FROLITICKS

Satirical commentary on Canadian and American current political issues

Feb 17

Trump’s Trade Policy Appears to be Directed at Securing Critical Mineral Rights

by bcurry

After three years of war that forged a new unity within NATO, the Trump administration has made clear it is planning to focus its attention elsewhere: in Asia, Latin America, the Arctic and anywhere President Trump believes the U.S. can obtain critical mineral rights.  Moreover, this is why Trump to a large extent has his eye on annexing Canada and Greenland, both of which have an abundance of critical minerals such as uranium, graphite and lithium.  Critical minerals are currently used in over 230 sectors of the U.S. economy, from energy infrastructure to advanced technology manufacturing, and from aerospace engineering, including satellites, to medical equipment.  Critical minerals are the building blocks for the green and digital economy and demand for them will only grow throughout the global energy transition. Disruption potential is related to how much of a commodity’s global production is concentrated in countries that are relatively unwilling or unable (due to political or economic instability, workforce or infrastructure inadequacies, regulations, etc…) to supply the U.S. with critical minerals.  Some critical minerals are produced primarily in countries that are economically or politically unstable, or do not have a reliable trade relationship with the U.S. —  thereby representing a higher supply risk.  This however does not apply to Canada which is a stable supplier of minerals in general, including copper, zinc, phosphorus, silicon metal, cobalt, high-purity iron ore, and rare earth elements.

The lack of stability in Ukraine is a major reason why Trump apparently ha turned down Ukraine
President Volodymyr Zelensky’s extraordinary offer that the U.S. be granted a 50 percent interest in all of Ukraine’s critical mineral resources as compensation for past and future support of the war with Russia. 

However, Canada recognizes that critical minerals are the foundation on which modern technology is built upon.  They’re used in a wide range of essential products, from mobile phones and solar panels to electric vehicle batteries and medical applications. By building critical minerals value chains, Canada can become a major global supplier of choice for critical minerals and the clean energy and technology sources they enable.  For this reason, Canada is not willing to simply give away control of these precious minerals to the U.S. or any other nation for that matter.  They are also essential to Canada’s economic or national security.

Canada has already partnered with the U.S. when it comes to discovering and mining critical minerals.  In January 2020, the Canada-U.S. Joint Action Plan on Critical Minerals was announced to advance bilateral interest in securing supply chains for the critical minerals needed in strategic manufacturing sectors.  Canada has also worked with other countries such as Japan to encourage cooperation on international standard-setting for critical minerals, as well as several multilateral organizations such as the International Energy Agency (IEA), the World Bank, the International Renewable Energy Agency (IRENA), and the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF).  The U.S. is also an active member of these multilateral organizations.

For these reasons, it is difficult to understand why Trump continues to be so aggressive when it comes to the U.S.-Canada trading relationship.  Canada is an exporting nation, which includes most of our natural resources which make up the bulk of exports.  Canada is very interested in exporting critical minerals to its allies through various trade agreements, and is investing more in the extraction of these minerals.  Canada already provides a stable and growing market when it comes to critical minerals.  If Trump wants to ignore the existing cooperation between the two countries, he does so at his own peril and that of those American businesses which rely on a steady and reliable supply chain.

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Nov 26

Trump’s Tariff Threats Against Canada and Mexico Will Hurt Americans Equally

by bcurry

Here we go again, Donald Trump’s bargaining concept is getting in the way of economic realities.  Threatening to impose a 25% tariff on all Canadian and Mexican products entering the U.S. is simply nonsense, and most likely in violation of the current U.S.-Mexico-Canada trade agreement.  This agreement, by-the-way signed during the former President’s first term, is up for re-negotiation in two years. 

The U.S. is the largest importer of goods in the world, with Mexico, China and Canada its top three suppliers.  Take for example the North American automotive sector which relies on integrative parts and components from both Canada and Mexico, whereby auto plants on both sides of the border and some production lines would most likely screech to a halt.  Not only can higher tariffs cause increased inflation, but they would also cause job losses in all three countries.  The tariffs, if implemented, could dramatically raise prices for consumers on everything from gas to automobiles to agricultural products.

