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

An aerial shot of Cedar Valley Lodge this past August, LNG Canada’s newest accommodation for workers. This is where several employees are isolating after a COVID-19 outbreak was declared on Nov. 19. (Photo courtesy of LNG Canada)
52 positive COVID-19 cases now associated with LNG Canada site outbreak

Eight cases still active, 44 considered recovered

Terrace RCMP are searching for Kenton David Fast, who is unlawfully at large. (Terrace RCMP Photo)
Terrace RCMP searching for man unlawfully at large

Kenton David Fast was last seen in Terrace on Dec. 1, 2020

Traffic controllers Hayley Stevens (left) and Hector Blackwater (right) have been recognized by drivers for their friendly waves, smiles and dance moves while working south of Terrace. (Ben Bogstie/Terrace Standard)
Skeena Voices | Positivity is just part of being a flagger

Hector Blackwater and Hayley Stevens have been drawing attention on social media

Skeena MLA Ellis Ross has been named critic for Environment and Climate Change Strategy for the BC Liberals. (Peter Versteege photo)
Skeena MLA Ellis Ross named critic for Environment and Climate Change Strategy

Previously, Ross was the critic for LNG, Resource Opportunities, and Responsible Development

A B.C. Ambulance Service paramedic wearing a face mask to curb the spread of COVID-19 moves a stretcher outside an ambulance at Royal Columbia Hospital, in New Westminster, B.C., on Sunday, November 29, 2020. THE CANADIAN PRESS/Darryl Dyck
B.C. records deadliest weekend of COVID-19 pandemic with 46 deaths; more than 2,300 cases

Provincial health officer Dr. Bonnie Henry provides COVID-19 update

THE CANADIAN PRESS/Nathan Denette
B.C. researchers launch study to test kids, young adults for COVID-19 antibodies

Kids and youth can often be asymptomatic carriers of the novel coronavirus

A sign is seen this past summer outside the Yunesit’in Government office west of Williams Lake reminding visitors and members to stay safe amid the COVID-19 pandemic. (Rebecca Dyok photo)
B.C. First Nation leaders await privacy commissioner decision on COVID-19 information

Release of life-saving data cannot wait, says coalition of First Nations

MLA Jennifer Whiteside is B.C.’s new minister of education. She is speaking out against Chilliwack school trustee Barry Neufeld and asking him to resign. (Black Press)
New education minister calls on Chilliwack trustee to resign

Whiteside echoes former minister’s promise to look at options to remove Barry Neufeld

Peter Beckett. ~ File photo
Supreme Court of Canada to decide if it will hear appeal in 2010 wife murder trial

Peter Beckett has stood trial twice for murder in connection with the death of his wife, Laura Letts-Beckett

Tabor Home in Abbotsford. (Ben Lypka/Abbotsford News)
B.C.’s largest COVID-19 care-home outbreak records 19 deaths, 147 cases

Tabor Home in Abbotsford has been battling outbreak since Nov. 4

Ash and Lisa Van carry a freshly cut Christmas tree while wearing personal protective masks at a Christmas Tree Farm in Egbert, Ontario, Sunday, Nov. 29, 2020 THE CANADIAN PRESS/ Cole Burston
‘Everyone wants a tree and they want it now’: Christmas tree sales on pace for record

Anticipated demand for Christmas trees has sparked a rush by some to purchase more trees wholesale

Business groups have been advocating for years that local approvals for construction in B.C. are too long and restricted, and that B.C.’s outdates sales tax deter business investment. (Black Press Media file photo)
B.C. residents worried about COVID-19 deficit, business survey finds

Respondents support faster local approvals, value added tax

Most Read