Labour market losing slack, bank says.

New work well paid, full time

OTTAWA A top official of the Bank of Canada played up the bank’s “low, stable and predictable inflation” policy on Thursday, while dismissing the “myth” that recent job creation has been at the cost of “highpaying, full-time” positions.

Tiff Macklem, in a speech to the Winnipeg Chamber of Commerce, also noted that “much of the slack in the labour market has been taken up,” and he reiterated the central bank’s stand that interest rates will eventually be going up.

“Some commentators have suggested that, while the Canadian economy has created more jobs, fewer manufacturing jobs and more service sector jobs have meant fewer high-paying full-time jobs. True, the share of service sector jobs has risen while manufacturing has declined,” Macklem said. “But the rest of the argument is myth.”

“Since the trough, the vast majority of the new jobs created are full-time and in the private sector. And more than 90 per cent of them are in industries that pay average or above-average wages.

“Much of the slack in the labour market has been taken up, and firms are increasingly facing difficulty in finding suitable labour. Nevertheless, some slack remains and can be expected to persist in the near term,” he said.

“But looking ahead, as the slack is taken up and demographic trends slow the growth of the labour force, continued labour-market health will depend increasingly on reducing barriers to work, connecting workers with jobs, and facilitating a more mobile and more productive workforce.”

Macklem took the opportunity in Thursday’s speech to reiterate the Bank of Canada’s existing rate statement.

“To the extent that the economic expansion continues and the excess supply in the economy is gradually absorbed, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving the two per cent inflation target over the medium term.”