Good summary of concerns regarding low GDP per capita growth:
There is a startling admission buried in Chart #28 of the budget released this month by Canada’s Liberal government.
The chart in Finance Minister Chrystia Freeland’s budget quietly acknowledges a forecast by the OECD, a club of mostly wealthy nations, that Canada will likely come in dead last in the next four decades in regard to GDP growth per capita.The downplayed chart, one tiny aspect of the 304-page document, serves as a warning that individual Canadians, compared to the citizens of 39 other economically advanced countries, will in the next decades likely suffer the lowest real growth in their wages.
Freeland puts the blame for tepid wages almost entirely on Canadian businesses, which she claims “have not invested at the same rate as their U.S. counterparts.” The finance minister then boasts that Ottawa’s policies on housing and immigration will “strengthen the middle class and leave no one behind.”
But more than a few people suggest they are doing the opposite. Why, when the country’s GDP is expanding, have individual Canadians not been getting ahead? Why is their wage growth projected to lag so far behind citizens of other nations? And why are millennials taking the brunt of it?
The OECD predicts Canadians will experience the lowest growth in real wages out of 40 advanced economies. A downplayed version of this chart appeared in the Liberal budget. (Source: OECD / B.C. Business Council)
“Past generations of young Canadians entering the workforce could look forward to favourable tailwinds lifting real incomes during their working lives. That’s no longer the case,” he said.
“If the OECD’s long-range projections prove correct, young people entering the workforce today will not feel much of a tailwind at all. Rather, they face a long period of stagnating average real incomes that will last most of their working lives.”
Ottawa’s economic strategy is based on several “shaky pillars,” which include using “record immigration levels to turbo-charge population growth and housing demand in major cities,” Williams said.
“The political class appears to have lost interest in efforts to raise workers’ productivity and real wage growth through higher business investment per worker.”
Toronto-based analyst Stephen Punwasi says Canada is on its way to becoming the “next Greece,” referring to the way Greeks’ personal incomes tanked more than almost anywhere else after 2009 because of the housing-mortgage-ignited recession.
“Canada has embraced cheap growth by way of residential investment and debt,” Punwasi says. Canada has been putting too much emphasis on home construction, he said, as well as on printing money at a faster rate than almost any other country.
Nowhere in Canada, or even in much of the world, does the economy rely on housing as much as it does in B.C., which has a lower GDP per capita than Alberta and Saskatchewan. Almost 30 per cent of B.C.’s overall economy is tied up in real estate and construction. But the housing sector struggles to grow the economy, or wages, like other industries, which are more able to innovate and export.
The Liberals’ commitment to record immigration targets focuses mostly “on the benefits immigrants provide to older Canadians,” Punwasi said, including in the form of “strong housing demand and tax revenues.”But he cautions that Ottawa’s policies often exploit newcomers, who end up coming to the country unaware of flat wages, especially for the young adults who make up the bulk of immigrants, foreign students and temporary workers.
Donald Wright, the freshly retired head of B.C.’s provincial civil service, notes discouragingly that six out of 10 Canadians recently toll Nanos pollsters they expect their standard of living to worsen.
“Isn’t it time we took Canadians standard of living seriously?” Wright asks in presentations to groups of Canadian Senators and to the Canadian Association of Business Economists.
In addition to Wright’s concern about Ottawa’s inability to promote technological advancement and productivity, he joins Punwasi in worrying that policymakers are over-relying on population growth and cheap labour. It’s not helping the middle classes, he says.
“It’s time for some nuance on immigration policy,” says Wright, who was B.C. Premier John Horgan’s deputy minister. While remaining pro-immigration, Wright hopes for a more thoughtful debate about immigration in Canada, otherwise anti-immigration populists could come to dominate, as they have in other countries.
As it is, Prime Minister Justin Trudeau’s economic plan relies on increasingly record-high immigration counts — of 432,000 in 2022, 447,000 in 2023, and 451,000 in 2024. That compares to 250,000 when the Liberals were first elected.These targets, far higher than those in the U.S. or almost anywhere else, will impact economic equity in Canada, Wright says. “The evidence is very strong that the demographic group most adversely affected by higher immigration is the previous cohort of immigrants.”
That’s in part because the largest group of immigrants is disproportionately those between 25 and 40 years old, which is the same cohort as the already large baby-boom echo, also known as millennials.
An increase in immigration at this time amplifies the challenges millennials are having, particularly in the housing market, Wright says. “So, even if there is a valid argument for raising immigration levels, this is being done approximately 10 years prematurely.”
