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

Victoria’s Royal Jubilee Hospital took in two COVID-19 patients from Northern Health as part of a provincial agreement. (Black Press Media file photo)
Victoria hospital takes in two COVID-19 patients from Northern Health

Royal Jubilee Hospital takes patients as part of provincial transport network

Dan Imhof with a group of Bulkley Valley Soccer Society kids. (Contributed photo)
Two members of BV soccer club honoured with provincial awards

Daniel Imhof is Youth Coach of the Year and Georgia Mack is Administrator of the Year

Hazelton sign. (File photo)
Confusion, backlash surround Hazelton area zoning amendments

Housing shortages and affordability was the main concern from the public

Smithers Town Hall (Trevor Hewitt photo)
Council Briefs: Regular Meeting, November 24, 2020

Smithers Town Council approves $30,000 in technology upgrades to council chambers from COVID fund

Kelly Spurway hands out bag lunches on Main Street in Smithers out of the Salvation Army’s mobile community service unit earlier this year. (Thom Barker photo)
Christmas food donations threatened as demand soars

Cancelled Santa’s Breakfast usually a big help to fill the shelves, Sally Ann looks to other events

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

Janet Austin, the lieutenant-governor of British Columbia, not seen, swears in Premier John Horgan during a virtual swearing in ceremony in Victoria, Thursday, Nov. 26, 2020. Horgan says he will look to fill gaps in the federal government’s sick-pay benefits program aimed at preventing the spread of COVID-19. THE CANADIAN PRESS/Jonathan Hayward
B.C. premier says province prepared to patch holes in new federal sick-pay benefits

Horgan said workers should not be denied pay when they are preventing COVID-19’s spread

Provincial health officer Dr. Bonnie Henry updates B.C.’s coronavirus situation at the legislature, Nov. 30, 2020. (B.C. government)
Hockey team brought COVID-19 back from Alberta, B.C. doctor says

Dr. Bonnie Henry pleads for out-of-province travel to stop

B.C. Premier John Horgan on a conference call with religious leaders from his B.C. legislature office, Nov. 18, 2020, informing them in-person church services are off until further notice. (B.C. government)
B.C. tourism relief coming soon, Premier John Horgan says

Industry leaders to report on their urgent needs next week

An RCMP cruiser looks on as a military search and rescue helicopter winds down near Bridesville, B.C. Tuesday, Dec. 1. Photo courtesy of RCMP Cpl. Jesse O’Donaghey
B.C. Mountie, suspect airlifted by Canadian Armed Forces from ravine after foot chase

Military aircraft were dispatched from Comox, B.C., say RCMP

Most Read