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

OTTAWA — 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.”

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.”

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

COVID-19. (Image courtesy CDC)
Red Deer hits 304 active COVID-19 cases

Six new deaths were reported in Alberta

Clearview Public Schools had slight enrolment increase in September. (Image from Facebook)
Positive COVID-19 test reported at Stettler high school

An individual who was at Wm. E. Hay Stettler Secondary Campus has… Continue reading

(Advocate file photo).
Woman ‘beyond frustrated’ by Red Deer College program’s volunteer requirements

Teddie Briggs says she was “beyond frustrated” after learning Red Deer College’s… Continue reading

Hugh Danielson and Brayden Watts, of Red Deer are trying to spread the word about a new innovation for wheelchairs that they think will be especially helpful during the COVID-19 pandemic. (Photo courtesy of Brayden Watts)
Red Deer company lands exclusive patent rights to wheelchair extension

By some small miracle, Hugh Danielson and Brayden Watts stumbled upon a… Continue reading

A nurse gets a swab ready at a temporary COVID-19 test clinic in Montreal, on Friday, May 15, 2020. Health Canada has reversed course on home test kits for COVID-19, saying it will now review applications for such devices. THE CANADIAN PRESS/Paul Chiasson
Employee at Bethany CollegeSide in Red Deer tests positive for COVID-19

An employee at a Red Deer continuing care facility has tested positive… Continue reading

Teresa Kutynec, Red Deer Christmas Bureau president, dressed up as Mrs. Claus during the Charity Checkstop on Saturday. The event supports four nonprofit organizations: the Christmas Bureau, Mothers Against Drunk Driving, Red Deer Food Bank and Women’s Outreach Centre. (Photo by Sean McIntosh/Advocate staff)
WATCH: Charity Checkstop raises money for nonprofit organizations

Red Deerians supported four local nonprofit organizations without even having to leave… Continue reading

The commemorative plaque is seen on the outside wall at the Polytechnique in Montreal, on Friday, Dec. 4, 2020. Sunday will mark the 31st anniversary of the murder of 14 women in an antifeminist attack at Ecole Polytechnique on December 6, 1989. THE CANADIAN PRESS/Paul Chiasson
Scaled-back, virtual ceremonies to mark 31st anniversary of Polytechnique killings

MONTREAL, France — The anniversary of the attack that cut short the… Continue reading

A man wears a face mask as he skateboards along a street in Montreal, Saturday, Dec. 5, 2020, as the COVID-19 pandemic continues in Canada and around the world. THE CANADIAN PRESS/Graham Hughes
COVID-19 cases hit new records as Tam urges perseverance, promises vaccine on the way

Canada’s top doctor urged cautious optimism — and a healthy dose of… Continue reading

Asymptomatic testing will now be available for "priority groups" who are most likely to spread the COVID-19 virus to vulnerable or at-risk populations. File photo by THE CANADIAN PRESS
Manitoba judge rules church can’t hold drive-in services forbidden by health order

WINNIPEG — A Manitoba judge has rejected a church’s request to hold… Continue reading

Homeowners Cora and Alec Dion pose in the basement of their home in Fort McMurray, Alta., on May 8, 2020. More than seven months ago, the Dions were forced to flee Fort McMurray for the second time in four years as a spring flood threatened their home. THE CANADIAN PRESS/Greg Halinda
Fort McMurray residents still cleaning, considering options after spring flooding

‘It’s worse than just having water, because it’s ice mixed in with the water’

Public Services and Procurement Minister Anita Anand responds to a question during a news conference in Ottawa, Monday, Oct. 26, 2020. Anand says as soon as she knows when the first dose of a COVID-19 vaccine will arrive on Canadian soil, she will share that information with the country. THE CANADIAN PRESS/Adrian Wyld
Negotiating contracts for vaccines in development needed flexibility: Anand

Health Canada officials are days, maybe even hours, away from approving the COVID-19 vaccine

Speaker of the House of Commons Anthony Rota rises in the House of Commons, Wednesday, May 13, 2020 in Ottawa. nbsp; THE CANADIAN PRESS/Adrian Wyld
Speaker Rota reflects on first year presiding over unprecedented virtual Parliament

‘It’s not what I signed up for but it is what it is’

In this file photo, a lotto Max ticket is shown in Toronto on Monday Feb. 26, 2018. (By THE CANADIAN PRESS)
No winning ticket for Friday night’s $17 million Lotto Max draw

TORONTO — No winning ticket was sold for the $17 million jackpot… Continue reading

Harley Hay
Hay’s Daze: Not used to seeing giraffe with a mask

My bad. Now there’s an expression that used to stick in my… Continue reading

Most Read