What makes it all the more unsettling is that the corporate-backed organizations pushing Ottawa to hike immigration targets, such as The Century Initiative and the Conference Board of Canada, have acknowledged that higher immigration leads to lower GDP per capita.
“So why,” Wright asks, “has it become the core of the federal government’s economic ‘strategy’?”
Another commentary on the anniversary of the multiculturalism policy:
Fifty years ago today, on Oct. 8, 1971, Canada became the first country in the world to adopt what Pierre Trudeau described as a “vigorous policy of multiculturalism.” Canada’s identity “will not be undermined by multiculturalism,” Mr. Trudeau told the House of Commons, because “cultural pluralism is the very essence” of its identity.
In practice, multiculturalism has meant a series of government programs to fund research, support curriculum development, launch anti-racism initiatives, integrate immigrants and refugees, and promote intercultural and interfaith understanding. It has also translated to continued support for immigration: as written in a Migration Policy Institute study, “Canada may be the only Western country where strength of national identity is positively correlated with support for immigration, a finding that is difficult to explain except by reference to multiculturalism.”
How did such a policy come to be? In broad strokes, it was a product of the post-1945 rights revolution that saw historically disenfranchised groups dismantle inherited hierarchies and demand basic citizenship rights. But in order to exist, the notion of biculturalism first had to be dispelled. Indeed, Trudeau’s policy departed from the Royal Commission on Bilingualism and Biculturalism, appointed by Lester B. Pearson in 1963. “For although there are two official languages,” Mr. Trudeau insisted, “there is no official culture.”
From the moment it was constituted, the commissionwas criticized by non-English and non-French Canadians for incorrectly framing the country it had been tasked to study: Canada was not bicultural, they said, and never had been. Demographically, it had always been multicultural, something Commission co-chair André Laurendeau quickly learned. In his diary, he recounted a January 1964 dinner in Winnipeg, by any definition a multicultural city. Seated next to an Icelandic doctor and a Ukrainian war hero, he found himself “exposed to a veritable assault of multiculturalism” – so much so that he and his colleagues almost missed their plane.
And so it went, in hearing after hearing, especially in Western Canada: bilingualism was one thing; biculturalism was quite another. In its preliminary report released in 1965, the Commission indicated as much when it summarized the views of what it called Canada’s other ethnic groups: “If two cultures are accepted, why not many?” It was a compelling question, but not one the Commission could answer. Four years later, in 1969, it made a series of recommendations – for example, that the National Museum of Man, now the Canadian Museum of History, be given sufficient resources to carry out projects related to “cultural groups other than the British and French” – but it stopped short of recommending official multiculturalism, believing that was outside its mandate.
Mr. Trudeau, however, was not bound by the Commission’s mandate. Nor were the leaders of Progressive Conservative Party and the New Democratic Party. For his part, Robert Stanfield applauded the prime minister’s “excellent words” while David Lewis – who had been born David Losz in a Russian shtetl and who knew the sting of anti-Semitism – struck an eloquent and, perhaps, personal note, referring to cultural diversity as “a source of our greatness as a people.”
To its critics, however, multiculturalism was Liberal pandering to ethnic voters. The Globe and Mail referred to the portfolio of the Secretary of State for Multicultural Affairs as “an insulting political bone thrown at Canada’s ethnic communities” in a 1974 editorial, adding that it wasn’t sorry to see it folded into another portfolio.
But Mr. Trudeau’s commitment to multiculturalism wasn’t cynical. It stemmed from years of thinking about diversity and its accommodation. Federalism was one answer. Bilingualism was another. And multiculturalism yet another. He even included it as an interpretive clause in the Charter of Rights and Freedoms.
Successive prime ministers followed Mr. Trudeau’s lead in non-partisan fashion. In 1988, Brian Mulroney passed the Canadian Multiculturalism Act. And in 2002, Jean Chrétien declared June 27 Canadian Multiculturalism Day, turning multiculturalism into a national symbol, like hockey and maple syrup.
After making his announcement fifty years ago, Mr. Trudeau flew to Winnipeg where, on Oct. 9, he spoke to the Ukrainian-Canadian Congress. The Canadian mosaic, he said, “and the moderation which it includes and encourages, makes Canada a very special place.” After all, “Every single person in Canada is now a member of a minority group.”
That was true in 1971. It’s even more true in 2021: Canada will welcome 401,000 immigrants this year, a number not seen since the record set in 1913.
Donald Wright teaches at the University of New Brunswick and is the author ofCanada: A Very Short Introduction.
Multicultural Meanderings 