Canada and the U.S: A tale of Two Labour Markets

Its official, Canada’s employment picture is rosy and it seems we’re on the road to success. Happy days are here again! For a third consecutive month Canada posted solid gains in its employment sector. In June, Canada added 28,000 more people to its labour market.  That’s on top of the 22,000 added in May and a whopping 58,000 added in April. Canada’s employment rate sits at 7.2 percent.  The celebratory news doesn’t stop there. The Bank of Canada recently released a positive survey. It asked businesses what their hiring intentions were for the next year.  It showed 57 percent expect to add to their work force, that’s the highest level of hiring hopefulness since the survey began in 1998. On the outside it would seem the Bank of Canada’s decision to hold rates at 1 percent and our seemingly stable housing market is keeping businesses optimistic and anticipating the best. But have Canadians peaked over the fence?

On the same day Canada’s figures were released the United States posted abysmal employment numbers.  In June it added a paltry 18,000 jobs and its unemployment rate is stalled at 9.2 percent. If you’re wondering, that’s pretty high. The average employment rate since 1948 has been 5.7 percent in the U.S. Canada conducts 2/3rd of its business with the U.S and the economic reality south of the border poses a huge obstacle for Canadian businesses. On top of this, our persistently high Canadians dollar is making it expensive for anyone outside Canada’s border to buy our goods.

Put it this way. Canada, despite all its training with healthy financial habits, has been reluctantly thrust into a boxing ring with an opponent 10-times its size. Can you imagine what a match would look like? In this corner boasting a population of 310-million is the U.S and in this corner with a population of 34-million is Canada. Two nations in completely different weight classes fighting in the same ring. That’s Canada’s biggest challenge, finding an equal competitor to work with.  Not one that controls you when the economy is good and crushes you when the economy slows.

After the deep recession Canadian businesses need to change their frame of thinking.  We cannot rely on our American cousins to buy our goods. Canadian businesses are increasingly selling their goods to countries other than the U.S. Our trade with Europe is increasing and most surprising our trade with countries like China and India is up as well. This is the proverbial light at the end of the tunnel. As these, so-called, under developed nations start to develop, their need for consumer goods also increases. As they make more money they’re willing to dole out more cash for products and services.

It would be naïve to believe that the U.S’ unemployment numbers will have no affect on us. The difference is Canada has more options now. While in the past Canada had no choice but to trade with the most powerful country in the world, with globalization and the Internet, Canada can now do business with anyone, anywhere.

So, do you believe the hype?  That Canada will be A-ok?  Or do we take a long hard look at our competition in the ring and make an honest prediction about our future. Canada is resilient we proved that during the global economic crisis in 2008, but we are not invincible and despite our improving employment picture there is still a lot of variables that can derail us.  My advice to businesses,  be cautiously optimistic and tread lightly towards 2012.

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