For some reason, President-elect Trump believes that putting economic pressure on Mexico and Canada would force both countries to tighten up their borders against illegal migrants and the influx of drugs like the deadly synthetic opioid fentanyl.  Mexico’s efforts to fight drugs — which are manufactured by Mexican cartels using chemicals imported from China — have apparently weakened in the last year.  However, the new Mexican President Claudia Sheinbaum has argued that the flow of drugs is more of a problem of public health and drug consumption in American society, and rightly so.  On the other hand, both Mexico and Canada have an argument when it comes to the influx of weapons smuggled in from the United States, estimated to account for over 90% of arms smuggled into both countries.

Unfortunately, neither Mexico nor Canada like to be bullied into adherence to some needless policies by an American president, past or present.  President Sheinbaum has already declared that the introduction of new tariffs would result in retaliatory measures by Mexico.  The Canadian government is already examining the ramifications of increased tariffs, hoping to open up a further dialogue with the new American administration.  Hoping to avoid a trade war, both countries have indicated that they are willing to engage in talks on the issues at hand. 

What’s obviously a shot across the bow, Trump appears to think that these threats are an effective manoeuvre as part of some form of future negotiating tactics.  However, the resulting consequences will be dire for all parties concerned.  Canada in particular has clamped down on the flow of fentanyl both into and out of the country.  More aggressive attempts have also been made to deal with the influx of weapons from the U.S.  There is little doubt that these are security issues on both sides of the border.  Canada is also concerned about the potential influx of migrants from the U.S. as a result of Trump’s talks about a “massive deportation” program of illegal migrants during his second term.  Northern border security is just as important to Canadians as it is to Americans, and is nowhere close to American concerns over its southern border security.

I believe that the Canadian government will take a more cautious and respectful approach to Trump’s threat than the Mexican government which has warned the U.S. against any blatant attempts to subjugate its sovereignty through such threats.  As noted, Sheinbaum’s bristly response suggests that Trump faces a much different Mexican president than he did in his first term.  As for Canada, time will tell.  In addition, federally there will be an election next year and Trump’s administration will have to face a new Canadian government.  Unfortunately, the entire situation does not look good for the future of all three countries, both economically and politically.

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Jun 12

Is Inflation On The Way Down?

by bcurry

This past week, both the U.S. Bureau of Labor Statistics and Statistics Canada indicated that the general inflation rate trend is gradually going down.  As a result, the Bank of Canada reduced its central bank rate by a quarter of a point.  However, such an interest rate reduction will not immediately affect mortgage and loan rates offered by the banks and other financial institutions.  Also, for the average American and Canadian, the cost of living is still high as demonstrated by food prices and the costs of homes or rents in urban centers.  These costs do not necessarily have as much to do with inflation as they do with regards to other domestic issues and foreign markets.  For this reason, there is little likelihood that food costs, rents and housing costs will decline in the near future.  There is a general lack of affordable housing across both countries and the impact of climate change is already being felt in the agriculture sector.  We will have to wait to see what the U.S. Federal Reserve will do with respect to the current central bank rate.  With inflation sticking at a level above their 2% target, they’re apparently downgrading their outlook for interest rate cuts.

Politically, this situation does not bear well for the governing parties in both countries.  The economy, and especially inflation and high interest rates, is still the priority concern for most voters.  Remember the old adage: “It’s the economy stupid”.  In light of the coming American elections next November, the possibility of major economic improvements is increasingly unlikely every day.  The same can be said for the Canada’s federal government and its ruling Liberal Party under Justin Trudeau, which could call an election next year. 

In general, the current economy has also particularly hurt younger voters, such as Generation Z and the Millennials.  They have been especially affected by the lack of affordable housing and the continuing difficulties surrounding the cost of living and failure of wages to keep up with rising costs.  Their votes in coming elections will be very important and may very well determine which parties are successful in their bids to govern.

