Category Archives: Austerity

No shortage of workers – just a shortage of training

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Tue, 11/19/2013 – 10:06
Posted by Andrew Jackson     http://www.broadbentinstitute.ca

Two major recent studies – from Derek Burleton and his colleagues at Toronto-Dominion Bank, and from former senior federal government official Cliff Halliwell published by the Institute for Research on Public Policy – provide excellent overviews of recent developments in the Canadian job market, and an informed framework for thinking about our future skills needs.

This message seems to have finally got through to the Harper government. In a speech to the Vancouver Chamber of Commerce on November 14, Employment and Skills Development Minister Jason Kenney told employers to stop complaining and to stop relying excessively upon temporary workers. Instead, he said, employers should “put more skin in the game” by increasing wages in high-demand occupations and by investing more in the training of Canadians.

The TD and IRPP studies provide balanced overviews of our future skill needs. Neither see generalized shortages as an acute danger, notwithstanding the pending (if increasingly delayed) retirement of the baby boom generation. Indeed, Mr. Halliwell says we should welcome a tighter job market, after years of stagnant real wages for most workers.

Graduates from our postsecondary education system, together with new immigrants, will more or less match job vacancies opening up due to the retirement of highly skilled workers. And employers can be expected to minimize shortages as they emerge by investing in capital and skills so as to raise productivity.

All that said, these studies note that we face some specific skills shortages today in a limited number of occupations and regions, and that some employers may face increasing difficulties finding workers with the right education and skills to fill available jobs in the future.

This can, however, be seen more as an opportunity than a curse, given the significant unemployment and underemployment of today, especially for youth, recent immigrants and aboriginals. The challenge is to invest in skills to increase access to good jobs for Canadians who want to get ahead, and thus to forestall future shortages that might lower our economic potential.

One set of policies that makes sense is to raise the education and skills level of marginalized groups and to ensure that unemployed workers, especially the long-term unemployed, have access to retraining. While Canada has one of the most educated work forces in the world, we have a relatively high proportion of workers with low literacy and numeracy levels, and many recent immigrants need help to upgrade their qualifications.

Programs delivered by the provinces with the support of the federal government address these issues to a degree, although spending is well below the industrial country average. Unfortunately, the federal government proposal to introduce the Canada Jobs Grant will shift some funds away from training the most marginalized workers and toward employer-sponsored training.

Mr. Halliwell argues that our current educational and labour market policies fail the significant proportion of the work force that leaves the educational system with less than a postsecondary qualification and finds relatively low-paying, less-skilled jobs. These workers tend to receive little or no employer training – and are excluded from current government programs.

He suggests that we think about “second chance” programs for this group, to improve their opportunities in the job market later in life and to help fill employer needs for skilled workers.

One option that Mr. Kenney might consider is to give more employed workers access to Employment Insurance (EI) benefits for training leaves, on the model of apprenticeship training. Apprentices qualify for EI benefits when they are away from their regular job for the classroom part of their program.

EI-supported training leaves would allow workers to take a community college or similar training programs – still at some considerable financial sacrifice to themselves, since benefits only replace up to 55 per cent of normal wages and since tuition costs would have to be paid.

Employers could contribute by making sure that a worker could return to the job from which she or he took a leave and, perhaps, by providing a supplementary income if the training program met the needs of their business.

EI-training leaves would empower individual workers to invest in their skills, and help create a higher-skilled work force for the future. Mr. Kenney might consider this option as an alternative to the proposed Canada Jobs Grant, which has won few supporters to date.

This article originally appeared on the Globe & Mail’s Economy Lab.

Photo: Cristiano Betta. Used under a Creative Commons BY 2.0 licence.

Most Canadians doubt health care system prepared to handle ‘tsunami’ of aging boomers, new poll shows

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From:     Sharon Kirkey, Postmedia News  13/08/19

Three in five Canadians surveyed said they will have to rely on the public system for home care and long-term care if they need it later in life.

Canadian Physiotherapy Association/CNW GroupThree in five Canadians surveyed said they will have to rely on the public system for home care and long-term care if they need it later in life.

Canadians have little faith the country’s health system is prepared to handle the needs of a looming “tsunami” of aging boomers, a new poll has found.

Six in 10 Canadians surveyed said they lack confidence in the health system’s ability to care for Canada’s rapidly greying population.

Women, as well as Canadians aged 34 to 54, and those already caring for an elderly person, are among those least confident that hospitals and long-term care facilities can handle the demands of a population that is living longer than at any other time in the nation’s history, according to the Canadian Medical Association’s annual report card on health.

