THE ECONOMY

A move toward self-reliance

PATRICIA BEST January 5 1987
THE ECONOMY

A move toward self-reliance

PATRICIA BEST January 5 1987

A move toward self-reliance

THE ECONOMY

In 1983 Monique Decelles, a 29-year-old Montreal college teacher, took a 20-per-cent pay cut as part of a provincial government austerity program. As a result of that pay cut, Decelles, who earns $28,000 a year, is still making less than she earned in 1981. As a way of financing her favorite recreational activitytravel—she has taken on a second job teaching night school. Walter Dee, a 39-year-old CP Rail foreman who lives near Aroostook, N.B., has also taken up moonlighting. Dee’s wife, Alice, works full time as a schoolteacher, and their combined salaries total $62,000 a year. But Dee finds that that is not enough for his family of five, and he has tried various ways of bringing in a third income. The latest methods: growing Christmas trees, and peddling household goods, such as detergents and clothing, from his home.

Decelles and Dee were also among the small but growing number of Canadians questioned in The Maclean's/ Decima Poll who indicated that they rely more on themselves for their economic well-being these days, rather than on government, business or unions. In the latest Maclean’s/Decima Poll, for the second year in a row, the percentage of respondents who said they looked to government to protect their economic interests stood at 42 per cent—down from 49 per cent in 1984. Thirty-one per cent of the respondents said that they expected the business sector to look after their economic interests, down from 33 per cent in 1985. Only 13 per cent of those polled said that they looked to unions for their economic well-being, compared with 14 per cent in the 1985 poll. At the same time, poll respondents who named “other”—usually meaning themselves— rather than business, unions or government as the most important economic caretaker rose to 12 per cent from nine per cent in both 1985 and 1984.

For some observers, those results appeared to confirm signs of a disillusionment with large organizations that has been growing among Canadians over the past decade. According to Richard Lipsey, senior economic adviser at Toronto’s C.D. Howe Institute, Canadians far more than Americans “have always had more faith in government to be a partner in running their affairs.” Now, said Lipsey, “people complain that the government does not get them the jobs or good salaries. It is a move away from corporate solutions to stand or fall on your own merits.” Poll respondent Perry Halls, a 30-year-old Torontonian who earns $35,000 a year as a computer specialist, says that government is not doing enough to stimulate personal prosperity. Said Halls: “People are pessimistic generally about the government because they do not have much control over its course of action.”

That tendency toward pessimism may also reflect the economy’s relatively sluggish performance in recent years, and uncertainty over future prospects. According to the Howe Institute, Canada’s record of growth in real gross domestic product (GDP) and in total employment since the end of 1982 has in fact been stronger than in the United States, Japan or the European Economic Community. But according to the Royal Bank’s monthly Econoscope report for October, the GDP, after growing by 3.1 per cent in 1986, is expected to slow to just 2.5 per cent in 1987 before rising again to a rate of three per cent in 1988. At the same time, the bank predicted that inflation—which averaged 3.9 per cent in the year just ended—will decline slightly to 3.5 per cent in 1987.

Unemployment, which hovered at around 9.5 per cent throughout most of 1986, edged back up during the last quarter of the year to 10 per cent, mainly because of setbacks in the energy sector, hard hit by the worldwide slump in petroleum prices. The Royal Bank predicted that by 1988 the unemployment rate will decline only slightly to 9.4 per cent. Despite that, poll respondents showed less concern over unemployment than in previous years, with only 39 per cent of those surveyed calling unemployment the most important issue facing the country, compared with 45 per cent who thought it was most important in 1985 and 52 per cent in 1984.

For Elsie Telech, a 51-year-old widow who lives in Choiceland, Sask., 100 km east of Prince Albert, unemployment is still an important issue. “There are so many younger people who are unemployed—there is nothing for them to do,” said Telech, a respondent in The MacleanWDecima. Poll. But the survey results suggested that other economic issues are beginning to concern many Canadians. Ten per cent of those polled named government spending and the federal deficit, estimated at $32 billion for fiscal 1986-1987, as an overriding concern, compared with only two per cent who felt that way in 1985. Said poll respondent John Menard, a 58-year-old electrician in Buckingham, Que.: “It is demoralizing, especially when the government gives billions away and you need it so badly.”

