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

(Phil McLachlan/Capital News)
Murder charge laid in February 2020 stabbing death of Smithers man

Michael Egenolf is charged with the second-degree murder of Brodie Cumiskey

Families on the North Coast will benefit from 70 new childcare spaces Ministry of Children and Family Development announced on March 1. Seen here are children from Growing Together Child Care Centre in Surrey. (Photo supplied by Jennifer Rice, MLA for Northcoast)
Northcoast families to benefit from new childcare spaces

62 Childcare spaces in Lax Kw’alaams and 8 in Haida Gwaii are part of Childcare BC New Spaces Fund

Prince Rupert Firefighter Dylan Lawrence, demonstrates the new fire safety nozzles for hoses on March 1, which will allow for increased safety of firefighters at hazard scenes. The nozzles can spray water up to 200 feet and money for the purchase was donated to the department by Pembina. (Photo: K-J Millar/The Northern View)
Pembina donates to Prince Rupert Fire Dept.

New fire equipment will improve safety in Prince Rupert

Island Health chief medical officer Dr. Richard Stanwick receives a first dose of Pfizer vaccine, Dec. 22, 2020. (B.C. government)
COVID-19: B.C. seniors aged 90+ can start to sign up for vaccination on March 8

Long-term care residents protected by shots already given

Rob Germyn of Uncle Robbies Food truck was nominated in two categories of the 2021 Prince Rupert and District Chamber of Commerce Business Excellence Awards. Germyn won the Indigenous Peoples Entrepreneurship Award on Feb. 27. (Photo: K-J Millar/The Northern View)
14 winners at Business Excellence Awards

Prince Rupert and District Chamber of Commerce Business Excellence awards saw 49 finalists

Langley resident Carrie MacKay shared a video showing how stairs are a challenge after spending weeks in hospital battling COVID-19 (Special to Langley Advance Times)
VIDEO: Stairs a challenge for B.C. woman who chronicled COVID-19 battle

‘I can now walk for six (to) 10 minutes a day’

A copy of the book “And to Think That I Saw It on Mulberry Street,” by Dr. Seuss, rests in a chair, Monday, March 1, 2021, in Walpole, Mass. Dr. Seuss Enterprises, the business that preserves and protects the author and illustrator’s legacy, announced on his birthday, Tuesday, March 2, 2021, that it would cease publication of several children’s titles including “And to Think That I Saw It on Mulberry Street” and “If I Ran the Zoo,” because of insensitive and racist imagery. (AP Photo/Steven Senne)
6 Dr. Seuss books won’t be published for racist images

Books affected include McElligot’s Pool, On Beyond Zebra!, Scrambled Eggs Super! and The Cat’s Quizzer

FILE – Oshawa Generals forward Anthony Cirelli, left, shoots and scores his team’s first goal against Kelowna Rockets goalie Jackson Whistle during second period action at the Memorial Cup final in Quebec City on Sunday, May 31, 2015. THE CANADIAN PRESS/Jacques Boissinot
B.C. government approves plan in principle to allow WHL to resume in the province

League includes Kamloops Blazers, Kelowna Rockets, Prince George Cougars, Vancouver Giants, Victoria Royals

The fundraising effort to purchase 40 hectares west of Cottonwood Lake announced its success this week. Photo: Submitted
Nelson society raises $400K to save regional park from logging project

The Nelson community group has raised $400,000 to purchase 40 hectares of forest

AstraZeneca’s vaccine ready for use at the vaccination centre in Apolda, Germany, Sunday, Feb. 28, 2021. THE CANADIAN PRESS/Michael Reichel/dpa via AP
National panel advises against using Oxford-AstraZeneca’s COVID-19 vaccine on seniors

NACI panel said vaccines from Pfizer and Moderna are preferred for seniors ‘due to suggested superior efficacy’

A public health order has extended the types of health care professionals who can give the COVID-19 vaccine. (Photo courtesy of CHI Franciscan)
‘It’s great that midwives are included’ in rollout of B.C.’s COVID vaccine plan, says college

The order will help the province staff the mass vaccination clinics planned for April

Shipping containers are seen at the Fairview Cove Container Terminal in Halifax on Friday, Aug. 25, 2017. THE CANADIAN PRESS/Andrew Vaughan
Canadian economy contracted 5.4 per cent in 2020, worst year on record

Drop was largely due to shutdowns in the spring as COVID began to spread

The Nanaimo Clippers in action at Frank Crane Arena in early 2020. (News Bulletin file photo)
Nanaimo Clippers for sale, owner says hockey won’t be back to normal any time soon

Wes Mussio says he’s had numerous inquiries about the junior A club already

Provincial health officer Dr. Bonnie Henry updates B.C.’s coronavirus situation, May 8, 2020. (B.C. government photo)
B.C.’s weekend COVID-19 cases: 532 Saturday, 508 Sunday, 438 Monday

Fraser Health still has most, eight more coronavirus deaths

Most Read