Both the Federal Reserve and Bank of Canada have admitted that maintaining very low interest rates over the last decade has contributed to the current economic dilemma.  For example, it created a major imbalance in how the mortgage markets operate, encouraging many people to overspend and helping to cause incredible rising costs in housing.  In addition, new housing developments could not keep up with the created demand.  As a result of the pandemic, there was also a substantial increase in construction costs due to the resulting scarcity of materials.  It has taken some time for the markets to rebound and for supply chains to catch up to the subsequent demands.

While the markets did well during the pandemic and continue to do well, this primarily benefited the large corporate sector and shareholders, but not average Americans and Canadians.  Many of them suffered wage and job losses during the pandemic, and many have not recuperated those losses after the pandemic.  The pandemic significantly altered our economies and our lives.  The consequences will be around for years to come.  Just look at subsequent changes to our labour markets.

Yes, it would appear that the inflation rate is slowly on the way down.  However, for the existing political parties it may be too little and too late.  For the average person, the damage has already been done, resulting in a great deal of anger, frustration and increasing division in political views.  There is little doubt that both the Federal Reserve and Bank of Canada will continue to be cautious in how they handle the central bank rates.  Fearing any potential new inflationary pressures on the economy, don’t expect any major changes in the near future.

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Mar 25

Electorate in Both U.S. and Canada Appears to be Very Disgruntled. I Wonder Why?

by bcurry

George H. W. Bush Senior, going into his bid for a second term, was frequently told that it’s all about the economy stupid!  The U.S. economy went into a recession in 1990; the unemployment rate rose from 5.9% in 1989 to a high of 7.8% in mid-1991; and the debt percentage of total gross domestic product (GDP) rose from 39.4% in 1989 to almost 46.8% in 1992.  By the presidential election in1992, many conservative Republicans’ support of Bush had waned for a variety of reasons, including raising taxes and cutting defense spending.  Americans were less concerned with his foreign policy successes (e.g. Persian Gulf War victory over Iraq) than with the nation’s deteriorating economic situation.  Thus, despite having once been a relatively popular president, he lost to Bill Clinton.

Today, the primary issue among voters continues to be the economy, and especially the high rate of inflation and high interest rates affecting people’s mortgages and the cost of loans in general.  Yes, there is low unemployment and more people are employed today than anytime since the pandemic.  However, unfortunately for Joe Biden, the average American is struggling on a daily basis to make ends meet, especially since average wages have not kept up with increasing inflation over the last few years.  Many people and businesses are still recovering from the pandemic, which has created a real sense of insecurity and a general malaise within the population.

Taking all of this into account, and that people are not happen with another Trump vs. Biden election, there is a general mistrust with governance.  The same can be said for in Canada where you have a Prime Minister, Justin Trudeau, and a party that has been in power for over nine years.  The opposition is continuously harpooning about the high cost of inflation and high interest rates that average Canadians are facing.  There is also a good amount of discord over the government’s intention to raise the national carbon tax this coming April, despite it being only one element of several policies aimed at tackling climate change.  However, right now, climate change has taken a back seat to the economy.  A federal election will very likely be called next year in Canada, and all the government can hope for is that the economy will improve and inflation will come down.

Overall, these are tough times for governing parties.  There appear to be no win-win situations.  Government deficits have been climbing steadily, partly in earlier response to the pandemic, with no end in sight.  Wars overseas in the Ukraine and Middle East are not helping.  Funds are being allocated to support the Ukraine against Russia, Israel’s military and the plight of Palestinian refugees in Gaza.  The situation has placed both the U.S. and Canada in a difficult situation given the evolving humanitarian crisis in both conflicts.  In terms of foreign policy, domestically it is a no-win and highly emotive situation for both governments in terms of supporting one side or the other particularly in the Israeli-Palestinian conflict.

