Tuesday, February 7, 2023
No Result
View All Result
  • Media
Support Us
Macdonald-Laurier Institute
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
    • Jobs
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy Program
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Energy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Foreign Policy Program
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs Program
  • Projects
    • COVID and after: A mandate for recovery
    • COVID Misery Index
      • Beyond Lockdown
    • Provincial COVID Misery Index
    • Centre for Advancing Canada’s Interests Abroad
      • Dragon at the Door
      • The Eavesdropping Dragon: Huawei
    • An Intellectual Property Strategy for Canada
    • Speak for Ourselves
    • Canada and the Indo-Pacific Initiative
    • DisInfoWatch.org
    • The Transatlantic Program
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Talkin’ in the Free World with Mariam Memarsadeghi
    • Past Projects
      • Justice Report Card
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy Magazine
      • Inside Policy Back Issues
      • Inside Policy Blog
    • Papers
    • Columns
    • Books
    • Commentary
    • Straight Talk
    • Video
    • Multimedia
    • Podcasts
    • Leading Economic Indicator
    • Labour Market Report
    • MLI in the Media
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
    • Jobs
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy Program
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Energy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Foreign Policy Program
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs Program
  • Projects
    • COVID and after: A mandate for recovery
    • COVID Misery Index
      • Beyond Lockdown
    • Provincial COVID Misery Index
    • Centre for Advancing Canada’s Interests Abroad
      • Dragon at the Door
      • The Eavesdropping Dragon: Huawei
    • An Intellectual Property Strategy for Canada
    • Speak for Ourselves
    • Canada and the Indo-Pacific Initiative
    • DisInfoWatch.org
    • The Transatlantic Program
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Talkin’ in the Free World with Mariam Memarsadeghi
    • Past Projects
      • Justice Report Card
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy Magazine
      • Inside Policy Back Issues
      • Inside Policy Blog
    • Papers
    • Columns
    • Books
    • Commentary
    • Straight Talk
    • Video
    • Multimedia
    • Podcasts
    • Leading Economic Indicator
    • Labour Market Report
    • MLI in the Media
No Result
View All Result
Macdonald-Laurier Institute

Rising rates could put labour in the line of fire: Linda Nazareth in the Globe and Mail

February 4, 2022
in Columns, Domestic Policy Program, Economic policy, Experts, In the Media, Issues, Latest News, Library, Linda Nazareth
Reading Time: 4 mins read
A A

Companies are facing a year where they will have to come up with creative ways to deal with the inflation issue and where workers may well be part of the solution, writes Linda Nazareth in the Globe and Mail. 

By Linda Nazareth, February 4 2022

Will higher inflation translate through to a wave of layoffs in 2022? Finding workers – not getting rid of them – has been the bane of companies for the past year, but that might be changing as rising costs translate into rising wage bills as well.

The Bank of Canada and the U.S. Federal Reserve each kicked off their first meetings of the year by making it clear that rate increases were imminent in the coming weeks.

That means higher interest payments for both consumers and businesses and less growth overall. But higher interest rates are one thing; higher rates and a spate of layoffs are another. The fact is, increased inflation (which is the reason rates will rise in the first place) is also putting pressure on the bottom line and it may be that workers are the ones in the line of fire.

The idea that Canada could see job losses may seem far-fetched amid employer woes about finding enough workers at all, but it is already happening elsewhere. Peloton, the early-pandemic exercise-bike darling, put out lower-than-expected earnings earlier this month, along with warnings about how higher costs may force it into paring back its work force. The consumer-goods giant Unilever announced last week that it is cutting 1,500 jobs globally in a bid to create healthier margins and boost its stock prices.

In neither case is inflation the only reason behind the proposed cuts (Peloton has also faced a loss of its cool factor and a TV character having a fatal heart attack after a ride), but it is a major reason why companies are worried. As early as last summer, Unilever was pointing out that even though Ben & Jerry’s ice cream was flying out of the freezer cases, a rise in input costs was squeezing margins and would continue to do so unless they could raise prices.

There have been price hikes across the board, in Canada, the United States, and many other countries. Canada’s inflation rate hit a 30-year high of 4.8 per cent in December, a figure far in excess of the 2.6-per-cent increase in wages seen over the same period. That cuts into Canadians’ purchasing power, which is already setting 2022 up to be a year of labour unrest. Workers across a wide swath of industries are no doubt going to be pointing out the discrepancy between inflation and wage growth to their managers, seeking pay increases to keep their losses in check.

Maybe workers will get those pay hikes. Labour is still in short supply, with the unemployment rate at 5.9 per cent in December (not much higher than where it was prepandemic) and companies scrambling to find workers. At the same time, companies are not going to be thrilled at the thought of higher wage bills, especially when paying more for financing and for a range of inputs from energy through to raw materials.