Only in Quebec does a majority (54 per cent) believe that hospitals and long-term care facilities in their area are sufficient to meet the needs of the elderly, according to the survey.

The anxiety Canadians have about health care in their so-called golden years is both real and well-founded

The Ipsos Reid poll of 1,000 Canadians was released to coincide with Monday’s opening of the CMA’s annual meeting in Calgary, where main items on the agenda include a special session devoted entirely to end-of-life care issues.

“The anxiety Canadians have about health care in their so-called golden years is both real and well-founded,” outgoing CMA president Dr. Anna Reid said in a statement released with the poll.

All levels of government, including the federal government, “need to act to address the demographic tsunami that is heading toward the health care system,” she said.

A vast majority of Canadians — 93 per cent — support a national, seniors’ health strategy for home care and long-term care, the poll found, with support highest in Alberta and Ontario, as well as among women and Canadians nearing retirement age (55 to 65).

Three in five Canadians surveyed said they will have to rely on the public system for home care and long-term care if they need it later in life.

Half are “very” concerned about maintaining their health in their retirement years; seven in 10 are worried about their financial future, the poll found.

Those already caring for an older adult are among those most worried about there not being enough services should they ever need home or long-term care in their own old age.

Reid, who has been caring for her own elderly father, who suffers from dementia, said more resources are needed for nursing care, home-based care and palliative care, particularly in smaller communities. “We know how to do good palliative care, it’s just not being practised across the board,” she said in an interview.

We could be saving the system an enormous amount of money by providing far more support in the home environment

It costs nearly $1,000 a day to keep a senior in a hospital bed, and $126 a day for a bed in a long-term care facility, said Dr. Louis Hugo Francescutti, incoming president of the doctors’ group.

“To keep them in home with supportive home care and assisted living costs about $35 to $50 a day,” he said. “We could be saving the system an enormous amount of money by providing far more support in the home environment.”

The average life expectancy of Canadians has increased by more than 30 years since the early 1900s, to 78 for men and 83 for women in 2011. But the number of years lived in good health is sliding. The majority of today’s seniors have at least one chronic condition; as many as one in four has two or more.

Overall, the 2011 census counted nearly five million people aged 65 and older in Canada.

By 2031, 22.8 per cent of the population will be 65 or older, jumping to one quarter — 25.5 per cent — by 2061.

The Ipsos telephone poll was conducted between July 17 and July 26. A sample this size is considered accurate within 3.1 percentage points.

Three-quarters, or 75 per cent, of those surveyed gave an “A” or “B” grade to the overall quality of health services. However, views on the future are split — about half think health services will get better and the other half believe things will get worse.

Only about half gave an “A” or B” grade to access to diagnostic equipment such as MRIs and CT scans, or access to specialists. The marks were worse for mental health, with only 41 per cent of those surveyed giving an “A” or “B” grade for access to mental health services.

Few — 29 per cent — gave the federal government top marks in dealing with health care in Canada.

Austerity chokes the down-and-out, as Harper and Flaherty look the other way

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By Nick Fillmore  August 16, 2013  http://rabble.ca

Austerity chokes the down-and-out, as Harper and Flaherty look the other way

The exceedingly aggressive austerity cuts carried out by Prime Minister Stephen Harper and Finance Minister Jim Flaherty over the past seven years have come home to roost as millions of Canadians, depressed and without hope, are succumbing to its worst consequences.

Program cuts and tax reductions for corporations and the wealthy have had a huge, disproportionate impact on the poor, working poor, underemployed, and those with health problems including mental illness.

The massive austerity program translates into less income, decreased services, and reduced health care for many of Canada’s most vulnerable people. It appears that more than 3.5-million Canadians — mainly the poor, the unemployed/underemployed and the under-privileged — are struggling.

The attacks on the vulnerable began soon after the Conservatives came to power in 2006. They launched cuts that were a broadside attack on the government’s ability to finance many of its activities, including these much-needed employment and social support programs.

Ignoring the needs of Canadians living in desperate conditions, Harper and Flaherty initiated the extremely aggressive austerity program because of their determination to reduce the deficit and cut the size of the federal government. Their decisions were based on their own neo-liberal economic beliefs, not what Canadians needed or wanted.

There are numerous examples of needless, brutal cuts. Claiming it was concerned that some people don’t have enough incentive to work, Harper-Flaherty toughened up the Employment Insurance rules. They took millions of dollars away from mostly seasonal workers, leaving them vulnerable.