In addition, stability in the energy markets is constantly under threat as a result of the sanctions against Russian oil and natural gas exports and the general unstable situation in the Middle East.  As a result, there has been a measurable direct or indirect impact in the form of rising costs for gas and heating fuel in North America.

There is little doubt that we live uncertain times.  There is also little doubt that voters are concerned with the cost of living and continuing hard economic times.  This bleak outlook does not bode well for President Biden and Prime Minister Trudeau.  The question then becomes whether their political opponents can take advantage of the situation?  I guess time will tell.

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Oct 22

The Power of the American Military Industrial Complex Continues to Grow

by bcurry

Lester B. Pearson, a former Canadian Prime Minister, was quoted in 1955: “The grim fact is that we prepare for war like precocious giants, and for peace like retarded pygmies.”  As you may know or not know, as a diplomat Pearson was largely responsible for encouraging the formation of the League of Nations after World War II, which in turn became the United Nations.

Former U.S. President Dwight D. Eisenhower warned in 1953: “In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.”  As a former general during World War II, Eisenhower clearly understood the power of the military industrial complex in the States, a power that has continued to grow from this day forward.

The U.S. is the world’s biggest arms exporter.  As of last year, according to the Stockholm International Peace Research Institute, the U.S. controlled an estimated 45 percent of the world’s weapons exports.  This is nearly five times more than any other nation and its highest level since the years immediately following the collapse of the Soviet Union.  That is up from 30 percent a decade ago.

The current conflict between Israel and Hamas is just the latest impetus behind a boom in international arms sales that is bolstering profits and weapons-making capacity among American suppliers, especially with respect to Israel’s military.  The U.S. already provides Israel with more than $3 billion in military assistance every year, and Congress is now apparently being asked to increase funding to Israel to the tune of $10 billion in emergency aid due to the conflict.

Even before Israel responded to the deadly Hamas attack, the combination of Russia’s invasion of Ukraine and the perception of a rising threat from China was spurring a global rush to purchase fighter planes, missiles, tanks, artillery, munitions and other lethal equipment.  Other countries such as Turkey and South Korea are also increasing their military equipment exports, giving purchasers more options at a time when production shortfalls in the U.S. mean it can take years for orders to be filled.  During the Biden administration countries such as Poland, Saudi Arabia, India, Indonesia, Vietnam, Australia, the Philippines, Singapore, South Korea and Japan have signed military equipment deals with the U.S.  Even some small Pacific island nations have done the same. Taiwan alone has a backlog of American weapons orders worth as much as $19 billion.  Canada recently signed an agreement with Lockheed, the world’s largest military contractor, to purchase F-35 fighter jets worth billions of dollars.

Economically, there is little doubt that foreign-based wars can stimulate certain sectors of a country’s economy.  One only has to recall the impact of the Vietnam and Iraq wars to witness the role of American military hardware providers who benefited from the billions of dollars spent in support of American actions in both countries.  Unfortunately, thousands of American lives were loss and thousands more were injured in these two nebulous conflicts.  Military equipment is being sold to all sorts of regimes, several non-democratic, simply to garner support for American foreign policy initiatives in their respective region.

Sadly, there are those who note that the Pentagon and the State Department are continuing to work to find ways to accelerate approval of foreign military sales to keep up with the rising global demand.  The industry has declared that the main bottleneck remains manufacturing capacity, requiring an industrial base capable of meeting these requirements.  Yes, there will always be those that argue if the U.S. industry doesn’t fulfill such perceived needs, then other countries will simply step in to do so.  Regrettably, this appears to be a winnable argument in Congress, with the military industrial complex taking full advantage at the expense of American taxpayers since it is often combined with foreign aid and foreign policy.

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Sep 9

Forecasts For Canada’s Population Growth By 2041 Reveal Interesting Trends

by bcurry

Today, Statistics Canada’s Centre for Demography released a new set of detailed demographic projections to 2041 on immigration and ethnocultural diversity for Canada and its regions.  The release notes that these new projections reflect the targets of the 2022–2024 Immigration Levels Plan released by Immigration, Refugees and Citizenship Canada in February 2022, as well as the most recent demographic developments, including those related to the COVID-19 pandemic.  What’s really of interest is the projected composition of Canada’s population and where the majority of people will be living.

The projections note that by 2041 Canada’s population will reach 47.7 million, up from 14.4 million in 2016.  More importantly, about 25 million of the future population will be immigrants or the children of immigrants born in Canada, accounting for 52.4% of the total population.  This compares to 40.0% of the total Canadian population in 2016.  The Canadian population in 2041 is projected to include 9.9 million to 13.9 million people born in Asia or Africa, depending on the projection scenario.  In 2041, about 2 in 5 Canadians will be part of a racialized group.  The concept of “racialized” population is derived directly from the “visible minority group” variable and therefore refers to the persons belonging to a visible minority group.  In terms of location in 2041, the vast majority of the immigrant population would continue to live one of Canada’s 36 census metropolitan areas (CMA), with Toronto, Montréal, and Vancouver remaining the three primary areas of residence of immigrants.

Needless-to-say, all of these projections have massive implications for socioeconomic policies among the three levels of government: federal, provincial and municipal.  Canada today is recognized as multicultural society, increasingly having to apply a host of policies in the next two decades to deal with ethnocentricity, diversity, education, systemic racism, immigration, employment, etc., etc., to name a few.  Different regions and localities will incur diverse impacts, especially when it comes to resettlement and labour markets.  It can be expected that many of the racialized population will represent skilled labour and entrepreneurial capabilities.  One can expect that there will be a good deal of competition among localities and provinces to attract and accommodate skilled immigrants and entrepreneurs.  In addition, we anticipate that our aging population, those 65 and older, will continue to grow, which obviously will have a significant impact on health care resources.  A good proportion of the racialized population within the total population is expected to be younger than the population as a whole.  Future growth in the Canadian economy will greatly depend on this youth segment of the population, and governments will have to facilitate the addition of foreign labour to the labour market through efficient and effective settlement policies.

In general, both Canadian and American experts have long predicted future increased multicultural elements in both societies.  What the Statistics Canada report highlights is the fact that the projected trends, especially for the racialized population, will greatly increase and accelerate in the next couple of decades at a faster rate than previously forecast.  In order for both countries to benefit fully from these trends, governments must first recognize the projected population changes and their future impacts.  Like everything else, there will be those in society who will oppose such trends, which, unless many things change, appear to be inevitable.  The fact is that if we accept these projections, than we must begin now to develop and adjust many of our socioeconomic policies.  Not to do so would be somewhat catastrophic and regressive!

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Aug 22

Both Canada and the U.S. have something in common: Dismal Economic Outlooks

by bcurry

When I was studying economic theory in college, one phrase kept leaping out at me: “Economics is the dismal science.”  This was partly due to the fact that I could never really be convinced that the discipline of economics was anything but a science.  Instead, I preferred to think of the reality of economics being continuously influenced by political policies and institutional structures, including those in the international sphere.  Control over the world’s economies is much more institutionalized than ever before.  The current economic situation in North America really highlights this perspective, especially given the reaction of bodies such as the U.S. Federal Reserve Board and the Bank of Canada in dealing with the post-pandemic world.

In Canada, one is coping with the highest levels of inflation since 1995.  The U.S. is seeing the highest levels of inflation since the early 1980s.  On top of which, we’re getting economic data that is fluctuating quite rapidly, so it’s very hard to get a precise read on where the economy is at any point in time.  The additional fear now is that both these monetary bodies are increasing the prime rates in order to tackle this hyperinflation at a time when the economy is attempting to get back on its feet after the disastrous pandemic period — thus the concerns about a potential recession in both countries and around the world.

