Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Governor of the Bank of Canada, Stephen Poloz speaks with media during a news conference Thursday June 12, 2014 in Ottawa.

Adrian Wyld/The Canadian Press

Canada's labour market is already limping, and lower oil prices could further dampen income growth and employment opportunities, the Bank of Canada says.

"We have an oil price shock which will reduce the income flowing into Canada, and lead probably to some increase in unemployment over all," Governor Stephen Poloz told reporters Wednesday just after the central bank unexpectedly cut rates.

The Bank of Canada bases its interest rate decisions on inflation targets. But it's keeping an increasingly public eye on the health of the country's labour market, too. Its monetary policy report observes that "material slack" remains in the economy, particularly in the jobs market, which is currently softer than the headline unemployment rate suggests.

Story continues below advertisement

It is hoping to cushion the sting of plummeting oil prices. Back in 2002, when oil prices were climbing and terms of trade improving, incomes of all Canadians benefited, senior deputy governor Carolyn Wilkins said. Now, the plunge in oil "reverses some of those gains," she said.

In the near term, lower oil prices are expected to give some relief to consumers. But the bank now sees a slowing in consumption growth, as negative terms of trade from lower oil prices "leads to higher unemployment and restrains income growth and wealth."

That restrained income growth in turn could drive household debt levels – already at a record – still higher, the bank cautioned.

The central bank also sees lingering weakness in the labour market. Its own measure of labour market performance – introduced last year – suggests "both more labour market slack and less improvement in labour market conditions than indicated by the unemployment rate," which sits at 6.6 per cent.

Some of areas of weakness have been cited before: Long-term unemployment is still close to its post-crisis peak, average hours worked remain low, and the share of involuntary part-time workers is still elevated. Wage gains, meantime, remain only "moderate," the bank said.

But the central bank is also troubled by how many Canadians are sitting on the sidelines of the labour market. The country's participation rate has ebbed to 65.9 per cent, a 13-year low. Some of that is a result of an aging population – but not all. Rather, some workers may be giving up on the hope of finding permanent employment.

"In another sign of ongoing labour market challenges, the participation rate is low relative to what would be suggested by purely demographic forces," the bank said.

Story continues below advertisement

Most concerning is the drop in the participation rate among core-aged workers, especially in Ontario. "These people are at the prime of their working lives and they are the largest component of the labour force, so even a small drop has implications," weighing on domestic demand and suggesting possible growing pressures on social assistance, said Tyler Meredith, research director at the Institute for Research on Public Policy.

Canada is really a tale of two economies, central bank officials stressed: the long-booming energy sector, which is showing clear signs of slowing, and the non-energy export sector, which is looking brighter thanks to a stronger U.S. economy and a weaker Canadian dollar.

It remains unclear, though, whether lost jobs in the oil patch – Suncor Energy Inc., for example, announced 1,000 cuts this month – will be counterbalanced by new positions that pay equivalent wages in Central Canada, Mr. Meredith said. "These are not necessarily the same jobs, and not at same wage rates."

There are some encouraging signs for workers. Inflation is expected to cool later this year, which could mean some real wage gains. And the central bank expects the economy should start to gradually strengthen by the second half of this year as U.S. growth gathers steam.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies