September 15, 2022
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ECONOMIC IMPACT & RESOURCES
Canada sheds jobs for third month, unemployment rate jumps to 5.4%
Canadian employment levels unexpectedly fell for a third straight month in August and the jobless rate jumped, a potential signal interest-rate hikes have started to cool the tight labour market.
The economy shed 39,700 jobs last month, Statistics Canada reported on Friday in Ottawa, a surprise negative reading compared to the 15,000 gain anticipated by economists in a Bloomberg survey.
The jobless rate rose to 5.4 per cent from record lows of 4.9 per cent in June and July due to the biggest increase in the number of unemployed since strict COVID measures were imposed in January.
The decrease in employment and higher jobless rate may be evidence the country’s labour force is re-balancing as the Bank of Canada’s aggressive rate hikes start to cool economic growth and slow demand. The additional job searchers may likewise ease wage growth as the labour supply expands.
August’s employment drop brought cumulative declines since May to 114,000, suggesting that hiring activities may be moderating. The data, however, continue to show signs of extreme tightness in the labour market, even with three months of job losses.
The average hourly wage rate was up 5.4 per cent from a year ago, compared with 5.2 per cent in both June and July. That’s the fastest increase in records dating to 1997, outside of the pandemic.
Hours worked were unchanged in August, following a decline of 0.5 per cent in July. Labour force participation rates rose 0.1 percentage points to 64.8 per cent, while the number of Canadians in the labour force grew by 66,000 in August.
Employment declines were driven by educational services and the construction sectors. The public sector shed 27,600 positions, the bulk of August’s job losses.
Regionally, employment fell most in British Columbia, Manitoba and Nova Scotia, while it increased in Quebec. Other provinces, including Ontario, saw little change.
Click here for the Statistics Canada Labour Force Survey, August 2022.
OTHER NEWS
Poilievre wins Tory leadership
After seven months of waiting, the most expected thing in Canadian politics was finally made official: Pierre Poilievre is the new leader of the Conservative Party of Canada. Poilievre was the favourite from the outset, arguably the most prohibitive favourite that the Party has had since Stephen Harper’s victory in the Party’s first ever leadership contest.
Poilievre received 68.15 per cent of the vote, far outpaced his progressive Conservative rival and runner up Jean Charest’s 16.07 per cent of the vote. MP Leslyn Lewis placed third, with 9.69 per cent, former Ontario MPP Roman Baber placed fourth, with 5.03 per cent of the vote, and mayor-turned-MP Scott Aitchison finished last with 1.06 per cent of the vote.
While the race had its moments of excitement and interest, such as the Party’s disqualification of Patrick Brown as a candidate, or the late endorsement of Poilievre by former Prime Minister Stephen Harper, the end result was never really in doubt. Perhaps more interesting than the race is what comes next, and what that means for the future of the Conservative Party.
Poilievre, in keeping with his previous role as Conservative Shadow Minister for Finance, is likely to retain a laser focus on the economy and the government’s fiscal record. His Conservatives are likely to take every opportunity to indicate their opposition and desire for the downfall of the current Liberal government. While the Tories under O’Toole and Scheer would, on rare occasions, vote with the government, expect none of this from Poilievre’s Tories. Canada’s politics are about to enter two-plus years of extended personality warfare between the Leaders of its two major parties.
We can also expect the issue of the carbon tax and climate change to re-emerge as political issues. Poilievre is one of Canada’s vehement opponents of the Trudeau Government’s national carbon pricing framework and we can expect this contrast to once again emerge as a key faultline in Canadian politics.
Conservative Members consistently expressed their wish for ‘a fighter’ at the head of their Party during this leadership contest. They have, in that sense, elected the Mike Tyson of Conservative politicians.
The Poilievre campaign strategy represents a distinct change from his predecessor in ways that go beyond ideology. The O’Toole campaign was predicated on the assumption that the path to Conservative victory lay in appealing to a conventionally defined ‘centre’ and as a result strategically retreated from contentious issues in order to reassure wavering Red Tories while attracting former Liberal voters who have become disenchanted with Trudeau’s record.
Poilievre’s campaign has always rejected this approach and has instead sought to supercharge base conservative voters while explicitly appealing to non-traditional voters who were previously disengaged with Canadian politics. A core Poilievre strategic assumption is that his targeted, and often confrontational, anti-establishment approach will appeal to a significantly larger share of the voting population as opposed to a more diluted ‘centrist’ campaign.
One unforeseen wrinkle to this could be that Poilievre’s introduction to the Canadian public could come in his official House response to the death of Her Majesty, Queen Elizabeth II. Such occasions are rarely partisan affairs, and it might be an interesting glimpse into whether a ‘Poilievre the Statesman’ exists as an asset for Conservatives.
Do Canadians get a holiday to mourn the Queen? It depends
The federal government has announced that Sept. 19, the date of Queen Elizabeth’s funeral, will be a holiday for federal government employees. The federal government did not extend the holiday requirement to federally regulated industries, such as banks and airlines. Those industries may follow the government’s lead but won’t be forced to.
Provincial governments regulate about 85 to 90 per cent of workers in Canada. Not every province has announced its plans. This article from CBC News (which is being constantly updated) outlines what each province is doing.