Now, you don’t have to be an economist to know that something’s wrong.  Filling up your gas tank, buying a home and purchasing groceries just got incredibly more expensive!  Governments blame much of the distress on post-pandemic supply chain problems and global fuel-food shortages due to the Russia-Ukraine war.  On top of which, there are suddenly skilled labour shortages in most countries, leading to increasing wage levels and low unemployment rates.  The current situation has particularly been led by Boomers, many of whom have chosen to retire.  An April paper by economists at the Federal Reserve Bank of Richmond found that “the pandemic has permanently reduced participation in the economy.”  Due to the lack of and high cost of child care for example, many women are financially unable to return to the labour market.  In order to fill many jobs, countries are having again to look to immigration policies as a possible solution.

Recent blow-out jobs reports may have quieted claims that the U.S. is in a recession, but it did not end the mystery about the state of the economy or resolve questions about where it is headed.  Should a recession evolve in the U.S., past experience would suggest that Canada is not far behind.  Similarly, both federal governments are under the gun to do something about inflation — a major political issue.  However, as most analysts state, the current economic situation is something completely new and unprecedented in light of post-pandemic elements and the current global situation with respect to supply chains, especially in Europe.

Higher interest rates as a result of Federal Reserve Board and the Bank of Canada benchmark interest rate increases to control the hyperinflation will have an immediate impact on lowering economic growth.  Consumers feeling the hit will most likely have to cut back on expenditures, including the purchases of homes due to the subsequent rise in mortgage rates.  Whether or not we are on the brink of a major recession is still up in the air.  There is no sector of the economy that hasn’t been affected during this so-called recovery period. 

However, how about longer-term predictions?  As the famous British economist, John Maynard Keynes, once said: “In the long-run, we are all dead.”  He further noted that aggregate demand does not necessarily equal the productive capacity of the economy.  Instead, it is influenced by a host of factors —sometimes behaving erratically — affecting production, employment and inflation.  As of today, this definitely appears to be the case.  All any of us can do is hope to survive during the foreseen continuing turmoil within the markets and the economy in general.  In the spirit of economics as a ‘dismal science’, most economists for are not overly optimistic about improved short-term growth. 

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May 5

Impact of Robotics on the Workplace Increased With the Pandemic and Won’t Stop Any Time Soon

by bcurry

For some time now, I’ve been following the use of robotics when it comes to various forms of employment.  Obviously, we have seen the emerging use of robotics in manufacturing and assembly operations, such as in the automotive industry.  However, now we are increasingly seeing the use of robotics in the health care sector, the retail sector as depicted by Amazon’s newest warehouses, the construction industry, and even in the restaurant sector.  The pandemic resulted in even more robotics use as a means to better ensure the health and safety of workers from contact with other workers, patients and air-born viruses in workplace environments.  Experts see organizations adopting robotics increasingly to perform otherwise unsafe or stressful workplace tasks, such as caring for patients in a hospital who are in quarantine or isolation.  They also argue that the use of robotics is not about replacing employees who would traditionally be performing certain tasks, but rather providing an overall enrichment of safety in these environments.  For example, according to the U.S. Centers for Disease Control and Prevention (CDC), over the past two years, more than 1 million American healthcare workers were infected with COVID-19 and more than 4,000 of them died.

Now, enter the emergence of artificial intelligence (AI) and its application to the field of robotics and automation.  AI will allow various forms of user-friendly robotics, including for example advanced remote-controlled humanoid nursing robots in the health care sector.  AI will enable the robot to learn repeated tasks.  Once a robot has repeatedly performed a task, such as removing a blanket from the patient’s bed or retrieving specimens, it will be able to do these tasks without being given step-by-step instructions.  Advances in robotics and AI will see other uses in not only so-called blue collar work, but also in various forms of white collar work.  In the past two years, automation and AI tools have become sophisticated enough to influence professionals and white collar work.  Administrative assistants, radiologists, financial advisers — and now lawyers — have all become the targets of such software.  McKinsey & Company, a global management consulting firm, estimated back in 2017 that 35 percent of all professional tasks can be automated these days.  JP Morgan has already marshalled an army of developers to build software that can do in seconds what it took lawyers 360,000 hours to do previously.

