Inflation and Unemployment in Canada Essay

The unemployment rates in Canada peaked during the recession period in the years 2008 to 2009 and stood at 8.3% due to cyclical events in the market (Wray, 2013). However, its stable financial sector and fiscal position help it maintain top ranks among the world leaders following these unemployment rates as they relied on commodity exports to China. While other countries have made notable progress, Canada is still lagging behind as a result of an obstructive shock of the commodity in 2014 and whose effects lasted to the years 2016 (Zmitrowicz, & Khan, 2014). The unemployment rates in the country remain at a staging 7% presently a little improvement from historic days when the rates of job creation and the growth of the workforce differed inherently.

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The rates of inflation in the country has also heightened over the initial forecast of 1.5% to 1.7%, and the price pressures are continuing to build up. Amidst all this, the Bank of Canada continues to expand, and the governor has maintained the interest rates at an all-time low ( Simard, Hanson,& Holder, 2015). There's need to hike the interest rates to make lending more expensive and quieten inflation rates. In the year 2017, in November, the price of gasoline went up by a staging 19% as compared to the previous year. The consumer price index which is used to define in inflation rates also increased to 2.1% and that attributed to a rise in prices of food and gas. In the same month, the cost of fresh vegetables was more expensive compared to a year earlier. It went up by 3.8%.

There was brief relief from the high cost of living and goods this January after the annual inflation rates cooled and consumers purchased gas and foods for less. According to statistics, the yearly inflation rates stood at1.7%. It is a bit of an improvement from 1.9% that was recorded in December but still above predicted rates of1.4% by economists. While different economists hold divergent views on whether the bank of Canada should hike rates, there are some that believe the economy is still standing firm enough to stand against moderate hikes. There is no change expected in the bank's policy by the markets. Ontario, which is the most populated province in Canada, experienced increased prices by 1.8 percent whereby consumers paid a lot due to the increase in minimum wage in the region at the beginning of this year.

Consequently, these high inflation rates in Ontario province are reflected when considering unemployment. Ontario and Atlantic provinces have reported the highest unemployment levels in the country which ranges from 16% to 17 percent. In some cities, the rates are worse than the average with some going up to 20%. Of the recorded 17 percent unemployment rates, 11.2% of these are persons with a bachelor's degree and 16% of high school graduates ( Brandt, Scott, Doyle,& Ballagh, 2014).The statistics are a sober reflection of the state of the economy.

The first steps in countering unemployment issues are to classify the causes as either cyclical or frictional whereby individuals spend a lot of time searching for jobs suited for their skills to structure the industries accordingly. The notion of engaging unpaid labor regarding internships that's been ruled against time and again should no longer stand. Young graduates should not work for free but instead, move towards entrepreneurship. The application of employment insurance to assist the unemployed is also working.

References

Brandt, M. G., Scott, G. M., Doyle, P. C., & Ballagh, R. H. (2014). Otolaryngology-Head and Neck Surgeon unemployment in Canada: a cross-sectional survey of graduating Otolaryngology-Head and Neck Surgery residents.

Journal of Otolaryngology-Head & Neck Surgery, 43(1), 37.Canada: inflation control must consider Financial Stability Concerns, says Governor Stephen S Poloz.(2015,February 25). Mena report. Retrieved April 3, 2018, from http://www.highbeam.com/doc/IG-403113252.html?refid=easy hf

Kozak, R (1991, February 23). The new tax in Canada feeds jump in inflation. Chicago sun-times. Retrieved April 3, 2018, from http://www.highbeam.com/doc/IP2-4041730.html?refid=easy_hf

Simard, G., Hanson, D., & Holder, G. (2015). Prospects for deleting the cosmic microwave background for studying inflation. The Astrophysical Journal, 807(2), 166.

Wray N. (2013, October 1) Study: Why youth unemployment in Canada is even worse than we thought workopolis.com. Retrieved from https://careers.workopolis.com/advice/study-why-youth-unemployment-in-canada-is-here-to-stay/

Zmitrowicz, K., & Khan, M. (2014). Beyond the Unemployment Rate: Assessing Canadian and US Labour Markets Since the Great Recession. Bank of Canada Review, 2014(Spring), 42-53.