Canada

Unemployment: does anybody really care?

IAN URQUHART January 24 1977
Canada

Unemployment: does anybody really care?

IAN URQUHART January 24 1977

Unemployment: does anybody really care?

Canada

The year was 1961 and a record-shattering unemployment rate of 7.1% touched off an uproar across Canada. Newspaper editorials shouted out their anger, business and labor leaders demanded government action, economists fretted and in parliament the opposition declared the situation to be a national emergency. A frightened government, led by John Diefenbaker, reacted with a blitz of job-creating programs, easier credit and in-depth studies of the whole problem of joblessness.

At the end of 1976, an average 7.1% of the work force was again unemployed, for the first time since 1961, with an average 736,000 out of work each month. The prospect for this year is even worse, with government projections pointing to a 7.5% jobless rate. But when the latest dismal figures were released earlier this month, the roars of protest that greeted unemployment increases in the past had become little more than a whisper and public interest lasted little more than a day. In parliament, only Ed Broadbent and the NDP have paid much attention to the rising figures. Says Broadbent: “I think part of the difficulty with the unemployment crisis is that government, MPS and the majority of Canadians continue to view the problem as

one of statistics rather than as a human tragedy.” A Gallup poll taken in December showed 48% of the respondents think the government should give greater attention to unemployment compared with 42% who said inflation was of greater concern. But whatever worries existed privately, there was no public outcry.

Why this dramatic change in the public’s attitude to an issue of major national importance and why has unemployment ceased to be one of the most explosive forces in Canadian politics? The Economic Council of Canada, in a report last year entitled People And Jobs, outlined one of the most fundamental explanations. Said the council: “Clearly, the nature of unemployment in Canada is very different from what it was a generation or even a decade ago.” The national average may be high but there are no bread lines and nobody is starving. The jobless are being maintained by what the council describes as “one of the most generous and comprehensive social security systems in the industrialized countries.” Unemployment insurance, for example, didn’t even exist during the Depression years, and it has been dramatically improved since 1961. Unemployment payments do little, of course, to

relieve the mental torment and humiliation that so often accompany joblessness, but they do reduce its immediacy as a political issue.

There have been other, more profound changes, as well, in the actual makeup of the unemployed. No longer are the jobless primarily the passive victims of downturns in the economy, which occur at fairly regular intervals in the business cycle. Instead, except in some severely depressed regions, Canada has witnessed the phenomenon of job vacancies rising hand-in-hand with the unemployment rate—an indication that joblessness today has become an outgrowth of an increasingly high turnover in the labor market as more and more people abandon old jobs in search for new, more rewarding or more fulfilling ones.

Another major difference that has emerged between the unemployed of today and those of the past is that a far lower percentage of those currently out of work can be classed as breadwinners on whom families are dependent for their incomes. This factor, too, has tended to mute the political impact of the swelling unemployment rolls. In 1961, for example, joblessness for males 25 and over was 7.2% higher than the national average that year.

In 1976, unemployment for the same category had dropped to 4.2%, well below the national average. Today’s unemployed are more likely to be women, many of them married with' a working husband, and young people just out of school. Their incomes, while sometimes important to a family, are not usually crucial.

None of these factors, however, means that unemployment is less of a problem; only that the emphasis has shifted from the immediate, material deprivation that used to accompany joblessness to the less tangible, but equally real, difficulties of those now out of work; frustration, bitterness, despair and a shocking waste in human re-

sources represented by a monumental three-billion-dollar-plus annual payout in unemployment insurance. Frustration is manifest among the younger job-hunters, many of whom leave school ready and eager to work, only to be told they cannot be hired because they lack experience. An average of 32,000 college graduates were unemployed last year and even highly trained professionals were not always able to find work. Says an exasperated Elizabeth McTavish, career counsellor at Toronto’s York University: “This has been one of the most difficult school years I can remember. It’s hard to know what to tell the kids.”

Even those who find work may end up “underemployed,” with jobs well beneath their level of skill. This, in turn, can be profoundly frustrating and it is not without potentially destructive consequences for the country’s future. Warns economist Doug Fullerton: “It is among the idle, restless and educated young that the seeds of revolution find their most fertile soil.” Married women, entering the working world after years of rearing children (a task that is not considered “work” by economists and statisticans), are also being snubbed because of their lack of experience.