The fact of the matter is that future workforces will work hand in hand together with robots and processes using artificial intelligence.  The implications for workers are varied and enormous.  The current and next generations of workers will have to fully educated, trained and comfortable with this new reality.  As in the past, along with new technologies comes a demand for new skills and knowledge.  There is no sector that is immune to advances made in robotics and AI, some obviously more than others.  As we are already seeing shortages of skilled workers in certain sectors, there will be greater pressure placed on organizations to compensate through the use of automated processes.  Also, whether by design or accident, many of the countries with the most rapidly aging populations already have the most robots.  According to the International Federation of Robotics in 2016, the nations with the highest density of industrial robots included South Korea, Japan and Germany.  At that time, the U.S. ranked eighth among the countries.  With their ageing populations, the use of industrial robots will no doubt increase in both Canada and the U.S. if they are to effectively compete on the global scene.

The pandemic has increased our awareness of our vulnerabilities when it comes to maintaining productivity and private and public services.  One can certainly expect that most sectors will be examining the future ways to avoid the negative impacts of pandemics and climate change on their workforces.  One means to dealing with the changing labour force demographics will be to investigate potential other uses of robotics and AI.  It’s happening now, and there is no stopping the changes that will come about.  Emerging demands will require fresh, dynamic solutions.

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Mar 4

Comparison of Workers’ Wages and Benefits Between the U.S. and Canada

by bcurry

In recent months there has been a lot of discussion about the impact of the pandemic on the labour market in both the U.S. and Canada.  Much of the discussion has now evolved around the issue of hyperinflation in both countries and the resulting worker demands for increased wages.  In addition, there has been a shift in the labour market itself whereby many workers who worked in certain sectors, in particular retail, tourism, services and restaurants, were laid off due to COVID-19 for months on end.  Now that the economies are supposedly reopening in both countries, some of these workers have decided not to return to those sectors, but to seek other more reliable and better paying employment.  Indeed, according to recent stats, there have been record levels of workers switching jobs, a trend that picked up markedly in the second half of 2021.

However, there are still signs that wage raises are stopping fall short of compensating for all of the higher prices.  In some private sectors, unions are now taking advantage of the inequalities and have moved to organize disgruntled workers, offering better wages and benefits.  An example of this is the American United Auto Workers (UAW) that is looking to organize Tesla workers.  Several Starbucks workers have been seeking to organize unions in Buffalo, Boston, Chicago, Seattle, Knoxville, Tallahassee, Florida and the Denver area.  The International Association of Machinists and Aerospace Workers promoted a two-year-long push to unionize thirty Amazon facilities in the U.S.  Generally, such attempts have been unsuccessful.  In Canada, where unionization is easier in the private sector under industrial relations laws, certain unions have been more successful in organizing workers in facilities run by union-resistant companies such as Wal-Mart and Starbucks.

Among the major differences between the two countries is the fact that Canada has a universal health system in place and more labour standards laws offering such benefits as paid sick leave, maternity and adoption leave, paid vacation leave and higher minimum wages.  Canada’s federal unemployment insurance program is national in scope, unlike in the U.S. where states have a lot more leeway to differentiate in their qualifying requirements, amounts and duration of unemployment benefits.  Moreover, the Canadian safety net for the unemployed has been strengthened in recent years, playing an important part in allowing unemployed workers to do lengthier job search, provide additional economic security and keep their job protection guaranteed under the law.

On top of everything, workers are looking at the huge profits made by certain companies during the pandemic, such as Amazon, Wal-Mart, Loblaws Canada, etc., etc.  Many believe, and rightly so, that they have not received their fair share of the record profits in the form of increased wages and benefits.  Instead, they see companies buying back billions of dollars in stock from investors and increasing the dividend rates given to investors by large amounts.  With companies declaring the end of the worst of the pandemic, previous increases in the form of risk pay are also quickly disappearing — this despite the fact that many of the pandemic risks still remain.