Human Resources and Skills Development Canada (HRSDC), the government department that provides the most hands-on support for the poor, is being cut more than any other department. It will lose 5,700 positions — one-quarter of its workforce by 2016. The largest cut in absolute terms is to the Citizen-Centered Services Program, which helps Canadians access government services by phone and online.

Harper also cut funding to the National Aboriginal Health Organization (NAHO) and to a number of Aboriginal women’s health organizations — crucial programs on suicide prevention, women’s health, and diabetes. They also cut the Women’s Health Contribution Program, which funds six women’s health organizations across the country.

The austerity cutting is based on Harper and Flaherty’s near-fanatical determination to cut the deficit and reduce the size of government. The two unwaveringly believe in neo-liberal economics, which enriches corporations and the wealthy at the expense of the rest of us. We have two people running our country who don’t really believe in government!

Unfortunately, the problems of the less fortunate are not acknowledged in the PMO or Department of Finance. It is much more important that interest rates remain low for the benefit of corporations and the one per cent. A Google search for any Harper or Flaherty comments that express any concern or interest in the problems of the poor comes up empty.

Two moves early on by Harper and Flaherty eliminated the ability of the Conservatives to fund the kind of generous, liberal-minded government Canadians have been used to. First, a two-per-cent cut in the Goods and Service Tax income in Flaherty’s first two budgets cost the government a staggering $10-billion to $12-billion annually in revenues that had been used to help support government services.

In addition, Flaherty has cut $60-billion in corporate taxes since the Conservatives took power in 2006 – needlessly reducing the country’s corporate tax rate to the lowest among G8 countries.

The austerity program and other government cuts have had disastrous consequences for millions of Canadians. There are staggering disparities in life expectancy based on the amount of education a person receives and their amount of education. On average, people living in rich neighbourhoods live an average of 86.3 years, while those living in a poor neighborhood live only 65.5 years — a difference of 21 years.

There is more hunger across the country than ever before. In March, 2012, 882,188 people received food from a food bank in Canada — an increase of 2.4 per cent over 2011 and 31 per cent higher than in 2008, when austerity was being launched.

Children are not spared from the suffering. According to UNICEF’s most recent report, Canada is 21st out of 29 top countries for relative child poverty, and 27th for the percentage that were overweight.

Between the years 2007 and 2011, Statistics Canada reported a 20 per cent rise in people who said their mental health was deteriorating. Mental illness is already the number one cause for disability claims in the workplace. According to the Mental Health Commission of Canada, awards for mental injury at work have dramatically increased in recent years because of pressure placed on workers to produce more during the austerity period.

It’s also likely been an increase in suicides in Canada due to the distress suffered by individuals as a result of the austerity program. Two international researchers, David Stuckler and Sanjay Basu, have documented substantial increases in suicide in several European countries and the United States as a result of austerity cuts. Suicides in Canada increased from 3,512 in 2005 to 3,890 in 2009, which takes in the early part of the austerity period. However, Statistics Canada is three years behind in posting its deaths statistics, so no information is available covering a large period of austerity. But, assuming that Canada is experiencing roughly the same fallout as are Europe and the U.S., it is safe to predict a sizeable increase in suicides here.

Throughout the Conservatives’ seven years in office, independent economists argued that the austerity program was not achieving its stated goal of preparing the country for an economic recovery, but Flaherty refused to budge.

Then in April, the world was shocked when the austerity experiment, which was had destroyed the lives of millions in Europe, was totally discredited. Thomas Herndon, a young University of Massachusetts Amherst graduate student in economics, discovered that an influential paper endorsing austerity practices as a way of rebuilding beleaguered economies was incorrect because of spreadsheet coding errors and selective data.

Amazingly, Flaherty continued with the austerity experiment. “What I worry about is those that suggest that austerity should be abandoned,” he noted. “I think that’s the road to ruin quite frankly.”

So more cuts that will affect the poor the most are on the way. Harper and Flaherty will chop another $11.8 billion from government spending by 2014-15; job losses in both the public and private sectors will be 90,000 by 2014-15; and there will be 1.4 million unemployed workers in the country in 2015.

If Harper and Flaherty really wanted to balance the budget and look after people at the margins, they could work harder to collect the $29 billion the government is owned by the rich and corporations in unpaid taxes.

They also could try harder to find the $3.1-billion that was given to the anti-terrorism program but now cannot be accounted for.

The Council of Canadians says if Harper and Flaherty really wanted to both gradually reduce the deficit and look after the needs of the poor, they could continue to stimulate job growth through needed infrastructure projects (water, transit, green energy, roads, etc.), and reverse corporate tax cuts. Not by suffocating those at the very bottom of the pyramid.

