Evidence of meeting #30 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was data.
A video is available from Parliament.
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Library of Parliament
At the regional or at the professional level for various occupations—
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
You also looked for an indicator that wages within certain sectors and certain skill sets are changing?
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Library of Parliament
Changing.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
And that is an indicator that we typically see if there is a—let me just follow this through—skills shortage, a labour shortage in a particular industry, or in a particular sector. One of the indicators you would look for, economists would look for, is an increase in wages, because of the supply and demand factor, and that would be one of the signs you're looking for to indicate a labour shortage either at a regional level geographically, or at a skills level within a certain industry. Is that right?
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Library of Parliament
Absolutely.
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Library of Parliament
No.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
I understand what you're saying in terms of attempting to understand the positive and negative impacts of a specific program, like temporary foreign workers, but without that background, without the understanding of what's happening in the labour market at that level, as the governor of the bank said earlier, we'd always like more data.
How critical is having that data to a government implementing a program such as the temporary foreign worker program, as employers are coming to the federal government saying they need this program to augment because they simply have a labour shortage available?
How important is the data in order to guide the effectiveness of a program like temporary foreign workers?
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Library of Parliament
We work with data and we do our analysis based on data. We cannot do analysis based on the assertions by employers associations. To us, that's not solid evidence.
Any program in order be designed well needs to have the data to determine whether there's a labour shortage. In fact, we have a lot of data on the labour supply in Canada, which the government actually uses to determine regional unemployment rates for the management of the EI program, but we do not collect any information on labour demand, which is really critical in this case because once you have that, then the program can be targeted to regions and professions that show that kind of a shortage.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Where did you get the information for your labour market assessment, that approximately one in four new jobs in 2012 went to temporary foreign workers? How do you—
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Library of Parliament
It's based on the data that existed in terms of the number of jobs that were created during that period, and the number of temporary foreign workers that existed at the time. It's a very crude kind of estimate. It's very hard to develop that and look at the estimate of the temporary foreign workers program on their unemployment rate, or their rate of employment, for example.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Back to that natural supply and demand that we would see between a shortage in workers and an increase in wages being offered. That's a typical thing we would see in a free-market economy. C.D. Howe, that left-wing think tank, has looked at this and raised the question about whether a program such as this, if misapplied in particular, could have a suppressive effect on wages for Canadians who are not at all linked to a temporary foreign worker program, but are impacted by that.
Has your office looked to do this? Has it undertaken such research?
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Library of Parliament
We have not done that. As I said—
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Library of Parliament
It is possible to take a look at that and get back to you. Other than having a need to have the data for the labour shortage, we also need detailed data from the government on the temporary foreign workers program.
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Library of Parliament
We don't have that. We have not requested that, but we can.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
We'll make the request, too, and see if our combined efforts will actually get us the reality.
In this recent report, you talked about government spending as a restraint “acting as a drag on economic activity and job creation going forward.”
How much of an impact...? I'll leave it at that.
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Library of Parliament
As we noted in the report, we looked at all the measures introduced by the government since budget 2012, both the stimulative measures and the restrained measures, and it combined the two. We have evaluated the impact of those, and based on that, there is an impact of about 0.5% at the level of GDP, and about 46,000 jobs. Again, it's just to stress that this does not mean we are going to see a decline in employment. This is relative to what would have been the case, essentially, had they not introduced those measures.
Conservative
Conservative
Andrew Saxton Conservative North Vancouver, BC
Thank you to our witnesses for being here today.
When we conducted our pre-budget consultations across the country, we heard from employers across the country about their difficulties in finding skilled labour. There definitely were regions that had more difficulty than others, regions like Alberta, Saskatchewan, and Newfoundland, but it was generally across the country and across the board that employers told us over and over again that they had difficulty finding skilled labour.
I want to ask whether you have studied the skills gap here in Canada.
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Library of Parliament
As I mentioned in the labour report that we did, we looked at the skills gap based on the Beveridge curve that economists use. It's the relationship between the vacancy rate and unemployment rate, and as I said, the data does not support that.
I realize that some employers associations have been saying that, but even a survey by the Bank of Canada, where they talked to all the different businesses across the country, probably does not show any concern or an increase in concern by businesses in terms of hiring and the labour shortage. We have to work with numbers and the data. We cannot base our analysis on what employers associations say.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Still, it's quite surprising how your data is so different from what we heard from people who are actually in the market trying to find skilled labour. Maybe there's data that you're not looking at or that you haven't included in your report. Obviously, there's a difference in opinion here. It's not just opinion, it's a difference in what people are finding and saying versus what you found in your report. I would encourage you to look at more data, because it's surprising to me that your report did not confirm what we found when we did our pre-budget consultations.
Furthermore, I want to follow up on your last appearance before the committee. You've noted that the “prospects for the Canadian economy are generally more positive, as a result of buoyant international economic growth and sustained domestic demand.” Moreover, the G-20 has recently committed to increasing global GDP over the course of the next few years by 2%, by elimination of trade barriers.
With the international economic outlook improving, especially in the United States, can you expand on how Canadian exporters stand to gain from increased demand from lower trade barriers?
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Library of Parliament
Certainly, anytime you lower any kind of trade barriers of a free trade agreement, this would have a positive impact on the Canadian economy in terms of the level of activity and employment. Then one has to look at the details of that and see exactly how that is working out, but in principle, yes, of course.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Since taking over the government in 2006, our government has negotiated free trade agreements involving over 40 different countries, most recently with South Korea and with the European Union. Would you say that as a result of these free trade agreements that have been put in place in the last eight years that Canadian exporters stand to gain, both in the numbers of jobs that would be created as well as economic growth?
