POLICY UPDATES

Ontario’s COVID-19 “Deemed” Infectious Disease Emergency Leave ‎expected to end on July 30, 2022‎

In response to the COVID‑19 pandemic, the Ontario government made a regulation that temporarily changed certain Employment Standards Act (ESA) rules during the COVID-19 period. The temporary rules continue to be in effect until July 30, 2022. Learn more.

This means that the COVID‑19 period ends on July 30, 2022 , and non-unionized employees will no longer be deemed to be on infectious disease emergency leave by the regulation made by the government.

As a result, the ESA’s rules regarding temporary layoffs and constructive dismissal will resume.

However, if certain conditions are met, unionized and non-unionized employees may continue to be eligible for unpaid and where applicable, paid-infectious disease emergency leave if they are not performing the duties of their position for certain reasons related to COVID‑19.

Paid infectious disease emergency leave is available until March 31, 2023.

Click here for more information.

OTHER NEWS

Ontario throne speech set for Aug. 9

Ontario’s lieutenant governor will deliver a throne speech on Aug. 9.

The speech will lay out the re-elected Progressive Conservative government’s priorities and will come a day after the legislature convenes.

Legislators are to debate and vote on the provincial budget that was introduced but not passed before the spring election.

Premier Doug Ford has said there will be some small changes to the budget document, including an increase to Ontario Disability Support Payment funding that his party promised during the campaign.

Other political parties are urging the Progressive Conservative government to increase disability payments by a greater amount to help people keep up with the high cost of living.

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NEWS FROM OTHER COUNTRIES

U.S. Federal Reserve raises benchmark interest rate another 75 points

The U.S. central bank did what it was expected to do on Wednesday, raising its benchmark lending rate by three quarters of a percentage point as it steps up its battle to rein in runaway inflation.

The Federal Reserve raised the upper bound of its benchmark rate — known as the federal funds rate — to 2.5 per cent.

That matches the Bank of Canada’s rate, after Canada’s central bank raised by a full percentage point earlier this month.

After slashing interest rates in the early days of the pandemic, central banks around the world have recently begun to aggressively raise lending rates to deal with inflation that has risen to its highest point in decades.

The official U.S. inflation rate topped nine per cent last month, while it’s currently more than eight per cent in Canada.

U.S. GDP shrinks for 2 quarters in a row

The U.S. economy shrank from April through June for a second straight quarter, contracting at a 0.9 per cent annual pace and raising fears that the nation may be approaching a recession.

The decline that the Commerce Department reported Thursday in the gross domestic product — the broadest gauge of the economy — followed a 1.6 per cent annual drop from January through March. Consecutive quarters of falling GDP constitute one informal, though not definitive, indicator of a recession.

The report comes at a critical time. Consumers and businesses have been struggling under the weight of punishing inflation and higher borrowing costs. On Wednesday, the Federal Reserve raised its benchmark interest rate by a sizable three-quarters of a point for a second straight time in its push to conquer the worst inflation outbreak in four decades.

The Fed is hoping to achieve a notoriously difficult “soft landing”: An economic slowdown that manages to rein in rocketing prices without triggering a recession.

Fed Chair Jerome Powell and many economists have said that while the economy is showing some weakening, they doubt it’s in recession. Many of them point, in particular, to a still-robust labour market, with 11 million job openings and an uncommonly low 3.6 per cent unemployment rate, to suggest that a recession, if one does occur, is still a ways off.

Thursday’s first of three government estimates of GDP for the April-June quarter marks a drastic weakening from the 5.7 per cent growth the economy achieved last year. That was the fastest calendar-year expansion since 1984, reflecting how vigorously the economy roared back from the brief but brutal pandemic recession of 2020.

But since then, the combination of mounting prices and higher borrowing costs have taken a toll. The Labor Department’s consumer price index skyrocketed 9.1 per cent in June from a year earlier, a pace not matched since 1981. And despite widespread pay raises, prices are surging faster than wages. In June, average hourly earnings, after adjusting for inflation, slid 3.6 per cent from a year earlier, the 15th straight year-over-year drop.

The inflation surge and fear of a recession have eroded consumer confidence and stirred public anxiety about the economy, which is sending mixed signals

Consumer spending is still growing. But Americans are losing confidence: Their assessment of economic conditions six months from now has reached its lowest point since 2013, according to the Conference Board, a research group.

Recession risks have been growing as the Fed’s policy-makers have pursued a campaign of rate hikes that will likely extend into 2023. The Fed’s hikes have already led to higher rates on credit cards and auto loans and to a doubling of the average rate on a 30-year fixed mortgage in the past year, to 5.5. Home sales, which are especially sensitive to interest rate changes, have tumbled.

Even with the economy recording a second straight quarter of negative GDP, many economists do not regard it as constituting a recession. The definition of recession that is most widely accepted is the one determined by the National Bureau of Economic Research, a group of economists whose Business Cycle Dating Committee defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.”

The committee assesses a range of factors before publicly declaring the death of an economic expansion and the birth of a recession — and it often does so well after the fact.

This week, Walmart, America’s largest retailer, lowered its profit outlook, saying that higher gas and food prices were forcing shoppers to spend less on many discretionary items, like new clothing.

Manufacturing is slowing, too. America’s factories have enjoyed 25 consecutive months of expansion, according to the Institute for Supply Management’s manufacturing index, though supply chain bottlenecks have made it hard for factories to fill orders.

But now, the factory boom is showing signs of strain. The ISM’s index dropped last month to its lowest level in two years. New orders declined. Factory hiring dropped for a second straight month.

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