Nick Fillmore is a freelance journalist who worked in many areas with the CBC over nearly 30 years. He is a former member of THIS magazine’s editorial board and was publisher of The 4th Estate, an independent weekly in Nova Scotia, during the 1970s. Fillmore was also a founder of the Canadian Association of Journalists. To see other articles, visit his blog.

In economics we should do what works, and austerity doesn’t.

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August 6, 2013 · by Elliot Brice   From: http://donotgogentleblog.com

Economics is often said to be more of an art than a science. This is because, unlike in the sciences, it is very hard to draw solid conclusions from empirical data. This might be the case; nonetheless you’d be stupid not to try and draw some conclusions from the experiences of others. And when we look at the experiences of various national economies right now there are definitely some lessons to be drawn.

The biggest lesson is: ‘don’t be Europe’. Europe is bad and going backwards. Don’t do what they did. The failure of European economic policies have clear implications for economic theory and the economic policies of Australia and the rest of the world.

So what is the nature of the mess Europe finds itself in? Even answering that question is controversial; everyone agrees Europe is in a mess, but it’s not even clear what exactly the mess is. Is the mess a debt crisis fueled by dangerously high sovereign debt? Or is it an employment crisis fueled by low and negative growth? The governments of the Euro zone have clearly identified the crisis as a debt crisis because their solution has been austerity – slash government spending to cut back their respective deficits. However a good 3 years of austerity has failed to solve the crisis.

In the UK, government debt as a percentage of GDP only continues to rise and is now above 90 percent. French debt to GDP is also up around the dreaded 90 percent mark and rising. Spain lives in the mid 80s and is on an upwards trajectory, as is the debt to GDP ratio of Portugal, Ireland and most other European countries. Greek debt to GDP has fallen slightly but years of austerity have barely made a dent; their ratio still lies above 150 percent. See here and here.

So what’s going on here, why has government spending failed to stop the crisis? Perhaps because the crisis is not really a debt crisis. Sure debt is part of the problem, but the debt crisis and the growth crisis are two sides of the same coin. And by ignoring the other side of the coin, European governments have offered misdirected solutions that have only made the crisis worse. They have sacked public servants, slashed government welfare, increased the cost of things like university education, and put an end to many government services and programs that people depended upon in the process destroying countless lives and creating a lost generation who will never enjoy the opportunities their parents had.

They must be doing something wrong. We might get a clue at what they are doing wrong by having another think about that ratio that austerity nuts are obsessed with – debt to GDP. One way to reduce it is obviously by reducing debt; but that only works if GDP stays the same. The problem with that is that slashing billions of dollars of services, firing people and generally withdrawing cash from the economy almost inevitably results in a reduction in GDP. This explains why the debt to GDP of most European countries is not going down, despite harsh austerity. They are cutting spending, but that is resulting in lower growth. In fact it is resulting in negative growth. And that negative growth is sending companies out of business and driving people out of work.

Greece, Italy, Spain, Belgium, France and the Euro-zone as a whole remain in recession. The UK has experienced some slight economic growth in recent times but they are not exactly a success story having very nearly gone through three recessions over the period of time since the global financial crisis hit.

So I contend that trying to address debt to GDP through austerity is not a great idea.

If you are really concerned about debt to GDP then have a look at the other side of the ratio. You can reduce debt to GDP by increasing GDP. Even if you spend more and increase debt, the ratio of debt to GDP will still go down as long as GDP goes up by an even greater amount. And that is fairly likely to happen given the multiplier effect of spending: if the government spends 50,000 dollars employing someone, then that individual might spend 20,000 of that on a new car. Then the owner of the car shop might spend her new 20,000 dollars on a holiday to another city in the same country. Then the tourism operators in that city will spend their new 20,000 dollars on food, clothes etc. And the food and clothes sellers in the area will collectively have 20,000 new dollars to spend on something. This will go on and on; clearly the 50,000 the government has spent has resulted in more than 50,000 dollars worth of economic stimulus.

The above example has already resulted in over 80,000 dollars worth of stuff being bought. You might respond that in an economic downturn the government employee is likely to save their income rather than buy a new car. It is true that well off people will save in a downturn but less well off people tend to spend their money; which is why it is much more efficient to stimulate the economy through welfare for the poor rather than tax cuts for the rich. Furthermore, obviously (if the government has established a decent tax collecting structure – something Greece and Italy never did) then all of this new economic spending will result in more tax revenues, which will – guess what! – reduce the debt.