The poll results also suggested that Canadians are becoming less optimistic about the long-term prospects for the economy. Only 33 per cent of those polled believed that the economy is in a period of long-term recovery—down significantly from the 38 per cent who thought that last year. At the same time, 31 per cent thought that the economy is making only a short-term recovery, compared with 27 per cent in 1985. And 36 per cent of the respondents said that the economy was not recovering at all, compared with 34 per cent in 1985. “People are not predicting the end,” said Lipsey, “but they are apprehensive, and they may be right. Although this is one of the longest recoveries we have had, it is also one of the slowest.”

The recovery has also been one of the most unevenly distributed. The result, according to the Howe Institute, has been the creation of “the dual economy”—a booming Central Canada and widespread stagnation in the other regions of the country. In Quebec and Ontario, the manufacturing and service industries flourished during 1986—partly as the result of strong exports to the United States. But Western Canada suffered from depressed prices for oil and natural gas—which declined by up to 45 per cent in the first half of the year—and for grain and other commodities, including minerals and some forest products.

A growing sense of gloom was evident among poll respondents in the economically depressed parts of the country. In British Columbia respondents were more inclined than people in other regions to say that the economy is not recovering at all. In 1986, 48 per cent of British Columbia respondents expressed that belief—virtually the same percentage as the year before. Respondents on the Prairies had a much greater tendency than last year to describe the economy as not recovering—52 per cent in the latest survey, compared with 36 per cent in 1985. Quebecers, in sharp contrast, were the most optimistic Canadians, with 37 per cent describing the economy’s recovery as long-term, compared to the national average of 33 per cent.

How poll respondents assessed the state of the national economy:

Almost three-quarters of the respondents expressed satisfaction with their own economic situation.

An overwhelming majority of respondents were optimistic about their personal economic prospects:

But if there is growing discontent over the state of the economy, Canadians to a remarkable extent seem capable of separating that from their estimates of their own economic circumstances. In the latest Maclean's/ Decima Poll, 74 per cent of the respondents said that they were satisfied with their own economic situation, about the same as in 1985, when 73 per cent said the same thing. An even greater number—85 per cent in the latest poll, compared with 80 per cent in 1985 and 1984—said that they were optimistic about their future personal financial prospects.

Respondents’ satisfaction with their personal economic situation was highest in Ontario, where 80 per cent said they were satisfied, Quebec (74 per cent) and the Atlantic provinces (78 per cent). But in Western Canada there was a sharp decline in feelings about personal finances, with only 62 per cent of respondents in British Columbia reporting satisfaction, a sixpoint decline from 1985. Remarkably, feelings of optimism about personal economic prospects increased among respondents in all regions of the country except on the Prairies, where the percentage of optimists was about the same: 82 per cent, compared to 83 per cent in the previous poll. Said Lipsey: “The average person wants to work— and work creatively. Having a job or the prospect of a job is a necessary condition to being optimistic.”

Other factors, such as political beliefs and age, clearly play a part in forming an individual’s outlook. Lipsey noted that with inflation now at modest levels, elderly Canadians feel that they are better off. That was borne out by the poll results: fully 19 per cent of poll respondents who were 65 years of age or over said that they were very satisfied with their economic situation, compared with only 9.2 per cent of the total survey sample who felt that way.

Among some poll respondents, a buoyant outlook appeared to flow from a sense of self-confidence and a determination to rise above the constraints of an uncertain economy. Montrealer Decelles, who teaches business administration, said that she is optimistic that she can do a lot to change her financial situation. “With my training I can find another job—a job that is better paying than teaching,” she said. Not all Canadians are as lucky. For Menard, the poll respondent in Buckingham, Que., it is a struggle to save $3,000 a year toward his retirement while paying for basic necessities. But in spite of that, he remained optimistic. Declared Menard: “I am going to travel and meet people and try to get away from the trends of life.”

-PATRICIA BEST with ANN WALMSLEY

PATRICIA BEST

ANN WALMSLEY