It is in the depressed regions of Canada

where unemployment is at its worst *And even the published figures may be understated because the “participation rate,” the percentage of the population that is considered part of the work force, is so low in eastern Canada. In Newfoundland, the participation rate was just 49.4% last year compared to 66.5% in Alberta. In other words, unemployment is so high in Newfoundland that many people drop out of the working population and do not even bother looking for work because they know there is none to be found. Then, since they are not formally searching for jobs, they are not counted as officially unemployed. Economists call this “hidden unemployment.” If it were counted, the real unemployment rate in Newfoundland, say, might be closer to 20% than to the 13.6% actually recorded.

How can a country as wealthy as Canada suffer from such high unemployment and underemployment at the same time? The government has blamed both inflation, which caused considerable uncertainty in the business and labor markets, and the United States, Canada’s major trading partner, which, because of an economic recession, had an even higher unemployment rate than this country during the past two years (7.7% last year), making it difficult for Ottawa to take effective unilateral action.** Clearly there are other factors at work as well. Many have pointed an accusing finger at the liberalization of unemployment insurance in 1971 as a move encouraging workers, especially young workers, to quit and live off the “pogey.” Indeed, a study sponsored by the Economic Council found that the 1971 changes in unemployment insurance caused the jobless rate to rise by up to seven-tenths of one percentage point in the following year. The increase was attributed to people staying unemployed longer before taking a job rather than to people actually quitting their jobs to take advantage of unemployment payments. Liberalized unemployment insurance allows people to be choosier about what work they will accept, perhaps a good thing in the long run because they will ultimately be more satisified with their jobs. Others blame the schools and universities for churning out, year after year, graduates without the necessary skills to enter the job market, while many employers say Canada’s high unemployment rate is a result of falling productivity on the part of the Canadian worker.

Last October the government introduced a $350-million job program, to take effect beginning April 1. And in November, the government doubled the funding

*The average unemployment rates by province in 1976: Nfid. 13.6%, NS 9.6. NB 11.1, PEI 9.8, Quebec 8.7, Ont 6.2, Man. 4.7, Sask. 4.0. Alta. 3.9, BC 8.6.

**The unemployment rates for Canada’s other major trading partners, while growing, remain well below the Canadian level. The figures for the first nine months of 1976: Sweden 1.6%, Japan 2.1, Italy 3.5, France 4.2, West Germany 4.6, and the United Kingdom 5.3.

for LIP this winter to $200 million. But there is pressure for even more, especially with the new Carter administration in the United States having announced plans for a massive job program involving expenditures and tax cuts amounting to almost $30 billion over the next two years. A range of options is being considered, including cuts in personal, corporate, or sales taxes. But, Prime Minister Trudeau, perhaps recognizing the changing nature of unemployment, told the provincial premiers last month: “What we have to recognize is that pumping up demand may threaten inflation without resolving the problems of unacceptable regional unemployment, the barriers to mobility, recurring redundancy, institutional obstacles in changingjobs or gaining access to particular occupations, the lack of skill, experience or motivation, the handicaps of young people and older women returning to the labor force.” For these problems, special solutions, not a tax cut or major spending program, are needed, said Trudeau.

Some of the new, or recycled, ideas being put forward include:

• Compulsory service for young people, either in the military or in some socially useful field, with the federal government paying their salaries.

• “Affirmative action.” Another controversial idea, it is backed by feminist groups and the NDP and involves the hiring of women and other “disadvantaged” people such as natives and the handicapped on a priority basis.

• “Work sharing.” The federal govern-

ment has already announced its intention to adopt this scheme, at least on an experimental basis in depressed regions. Where a plant is about to lay off, say, 10% of its employees, the government would ask the company to keep them and shorten the work week for all employees by 10%. The government would then subsidize everyone’s salary to make up for the lost work time. •

• Pressure on the provinces and universities to gear their education system's more to the job market so that labor force “cripples” are not continually graduated.

By the early 1980s, as the crush of women and young people trying to enter the labor force begins to abate, economists forecast Canada may develop labor shortages rather than surpluses. In the meantime, however, the federal government is left facing the enormous problems created by the rising and rapidly changing nature of unemployment. IAN URQUHART