Slash and burn austerity hawks commonly used a 2010 study by Carmen Reinhart and Kenneth Rogoff to justify their policies. It argued that if a country has 90 percent debt to GDP or above, then economic growth will slow significantly. Of course a second study by Thomas Herndon, Michael Ash and Robert Pollin claimed to discredit the 2010 study, saying it was based on faulty calculations. Yet I would argue that even if the math wasn’t wrong, there is more explaining to do. After all, correlation doesn’t equal causation. And just because on average countries with 90 percent debt to GDP levels had much lower economic growth rates, that doesn’t mean high debt to GDP causes low economic growth. In fact based on what I was arguing above, it would seem to me that, if anything, low economic growth causes high debt to GDP. So what is more important than cutting debt? Stimulating growth!

The European economic crisis is not a debt crisis at all, it is a growth crisis and an unemployment crisis. Debt is the symptom but not the cause. And even if it was the cause, austerity is not the solution.

Karl Marx argued that capitalism lurches from crisis to crisis. You don’t have to be a communist to realise that this is a powerful insight. We have booms (that are often bubble’s waiting to burst) and we have busts; no one can deny it. Marx argued that it lurches from crisis to crisis because when there is an economic boom and demand for labour is high, workers will, according to the law of supply and demand, only work for high wages. This will result in high inflation (which is bad for business) and obviously will also directly dent the profits of businesses. As a result businesses will need to downsize and an economic crisis will ensue. This is the problem that the Hawke/Keating government’s Accord sought to address by asking unions to temper their demands for high wage growth.

On the flip side (which is the relevant side at the moment), when there is excess supply of labour (high unemployment), businesses can get away with paying low wages (as the law of supply and demand shows). This might seem like it would be good for business (and right wingers often argue that low wages would lead to full employment) but if wages are low for most people then savings will be low; once workers have spent their money on the essentials they won’t have much left over to buy any non-essential products. And so the businesses selling non-essential items, like TVs and antique furniture and tickets to rock concerts, will be in trouble. Businesses will start to close and an economic crisis ensues. So, Marx argues, we can’t win either way; capitalism is doomed to fail.

Businesses might try to get around this latter scenario by searching for new markets, especially in developing countries, finding new people to buy their stuff. This worked for a while; even though workers in Detroit couldn’t afford to buy the cars they were making, Chrysler found some rich people in China and Africa to buy their stuff. Eventually though the crisis came; once the banks stopped lending to people, and credit cards were maxed out, incomes weren’t high enough to keep buying things -and the great recession hit. I don’t think the solution to this problem is to do away with the system, because there is no credible alternative. Yet what we do need to do is to smooth the business cycle – it is in no one’s interest to lurch from crisis to crisis, bubbles and busts.

What I get from Marxian economics (as opposed to Marxist economics) is that the extremes of capitalism – bubbles and busts – cause severe crises; and an extreme response to an economic crisis will only create another crisis. A crisis results from either a bubble – excessive growth – or a bust.

Austerity is an example of an extreme response; it takes money away from those that need it, causes higher unemployment, lower wages and hence sends us hurtling towards another crisis. And that is how Europe finds itself now, lurching from serious crisis to serious crisis.

Marx also reminds us that extreme inequality, which austerity fosters, is bad for economic growth. Extreme inequality leads to the situation above, where most wealth is concentrated in the hands of the few while most workers have little money to spend on luxury goods, leading to a slump in business activity and an economic crisis.

The solution to Europe’s crisis then must involve a path forward that reduces wealth inequality, does not lead to significantly lower wages or higher unemployment; nor should it involve unsustainable wage growth built upon a bubble. The solution is to have prudent economic management that aims for sustainable wage growth, sensible government intervention in the economy to boost spending when necessary, a progressive taxation system that reduces inequality and a strong safety net that helps people get back on their feet and prevents an excess supply of labour. This Keynesian approach might not eliminate all booms and busts – they may indeed be an inevitable feature of capitalism as Marx said. Yet it can reduce the extreme volatility of capitalism and make crises less likely. This is the approach Australian Labor governments have largely followed. It is also the approach Obama has tried to follow (though he has had to negotiate with ideologically blinded austerity obsessed Congress). And the results in Australia and even the US are far more promising than Europe.

Any attempt by a potential future Abbott government in Australia to change from this path more towards an austerity path should be a cause for concern. It would be a triumph of small government ideology over doing what works. Europe has shown that the game is up for austerity hawks. Economic theory now needs to shift to the left, in line with what works.

Elliot Brice has studied economics at the University of Melbourne and is currently studying to be a high school teacher at the same institution. He also has an Honours degree in philosophy.