Thank you, Mr. Rajotte and members of the committee, for the opportunity to appear with you. I will focus my introductory remarks on the condition of Canada's overall labour market. In particular, I will argue that the labour market is characterized, and will continue to be characterized, by a condition of chronic excess supply. This contrasts with the oft-made claim that Canada is experiencing or is about to experience a major shortage of labour.
This issue is an important context for several of the measures that you are contemplating in Bill C-38, including the proposal to defer eligibility for old age security payments by two years and the plan to reduce and restructure employment insurance benefits, as well as measures to restructure immigration and migrant labour policies.
All of those are bundled, of course, into one piece of legislation. At the risk of repeating what just happened, I should add my organization's view to the record that we think it's inappropriate to consider measures that are very important, very long lasting, such as changes to OAS and EI programs, within the framework of an omnibus bill.
The issue of whether the labour market experiences excess supply or short supply is also very relevant to a wide range of economic policies. It's very common to use the official unemployment rate as an all-purpose indicator of the general supply/demand balance in the labour market. That official rate currently stands at 7.3%, which might not seem too bad, depending on your context. However, that rate is not an accurate indicator of true labour market balance, especially during a recession or in the period after a recession.
To qualify as officially unemployed for purposes of this measure, an individual must not only be working, but also actively seeking work. If you stop actively seeking work—according to the definition of that term by Statistics Canada—you disappear from the labour force, and hence from the unemployment statistics. This is an arbitrary hurdle that skews the resulting measure of supply/demand balance, especially when job searches may be inhibited by the view that there aren't positions to apply for. Perhaps I could mention that Albert Einstein defined insanity as doing the same thing over and over again, expecting a different result. In that case, if you've applied for 50 jobs and didn't even get a callback, applying for the 51st might be considered irrational.
It must be noted in this context that most unemployed Canadians do not receive EI benefits, so the idea that people are just going through the motions of looking for work in order to remain qualified for EI cannot explain this result.
I think that at this point in the business cycle, a better measure of labour market balance is the flip side of the unemployment rate, what we call the employment rate. It steps back from the issue of whether someone is actively seeking work and just asks if they are employed in any type of job.
A handout has gone around, and the graph at the top of that handout illustrates the trend in the employment rate in recent years. As you see, the employment rate fell dramatically during the recession by 2.5% of the working-age population. Since then, it has rebounded by only 0.6%. In other words, only one-fifth of the damage that was done to the labour market by the recession has been repaired. Indeed, in the labour market, it still feels like a recession, even though economists say technically we're in a recovery.
The last two months of labour market data were good. You'll see the last two points on that graph show a nice rebound, and that's very positive. Even with that, we're only back to where we were 16 months ago. In that regard, our employment recovery has stalled. I think it's worth noting that between one in four and one in three of the net new jobs created in Canada between the end of 2007 and the end of 2011 went to temporary foreign migrants. That program is playing a larger and larger role in meeting the new jobs being created.
How do we reconcile that graph with the claim that we have won back all the jobs that were lost in the recession?
This measure, as we should, takes into account ongoing population growth. Saying that we're back to the absolute number of jobs we had in the fall of 2008 is a bit irrelevant when we have to create hundreds of thousands of net new jobs each year to keep up with population growth in the four years since then.
We think a better measure of the actual mass of unemployment would take the non-participation of discouraged Canadians into account, and the table at the bottom of my handout does that. We add to the official unemployment tally, which is around 1.4 million as of April, about 300,000, representing the withdrawal from the labour market by many Canadians, as well as Canadians who are working involuntarily in part-time positions or who have a job but no hours or are waiting for the next shift.
By that measure, I estimate that true unemployment in Canada is about 2.3 million Canadians, or about 12% of the adjusted labour force.