Both Australia and New Zealand announced residents would get a one-time national public holiday later this month to mourn the Queen. Australian prime minister Anthony Albanese says his country’s holiday will coincide with a National Day of Memorial for the monarch on Sep. 22. New Zealand says it will hold a public holiday on Sep. 26, along with a state memorial service in the capital city of Wellington.
NEWS FROM OTHER COUNTRIES
U.S. inflation rate cools slightly to 8.3%
The U.S. inflation rate cooled slightly to 8.3 per cent last month, down for the second month in a row after hitting a 40-year high of 9.1 per cent in June, the U.S. Bureau of Labour Statistics reported.
While the decline was expected, it didn’t go down by as much as economists thought it would, and that’s largely because the price of many goods and services continues to increase at a breathtaking pace.
Food prices have increased by 11.4 per cent in the past 12 months. That’s the fastest pace of increase for that category since 1979.
And while gasoline prices have come down steadily for 10 weeks in a row after spiking in the early days of the conflict in Ukraine, energy costs are still sharply higher than what they were this time last year.
The energy index is up by 23.8 per cent in the past 12 months. That’s down from 32.9 per cent last month.
Food and energy prices are often volatile, so policy-makers try to strip them out of the numbers to see what is happening with so-called core inflation for everything else. If food and energy prices are ignored, the U.S. inflation rate came in at 6.3 per cent for the month. That’s up from 5.9 per cent previously.
Inflation has risen to multi-decade highs around the world in recent months, as loose monetary policy by central banks around the world earlier in the pandemic has helped fuel torrid demand for goods and services.
Central banks are trying to hike their rates in a hurry to get ahead of inflation, so Tuesday’s data will come as some measure of relief to the Federal Reserve, which is in charge of interest rates in the U.S.
But despite being down for two months in a row, inflation continues to increase in many categories, so economists think that more rate hikes are coming.
Economists expect the US Federal Reserve will increase rates by at least 75 basis points next week.
US News: IFA leads push for referendum on AB 257 (FAST Act in California)
Following the passage of Assembly Bill 257 or the FAST Act in California, IFA led a coalition of restaurant owners on a first step toward blocking the law by filing a referendum against the law on Wednesday.
The coalition of restaurants, known as the Protect Neighborhood Restaurants, filed the referendum with the California Attorney General to give voters the opportunity to protect California restaurants, employees, and consumers by delaying for two years the enactment of AB 257, or the FAST Act.
Officially, opponents of AB 257 will need to get more than 600,000 signatures, or roughly 5% of the total votes cast for Governor in the 2018 election, to temporarily block AB 257.
US News: IFA Sounds Alarm Over Proposed Joint Employer Rule Change
The International Franchise Association monitors joint-employer rules and lobbies strenuously against regulatory changes that expand the types of businesses that are covered by those rules. Recently the IFA has battled state and federal regulations – such as a National Labor Relations Board rule proposed Tuesday, Sept. 6 – that would make franchisors liable for actions by franchisees.
The IFA and its members, which include franchisees as well as franchisors, have been satisfied with a Trump-era rule set in April 2020 stating that a business is legally considered to be a joint employer if it has direct, immediate control over another business entity’s workers. “The IFA sees no reason to change the rule,” Michael Layman, IFA senior vice president for government relations and public affairs, told reporters Tuesday, Sept. 6, during a conference call.
Effects of Proposed NLRB Rule Change
But under the proposed rule change published earlier that day, two or more employers such as a franchisor and franchisee are considered joint employers if they “share or co-determine” rules and policies relating to terms and conditions of employment. As joint employers under this change, both business entities must bargain with unions representing jointly employed workers, and both are liable and punishable for unfair labor practices that either one commits. The rule change also dictates that both of the employers would be subject to union actions such as picketing if a labor disagreement erupts.
The NLRB proposal goes beyond the Trump era direct-control standard for joint employers, potentially adding two categories establishing franchisors as joint employers: 1) if the franchisor has indirect control of workers or 2) if the franchisor has what’s called “reserved control,” defined as a business entity that could potentially exercise authority, but may or may not opt to do so. Layman told reporters these new categories “set up an unpredictable framework for employers and small business to know what the rules are.”
In a nutshell, if the definition of joint employer expands under the new rule, franchisors would be on the hook for labor law infractions as though they are on-site managing the operation and allowing violations to manifest.
Next Step for the Rule Change
The NPRM (Notice of Proposed Rule Making) published Sept. 6 by the NLRB is a significant first step toward replacing the April 2020 rule set under the GOP. Next up is a public comment period as required by law. Comments are allowed through Nov. 7, 2022, and comments in response to initial comments have a Nov. 21 deadline.
“You have to go through all these hoops, so it takes a while,” Anne Lofaso, a former board lawyer and labor law professor at West Virginia University, told Bloomberg Law. “They can’t just immediately overturn it.”
IFA Advocacy
Staying true to its mission to protect franchising, IFA plans to bring 300 advocates to Capitol Hill later this month. In IFA’s statement about the proposed joint employer rule, the group plans to “ask lawmakers to consider the harm this expanded definition would bring to their businesses and those they serve.”
Support CFA’s Advocacy Efforts for 2022-23
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