Household debt rises slightly in Q2

OTTAWA • The amount households owe, relative to their income, crept higher in the second quarter, even as mortgage borrowing continued to slow, Statistics Canada said.

The agency said Friday credit market debt as a proportion of household disposable income increased to 169.1 per cent as growth in debt outpaced income.

In other words, Canadians owed $1.69 in credit market debt for every dollar of household disposable income.

The ratio was up from 168.3 per cent in the first quarter, however it was down from 169.7 per cent in the second quarter last year.

BMO Capital Markets economic analyst Priscilla Thiagamoorthy noted the increase was “well below seasonal norms” and one of the smallest second-quarter increases since 2000.

“Despite edging slightly higher in Q2, the closely watched household debt-toincome ratio appears to have finally turned the corner from all-time highs,” Thiagamoorthy wrote in a brief report.

“The key takeaway here is that borrowing cooled with the housing market as households adjusted to a slew of policy changes including tighter mortgage rules and gradual rate hikes.”

Household debt has been identified as a key vulnerability for the financial system by the Bank of Canada, however the central bank noted earlier this year that the risk has lessened.

On a seasonally adjusted basis, households borrowed $19.6 billion in the quarter, down from $22.2 billion in the previous quarter.

The decrease came as demand for consumer credit increased, but was more than offset by a decline in both mortgage and non-mortgage loans.

The decline in mortgages came as the housing market slowed amid tighter mortgage rules and rising mortgage rates.

Rates for five-year fixed mortgages have been rising as yields on the bond markets, where the banks raise money, have also climbed higher.

Meanwhile, rates charged for variable rate mortgages have also climbed as the Bank of Canada has raised its key interest rate target.

On an unadjusted basis, household credit market debt, which includes consumer credit, and mortgage and non-mortgage loans, totalled $2.16 trillion.

Muslim workers were denied prayer breaks

DENVER • A big U.S. meat packer has agreed to pay $1.5 million to 138 SomaliAmerican Muslim workers who were fired from their jobs at a Colorado plant after they were refused prayer breaks, a federal anti-discrimination agency said Friday.

Cargill Meat Solutions, a division of Minnesota-based agribusiness company Cargill Corp., also agreed to train managers and hourly workers in accommodating Muslim employees’ prayer breaks at its Fort Morgan beef processing plant, the U.S. Equal Employment Opportunity Commission said.

Wichita, Kansas-based Cargill denies wrongdoing but agreed to settle to avoid further litigation, the federal agency said.

The dispute dates back to the firings of the workers in late 2016 after management rescinded policies allowing Muslim employees to take short breaks for prayer.

In 2017, the agency found that the workers had been harassed and discriminated against for protesting the unannounced policy change that denied them opportunities for obligatory prayer. Hundreds of SomaliAmericans work at the plant in Fort Morgan, northeast of Denver.

In a related announcement, a Teamsters union local that was supposed to represent the workers will pay them $153,000 to settle discrimination complaints.

The federal agency said it determined that Teamsters Local Union No. 455, based in Denver and in Fort Morgan, failed to advocate for the Muslim workers in their dispute with Cargill and even harassed them because of their race, religion and national origin.

The workers were duespaying union members.

Union officials denied wrongdoing. But the local unit agreed to pay the workers, undergo training in handling grievances, and publicize employee rights to be free of discrimination based on race or national origin.

“In its capacity as a bargaining representative for its members, labour unions have an obligation to represent their members regardless of race, colour, religion, sex, national origin, age or disability,” Elizabeth Cadle, the federal agency’s regional district director, said in a statement.

Like other U.S. firms that employ Muslim line workers at meat packing and processing plants, Cargill managers must balance religious accommodations with demands of processing meat in an operation that frequently runs 24 hours.

Managing possible disruptions not only slows production but can create safety issues for line workers.

“Providing our employees with religious accommodation is an important part of engaging and supporting our employees, and our policy has remained consistent for more than 10 years,” Cargill Meat Solutions president Brian Sikes said in a statement.

The Council on AmericanIslamic Relations, a Muslim advocacy group, and Qusair Mohamedbhai, a Denver attorney who represented the workers, praised the settlement. Mohamedbhai said in a statement he welcomed “Cargill’s commitment to continue to communicate its long-standing prayer accommodation practices.”