to acknowledge that. At every level its economy is too dependent on a declining industry, and it seems to be yearning for the good old days instead of looking to the future. It is time for policy makers, industry leaders and Canadians in general to question their paradigms, in search for a different solution.
