Unemployment of Canada Essay

The current economic trends of Canada have left everyone wondering what has happened to its economic competitiveness. According to the World Economic Forum, Canada's economic rankings dropped from 13th spot to 14th spot in 2017 (Stackhouse). Additionally, Canada's' macroeconomic environment has been struggling to maintain conditions for economic growth. As such, Canada's economic growth has slowed down to 3.0% in 2017 and has reached a low of 1.8% in 2018 (Alexander). To make the matter worse, the Economic Outlook predicts that economic growth is unlikely to bounce back in 2019 (Alexander). Canada's economy is facing headwinds because of the high unemployment rates in the country.

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The unemployment rate in Canada has always been higher compared to Europe and the U.S. The unemployment rates in Canada originate in the mid-1960s when the average of the employed persons lowered compared to the labor force supplied. Since then, Canada's unemployment rates have stagnated between 3-5% ("Canada Unemployment Rate"). In 1975, the employment rates grew but it was undermined by the increased labor force which further escalated the average rates of employment. In 2017, the average unemployment rate in Canada was 6.4%. Today, the unemployment rate in Canada stands a high of 5.7% in 2019 ("Canada Unemployment Rate"). The average rate of unemployment remains high despite the efforts of the government to create new jobs because, as new jobs are created, the labor force in Canada also increases.

The unemployment rate in Canada is a major cause of the slowing growth of its economy. According to macroeconomic theory, a spike in unemployment is cyclical and results in a production decline and economic activities (Alexander). For instance, the unemployment rate is forcing the Canadian government to spend more than its income. The high number of unemployed Canadians is forcing the government to invest more in aid programs like food and free medical healthcare in order to support its people. However, the country is not able to collect an equal amount of its expenditure from income taxes. As such, Canada is forced to borrow money, which increases the debt burden. High debts eventually affect the economic activities of Canada by escalating the inflation rate, which influences the environment for doing business in the country.

Another consequence of unemployment in Canada is that Companies and business pays a heavy price for the unemployment rates. The unemployment rates influence the government's decision to tax more money from Companies and business in order to increase their income (Benge). The high taxes on Companies are pushing away investors and, eventually, heighten the unemployment rate. For example, Companies are forced to hire fewer workers in order to cut their expenditures. Additionally, trade in Canada has depreciated because people cannot afford to buy some products produced by Companies.

The unemployment rate in Canada is caused by higher rates of immigration. Despite immigration bans in Europe and U.S. Canada remains steadfast in welcoming immigrants. Today, about 21.9% of Canada's population is foreign born (Kaliski). Although immigration has a positive impact on the economic growth of Canada, the immigration rates are resulting in a large labor force which cannot be absorbed by the slow economic growth. The supply of labor force in Canada has reduced high demand for labor and thus resulting in low wages. The low income is influencing the economic growth of Canada by reducing consumer's expenditure, which in turn affects business in Canada. Additionally, low income is leading to poverty, poor housing, and limiting people to access better healthcare

Additionally, the unemployment rate in Canada results in people sucking from the economy instead of contributing to the economy. Due to high unemployment rates in Canada, the government has created and unemployment insurance aimed at compensating the unemployed persons in Canada (Kaliski). Although the insurance program is beneficial to Canadian people, the program is affecting the economic growth of Canada. Each month, thousands of Canadians are draining Canada's economy by receiving money from the insurance. Canada is using its resources to pay for labor which has not been provided (Kaliski). As a result, the government is forced to increase the interest rates and taxes which eventually affect the overall economy of the country.

Consequently, the unemployment rate in Canada has been escalated by racial discrimination in offering jobs. Most of Canada Companies and business organizations look for persons with Canadian work experience. The system of employment is conducted with discrimination which affects the non-Canadians. As a result, many immigrants are unemployed and this is a problem because the number of immigrants is increasing each year. From 2016 statistics, the unemployment rate was higher in people of color compared to Canadian citizens. The Arabs unemployment rate was 13.5%, while the black unemployment rate stood at 12.5% (Kaliski). Additionally, gender bias in employment opportunities is common in Canada because the women unemployment rate is higher compared to that of men.

Unemployment rates in Canada are an economic problem that demands immediate solutions. One of the solutions to the unemployment rates in Canada is to implement monetary policies which improve the environment of doing business. For example, the government should reduce tax rates taxed to Companies and business organizations. By reducing the taxes, Companies will employ more workers and raise their wages (Benge). The policy would create numerous opportunities for the unemployed workforce in Canada thus promoting economic growth. Additionally, the government should enact policies that lower the interest rates on loans. Lowering interest rates would allow Canadians to borrow money and start a new business (Benge). The growth of the small businesses would increase the government's income and reduce overdependence thus promoting overall economic growth.

Also, Canada can reduce unemployment rates by reducing the number of immigrants. Canada should look at the bigger picture of the negative impact of immigrants, which is causing a large supply of unwanted labor force (Platt). Canada should enact policies that control the number of immigrants entering and settling in the country. By lowering the number of immigrants, the supply of labor force will reduce and in turn increase the demand for employment opportunities. As such, most people will be employed and have personal income, which will reduce overdependence on the government's aid, thus promoting a healthy environment for economic growth.

Canada's economy is facing headwinds because of the high unemployment rates in the country. The country's unemployment rate is at 5.4% high. The unemployment rate is slowing down the economy by causing overdependence on the government, increasing inflation rate, high taxes, and interests on loans. The unemployment rates are caused by high immigration rates, racial discrimination during employment, and unemployment insurance. To solve the unemployment problem in Canada, the government should enact monetary policies that promote an environment conducive for economic growth. It is also recommended that Canada controls the number the immigration rate by limiting the number of immigrants entering the country. The solutions will help to reduce the supply of labor and increase the number of employment opportunities.

Works cited

"Canada Unemployment Rate". Tradingeconomics.Com, 2019, https://tradingeconomics.com/canada/unemployment-rate. Accessed 10 June 2019.

Alexander, Craig. "Canada: After A Shake, Rattle, And Stall The Economy Is Poised For Modest Growth". Deloitte Insights, 2019, https://www2.deloitte.com/insights/us/en/economy/americas/canada-economic-outlook.html. Accessed 10 June 2019.

Benge, Vicki. "The Effects Of Monetary Policy". Bizfluent, 2017, https://bizfluent.com/13635957/the-effects-of-monetary-policy. Accessed 10 June 2019.

Kaliski, S. F. "Real and insurance-induced unemployment in Canada." The Canadian Journal of Economics/Revue Canadienne d'Economique 8.4 (1975): 600-603.

Platt, Brian. "Record Opposition Among Canadians To Taking In More Immigrants, But Too Soon To Call It A Trend, Pollster Says". National Post, 2018, https://nationalpost.com/news/politics/survey-shows-spike-in-opposition-to-higher-immigration-in-canada-but-too-soon-to-call-it-a-trend. Accessed 10 June 2019.

Stackhouse, John. "What Happened To Canada'S Economic Competitiveness?". World Economic Forum, 2017, https://www.weforum.org/agenda/2017/10/royal-bank-canada-economic-competitiveness/. Accessed 10 June 2019.