Canada’s “economy” is recovering faster than expected, but employment is lagging. The Organization for Economic Co-operation and Development (OECD), a group promoting trade between 37 advanced economies, published the latest unemployment rates for member countries. The data shows Canada is significantly behind its G7 peers, with only a few OECD countries worse off. Canada is also seeing the unemployment rate rise, while its biggest trade partner is seeing the rate fall.
About The Data
The OECD’s unemployment data is organized by the latest rate reported, which isn’t always the same month. Countries report around the same time, but for different months. In particular, Canada and the US’ most recent data point is for January. The rest of the G7 (including the aggregate), and OECD are reporting December’s numbers.
Does this make the comparison unfair? Nope. Some data points will be a little more stale, but the gap and direction of change are important. Substantial gaps aren’t likely to close, in just a month or two. Likewise, indicators with small lateral movements are likely stable. At this point, most countries are way past their worst economic woes, and are focused on recovery. The rates help tell us a lot about how countries are faring with the pandemic.
Canadian Unemployment Makes A Sharp Increase, Topping The G7
Canada’s unemployment rate made a sharp rise, making it one of the worst rates of any advanced economy. The unemployment rate fell to 9.4% in the last reported data point, up 8.8% from the previous month. A sharp uptick that brought the rate 67.86% higher than the same month last year. Canada’s unemployment rate is now much higher than most of its peers.
How Does Canada’s Unemployment Rate Compare?
The unemployment rate of G7 countries, and the OECD average for the latest reporting period. Source: OECD, Better Dwelling.U.S. Unemployment Is Falling, While Canada’s Rate Is Rising
The U.S., Canada’s biggest trade partner, is doing considerably better in terms of unemployment. OECD data shows the US unemployment rate was at 6.30% at the last data point, down 5.97% from a month before. This is 32.98% lower than Canada’s unemployment rate. Equally important is this rate is falling, while Canada’s rate has been rising over the same period. Things are getting better in the US, and worse in Canada.
The G7 Average Unemployment Rate Is 39% Lower Than Canada
Canada’s unemployment rate is much higher than its G7 peers. The G7 average rate of unemployment is 6.06% at last reporting, up 1.00% from the month before. The rate is 39.19% lower than Canada’s last reported rate. Japan is the lowest country in the group with an unemployment rate of just 2.90%, 69.15% lower than Canada’s. Canada’s unemployment isn’t just significantly higher. It’s last reported number is the highest rate of any G7 country, by a large margin.
The OECD Average Unemployment Is 26% Lower Than Canada
The OECD’s 37 member average, is also much better than Canada’s unemployment rate. The average was last reported at 6.88%, virtually flat from the month before. This rate is 26.76% lower than Canada’s latest rate. Only 7 OECD countries rank above Canada, and they include Chile, Lithuania, and Greece. These countries all had significantly higher unemployment rates than Canada, before the pandemic. They’re also not typically compared, due to the size of their GDP in contrast to Canada.
Different countries are likely to be at different points of their recovery. Different rates shouldn’t be surprising, but large gaps and rising unemployment rates are concerning. Canada is trailing its G7 peers, and very few OECD countries are doing worse. Oddly enough, Canada’s real estate is rising the fastest out of any G7 country at the same time. It would appear Canada is focused on an entirely different goal from the rest of the pack.
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The Bank of Canada must be so proud.
Can someone explain what’s happening in Canada? I genuinely have no idea how to mentally unpack this as a non-Canadian.
Canada’s economy was shrinking before the pandemic on a per capita basis. The only thing that was keeping it going was the number of people coming in. Essentially, they were averaging up. Bad economy, it just appeared successful.
Now that it stopped, they’re essentially bribing their voting base. “My house increased during the pandemic, best government ever!” They must have done research and found the unemployed aren’t their voter base.
The federal government has structured the economy so that the only way to make any real money is to speculate on real estate. Wages have been driven into the ditch through mass immigration (3x the rate of the US). Labour is now next to worthless in Canada and there is really no point in working hard. This naturally benefits people born to wealth but heavily disadvantages anyone who doesn’t have billionaires for parents. I believe there will be significant outflow of young Canadians in the coming years as they realize that the social contract in Canada is the worst in the Western world.
In a nutshell, Canada is a low-wage, high cost of living, high tax country that prioritizes housing speculation over productive work. An absence of competitive industries and the decline in oil and gas has left it a one-trick pony : real estate.
This is spot on. Well said.
On the immigration point, while it is true that an increase in the labor force will suporess wages, but the reason why Canada has more immigration than the US is because the country needs it, it is a net gain to the country not a rent loss. Canada benefits from attracting educated labor that start spending whatever money they bring with them as soon as they arrive and start paying into the tax system as soon as they start working. Canada in that sense pays none of the costs and reaps all the benefits. I believe that immigration has been a net positive for Canada.
The main reason the economy is struggling, is in my opinion to decades of bad government policy that includes but not limited to limited diversification and shift away from investing real productive sectors in the economy that have a path for sustainable growth (such as tech and infra structure and renewable energy). Allowing the real estate speculation to go rampant, suppressing interest rates and turning a blind eye towards inflows of foreign capital pooling in the local real estate market, thus inflating asset prices. All this robs Canadians, especially the young ones whether they immigrated here or not, from their future productivity earning because they have to buy in to an inflated market. Keep in mind new immigrants will have a much harder time surviving in this climate than Canadians born in Canada.
Why does Canada “need” THREE TIMES more immigrants per capita than the US? What data do you have to support your assertion?
What me worry?
Doesn’t everyone have a trust account.
After all, budgets balance themselves.
So is Ccanada first or fourth?
What’s the big deal? Just print more… Printer goes brrrr. Also, just forgive those who erroneously applied for CERB. If we put half the population on EI or other benefit programs and the other half is buying, buying, homes (liabilities) and everything is appreciating; this could never fail. I mean does anyone care about deficits? That is such an old way of thinking, let’s just use MMT to build a bridge to the moon
Jamie we have no idea. We are off the rails*….Your guess is as good as anyone’s.
Oh….But one thing is for sure real estate will keep going up by at least 10% a year indefinitely.
Well it’s a good thing Trudeau wants to bring in 1.3 million foreign nationals over the next 2-3 years. If Canadians thought Canadian cities were for them, they were mistaken.
Why bother working when we have CERB and whatever else? Also, we can just flip real estate to make money!
Well that’s years of malinvestment. Canada’s main industry is house flipping.
However, we’re #1 in cranes per capita. 😀
It’s not surprising, the stimulus encourages people to do nothing.
We are borrowing dead money and spending it on paying people to sit at home.
It would be better form if it were invested in infrastructure, energy projects etc. etc.
That would actually create paychecks and jobs.
BOC rather buys housing bonds than to make sure it gets invested somewhere useful.
Like in investing in a Canadian Vaccine production facility.
I’m curious, does this take into account the different ways countries measure unemployment? I am not an expert on the matter but I know there are differences in this measure between Canada and the US, for instance.
Did my comment asking if this took into consideration the different ways countries measure unemployment really get deleted?
I guess not. But it did disappear to me temporarily.
and in the 45 minutes that have passed, you could have researched the answer!
Do not worry we have the real state.
The prices always go up every month now … before in Milton 2015 you could rent a townhome for around $1200. You not going to find anything below $ 2200 and even the groceries in this country is super expensive. My landlord lives overseas and never step into Canada.
When the government says we need more investors or Canada is open for business! They came but before that, they snow wash in the real state.
Just remember that Canada was a great country way before when a medium-class worker could afford to buy a house even with immigrants arriving every day.