Unlike the situation four or five decades ago, when inflation and layoffs went hand in hand, the fallout this time around might be more subtle. Perhaps it will take the form of the hiring that does happen, rather than layoffs per se. The pandemic has already intensified what was a push to use technology as a substitute for workers and higher wage costs are only going to make things such as robot-servers look that much more attractive than human ones. Pizza Hut, for example, introduced a fully-automated robot-powered restaurant in Israel this month, with technology taking care of everything from touchscreen ordering to making and boxing the pizza (employees are still used to hand it to customers, but future versions will not be needed for that either). If robots will soon be making our pizza, you can be sure they will be doing more for us too, with smiles on their robot-faces and zero demands for higher salaries.

Robots aside, higher inflation also means that companies will look for ways to keep wage bills in check by changing the way they hire. That might mean more part-timers or gig workers, or moves to any work arrangements that are less expensive than keeping full-time workers on the payroll. It would be a reversal over what we have seen over the past year, when a worker shortage has meant more bargaining power for labour and more favourable conditions in some industries.

It is worth noting, too, that the situation might have been worse if we had not already had a restructuring of the economy that has led to more non-traditional work arrangements and more competition from online retailers. A prepandemic paper put out by the Dallas Federal Reserve in 2019 suggested that between the rise of the gig economy and proliferation of online shopping, inflation was not nearly where it might have been given that unemployment rates were at generational lows. In turn, this has been a factor that kept interest rates low before the pandemic and allowed central banks to lower them even further over the past two years.

That party is over, of course. Central banks will soon be implementing rate hikes, maybe several of them, that in the best case will tame inflation and get everyone back on to an even keel. In the meantime, however, companies are facing a year where they will have to come up with creative ways to deal with the inflation issue and where workers may well be part of the solution.

Linda Nazareth is host of the Work and the Future podcast and senior fellow for economics and population change at the Macdonald-Laurier Institute in Ottawa.

Tags: Domestic Affairsdomestic policyeconomic policyeconomyinflationLinda Nazareth
Previous Post

Olympics Heighten Oppression in China: Anastasia Lin in the The Wall Street Journal

Next Post

A lighter touch is needed for the government’s online harms bill: Von Finckenstein and Menzies in the Globe and Mail

Related Posts

It’s time to leverage Canada’s energy advantage into a geopolitical one, too: Shuvaloy Majumdar in Maclean’s
Columns

For the oil patch, ‘just transition’ is buzzword legislation, not sound economics: Heather Exner-Pirot in the Globe

February 7, 2023
Prioritizing gender identity over sex in prisons endangers female prisoners
Releases

Prioritizing gender identity over sex in prisons endangers female prisoners

February 6, 2023
Greedflation? It’s a government thing: Philip Cross in the Financial Post
Columns

Jagmeet Singh uses confusion about private care to support the status quo: Shawn Whatley in the National Post

February 6, 2023
Next Post
Stop messing with free speech on the internet: Peter Menzies in the Financial Post

A lighter touch is needed for the government’s online harms bill: Von Finckenstein and Menzies in the Globe and Mail

Macdonald-Laurier Institute

323 Chapel Street, Suite #300
Ottawa, Ontario
K1N 7Z2 Canada

613.482.8327

info@macdonaldlaurier.ca
MLI directory

Follow us on

Newsletter Signup

First Name
Last Name
Email Address

Support Us

Support the Macdonald-Laurier Institute to help ensure that Canada is one of the best governed countries in the world. Click below to learn more or become a sponsor.

Support Us

Inside Policy Magazine

  • Current Issue
  • Back Issues
  • Advertising
  • Inside Policy Blog
  • Privacy Policy

© 2021 Macdonald-Laurier Institute. All Rights reserved.

No Result
View All Result
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
    • Jobs
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy Program
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Energy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Foreign Policy Program
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs Program
  • Projects
    • COVID and after: A mandate for recovery
    • COVID Misery Index
      • Beyond Lockdown
    • Provincial COVID Misery Index
    • Centre for Advancing Canada’s Interests Abroad
      • Dragon at the Door
      • The Eavesdropping Dragon: Huawei
    • An Intellectual Property Strategy for Canada
    • Speak for Ourselves
    • Canada and the Indo-Pacific Initiative
    • DisInfoWatch.org
    • The Transatlantic Program
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Talkin’ in the Free World with Mariam Memarsadeghi
    • Past Projects
      • Justice Report Card
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy Magazine
      • Inside Policy Back Issues
      • Inside Policy Blog
    • Papers
    • Columns
    • Books
    • Commentary
    • Straight Talk
    • Video
    • Multimedia
    • Podcasts
    • Leading Economic Indicator
    • Labour Market Report
    • MLI in the Media

© 2021 Macdonald-Laurier Institute. All Rights reserved.

IDEAS CHANGE THE WORLD!Have the latest Canadian thought leadership delivered straight to your inbox.
First Name
Last Name
Email address

No thanks, I’m not interested.

This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies.

Privacy Preference Center

Consent Management

Necessary

Advertising

Analytics

Other