Moreover, the pandemic has had a significant impact on the labour markets of both countries.  Employers in both countries are being forced to compete for scarce labour due to the shift in the bargaining capabilities of workers, especially in light of today’s hyperinflation.  Indeed, wage increases are just one of many sweeteners that hungry firms are offering.  Also on the rise are perks like a four-day workweek — offered by some eleven percent of companies surveyed recently by the Payscale data firm —  as well as remote work, flexible schedules, free college tuition and other attractive benefits.

All in all, current hyperinflation will continue to cut into workers’ pay cheques.  The coming months will be difficult ones for both employers and workers.  Both Canada and the U.S. have similar labour markets, suggesting that significant adjustments will have to be made in each country.

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Jan 22

It’s Hard to be Optimistic About the Rest of 2022 — Here’s Why

by bcurry

Well, the New Year began much as the old year ended.  Across the board there are numerous reasons for North Americans not to be overly optimistic about the rest of the year.  Several key factors are leading us to this conclusion.

  • The Omicron variant of COVID-19 has created a fourth or fifth wave, depending on who you are talking to.  Although Omicron appears to have possibly peaked, it has once again severely strained our health care systems.  In addition, the unvaccinated continue to represent the largest number of hospitalizations, especially when it comes to patients in our ICUs.  Our health care providers continue to be under a great deal of strain, especially after two years of treating COVID patients.  There is now a tremendous backlog of elective surgeries and treatments.  In addition, although CDC studies show the effectiveness of booster vaccine shots in preventing severe COVID cases, far fewer adults have gotten booster shots to date.  When will we move from a pandemic to an endemic?
  • In most jurisdictions, kids are back for in-person learning in schools.  However, there are still a large number of children under the age of twelve who have not received their first dose of a COVID vaccine.  With the Omicron variant being twice as contagious as the Delta variant, many parents are concerned about the safety of schools and the potential effect of the disease on their children.  Indeed, statistics have shown that more children are being hospitalized due to Omicron.  Questions have been raised about whether in-person learning can continue in the near future.
  • Even with the economy starting to reopen, a number of economic issues have arisen.  Among these is the forecast of continuing hyperinflation over the coming months.  There continue to be supply chain problems, shortages of skilled labour and increasing fuel, food and housing prices.  With the current annual inflation rate running at around six percent, Canadians have not seen such a high inflation rate since 1991.  A survey of consumer expectations showed Canadian households also expect inflation to stay above 3 percent over the next couple of years, above the two percent average considered normally acceptable.  Central banks have little choice but to raise interest rates this year which will have a major effect on government and personal debt payments down the road.
  • Internationally, both the U.S. and Canada, as members of the North Atlantic Treaty Organization (NATO), will have to deal with on-going Russian threats suggesting a possible military incursion into eastern Ukraine.  Although the Ukraine is not a member of NATO, the allied countries strongly believe that there needs to be an immediate and firm reaction to any Russian incursion.  As a warning to Russian President Vladimir Putin, NATO countries are arming and training the Ukraine military and defence forces in preparation for such an event.
  • China’s economy is slowing, a worrying sign for the world.  China’s National Bureau of Statistics indicates that economic output from October through December of 2021 was only 4% higher than during the same period a year earlier.  This is a far cry from previous annual growth rates ranging between 6 and 9 percent in recent years.  The Omicron variant of the coronavirus is now starting to spread in China, leading to more restrictions around the country and raising fears of renewed disruption of supply chains.  Being a major supplier to the North American markets, any continuing slowdown in China’s economy will have a severe impact on U.S. and Canadian businesses and consumers.
  • COVID-19 government relief programs for the unemployed and businesses affected by government-imposed lockdowns and public health measures are being phased out.  This could result in many hardships for lower income individuals and small to medium-sized businesses.  The resulting loss of income due to the pandemic will have an impact on government revenues in the near future.  Many government support programs may have to be reviewed for termination or reduction under expected future austerity measures.

Canada China Coronavirus COVID-19 Economy Economy Federal Government Federal Government Health Care Ukraine US

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