Governor of the Bank of Canada Tiff Macklem holds a press conference at the Bank of Canada in Ottawa on Wednesday, Oct. 28, 2020. THE CANADIAN PRESS/Sean Kilpatrick

Governor of the Bank of Canada Tiff Macklem holds a press conference at the Bank of Canada in Ottawa on Wednesday, Oct. 28, 2020. THE CANADIAN PRESS/Sean Kilpatrick

Economic recovery threatened if some workers, households left behind, Macklem says

Low-wage workers are still about 20 per cent below their pre-pandemic levels of employment

An economic rebound that leaves behind parts of the Canadian labour force in the short term could end up jeopardizing the recovery from COVID-19 in the long run, Canada’s top central banker says.

Bank of Canada governor Tiff Macklem says the pandemic has widened divides in the country that could worsen further without the right response.

He says the longer people hit by the pandemic are out of work, the harder it will be for them to find new jobs and the more likely they are to give up looking for work.

The combined effects on workers and businesses could weigh down the economy, harming even those who are doing comparatively well.

It’s why Macklem has been talking recently about inequality, and why he thinks the central bank should be making the argument.

“Our mandate is to support the economic and financial well-being of Canadians. It doesn’t say some Canadians, it’s all Canadians,” he says over a video conference from his office.

“What we see right now, as a result of this pandemic, are growing divides.”

Low-wage workers are still about 20 per cent below their pre-pandemic levels of employment, Macklem notes, whereas other workers with higher incomes have recouped job losses from the spring.

“High-touch” sectors like restaurants and accommodations are lagging behind as restrictions limit customers and consumers stay home.

The way back isn’t a sprint but a long slog, Macklem told The Canadian Press hours after the bank said it’s expecting to take until 2022 for the economy to get back to pre-pandemic levels, with some scarring from closed businesses and unemployed workers taking even longer to heal.

“It’s not going to be possible to fully recover the economy until we have a vaccine, but we want to try to reduce the negative effects,” he says.

“Once there is a vaccine, we want to make sure we get back to our full potential.”

READ MORE: Advocates say provinces should invest CERB savings in social welfare programs

Macklem took over the central bank’s top job in June. He had been the bank’s second-in-command during the last economic crisis a decade ago.

One of the bank’s key functions is to keep inflation at a moderate level, which it does by controlling a key interest rate. The lower the interest rate, the more appealing it is to borrow, invest and spend.

Macklem inherited a key policy rate slashed to 0.25 per cent, which he has said is as low as it will go and where it will stay, likely until 2023, to keep interest rates low so households feel comfortable spending.

He has overseen the bank’s foray into “quantitative easing,” which is a way for central banks to pump money into the economy, and mass buying of federal debt to effectively lower borrowing costs for the government.

It has put him in a political hot seat, with Conservatives on Parliament Hill warning the bank about appearing too cosy with the Liberals and wanting Canadians to take on debt to finance a recovery.

Macklem says the bank’s actions are independent of whatever the government might want, and have to do with its mandate of keeping inflation at two per cent a year. Inflation is close to zero because of the pandemic.

“We have a lot of unemployed Canadians. That’s putting downward pressure on inflation. So we need to put a lot of monetary stimulus into the system to achieve our objective,” he says.

“I don’t want to pretend that there aren’t some difficult decisions to take, but our objective is clear.”

Near, the end of the interview, Macklem takes a breath to think over a question that he repeats out loud: “How am I coping?”

He speaks slowly about getting fresh air, eating right and getting enough sleep. He says he misses talking to colleagues in person, and the worry the bank could lose some creativity in its thinking without people in the same room, sharing thoughts and ideas.

“We’ve got to guard against that,” he says.

He pivots to the uncertainty facing Canadian households: Parents whose children might be at school one day, home another, or others with elderly parents who need help getting essentials from the store.

Every Canadian is dealing with extraordinary demands, he says, and no one knows how this pandemic is going to play out. That leads to anxiety.

“I gained a lot of experience particularly in the ‘08-‘09 financial crisis. This crisis is very different. But you know, that feeling you get in the pit of your stomach is not that different,” he says.

“Some of the lessons from that crisis and also some of the things that we did that were not as effective, I think, are very valuable in dealing with this pandemic.”

Jordan Press, The Canadian Press


Like us on Facebook and follow us on Twitter.

Want to support local journalism during the pandemic? Make a donation here.

Coronavirus

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Churches, including Langley's Riverside Calvary Church, are challenging the regulations barring them from holding in-person worship services during COVID-19. (Langley Advance Times file)
Hospital outbreaks included in Fraser Health update Feb. 28, 2021. (Black Press file)
Fraser Health declares COVID-19 outbreaks at Chilliwack General and Surrey Memorial

The medicine units are temporarily closed but ERs remain open, according to Fraser Health update

Joanne Lechner, Batch Foods head chef and owner, prepares the Langley meal maker’s popular “Gnocci Doklie Bowl” talian cuisine (Dan Ferguson/Langley Advance Times)
Local delivery and food pickup for seniors is way, way up during the pandemic

While in-person dining and catering has been hurt, pre-made meals are selling well

Island Health chief medical officer Dr. Richard Stanwick receives a first dose of Pfizer vaccine, Dec. 22, 2020. (B.C. government)
COVID-19 vaccination set to start for B.C. seniors aged 80-plus

Long-term care residents protected by shots already given

Det. Sgt. Jim Callender. (Hamilton Police Service screenshot)
B.C. man dead, woman seriously injured after shooting in Hamilton, Ont.

The man was in the process of moving to the greater Toronto area, police say

(Black Press file photo)
Child in critical condition, homicide investigators probe incident near Agassiz

The child was transported to hospital but is not expected to survive

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

A GoFundMe campaign for Riley Stevens and his family has raised more than $5,700 since launching last week. (Contributed photo)
White Rock mom of sick tot ‘totally blown away’ by donations, offers help

GoFundMe campaign to help family of Riley Stevens crests $5,700

Sewage plant in Lower Mainland, operated by Metro Vancouver. (Metro Vancouver screenshot)
‘Poop tracker’ launches as researchers test Lower Mainland sewage water for COVID-19

‘Studying the virus in wastewater allows researchers to look at an entire population…’

(Pxhere)
Compensation fund opens for B.C. students negatively affected by incorrect exam marks

Marks for 2019 provincial exams were incorrectly tabulated

Most Read