After rain the good weather. This proverb describes the situation of Canada’s economy well: after a drop in GDP of 5.2% in 2020 due to the health crisis, the country recorded a growth of 4.6% last year. “The recession due to the pandemic was severe and sudden, but the recovery was very rapid. At the end of 2021, real GDP returned to its 2019 level,” said Steven Ambler, associate professor of economics at the University of Quebec to Montreal.
For 2022, the signals are also green. Economists at the National Bank of Canada forecast growth of 3.6%. However, this figure was revised downwards at the start of the year, since initial projections were for an increase of more than 4%. But the sharp rise in prices in recent months – the highest since 1991 – has forced the Central Bank to raise interest rates. A first since the year 2000! The monetary authorities are expecting permanently high prices this year due to geopolitical tensions causing commodity prices to soar. What to fear a new recession? Not really… “Economic growth is in very good momentum. Canada is well positioned in the medium to long term, although there are some short-term tensions, including inflation. And, unlike the Europe, the oil shock is not negative since the country is a net exporter of hydrocarbons,” explains Sébastien Lavoie, chief economist at Laurentian Bank.
Toronto, the country’s economic powerhouse
Certainly, sectors such as real estate could slow down. And consumers are being more selective in their purchases, despite abundant savings accumulated during the pandemic. On the other hand, other markets should continue to rise. Evidenced by the data, in Toronto, Ontario – the province is the economic engine of the country, contributing nearly 40% of GDP. This is also evidenced by the video game industry in Montreal, in the province of Quebec, which generates approximately 20% of the wealth produced in Canada. Finally, the hydrocarbons sector, in Alberta in particular, and the information technology sector in Vancouver, in the province of British Columbia, bear witness to this.
“Although there are inflationary threats and the Central Bank is forced to play a tightrope on its future rate hikes and in its communication, the situation is quite reassuring. High energy prices favor regions like Alberta and Newfoundland, whose economies had been the most affected during the pandemic”, abounds Steven Ambler. Result of this rather favorable situation? Canada recorded record exports in March, at 63.6 billion dollars (47 billion euros) and a trade surplus of 2.5 billion dollars (1.85 billion euros).
Despite inflationary pressures and the monetary tightening initiated by the Central Bank – which should continue this year to contain the rise in prices – Canada has an extremely dynamic labor market. In fact, the unemployment rate in all the provinces reached its historic low at the start of the year, around 5%. According to Statistics Canada, the number of vacancies stood at 826,500 in February. While this number has fallen from the peak of 988,300 reached in September 2021, it still jumped 61.2% compared to the first quarter of 2020, just before the pandemic! If such job creations may seem positive, they actually represent a brake on the development of companies, which have difficulty finding candidates.
A finding confirmed by the quarterly survey conducted at the beginning of the year by the Central Bank, and mentioned in a speech by its Deputy Governor, Toni Gravelle, on May 12, at the congress of the Association of Quebec Economists: “The labor shortages are still widespread and many companies are having difficulty filling their vacancies. This is especially the case in Quebec. Job creation has been robust since last fall in the Belle Province and the unemployment rate is now at an all-time low of 3.9%.
Labor shortage in all sectors
Beyond the French-speaking province, it is indeed the country as a whole that is affected by the lack of available talent. “The situation is problematic, because the labor shortage is true in all sectors,” observes Yannick Paradis, sales director of Talent.com in Canada, the second platform for connecting employers and employees in the country. in terms of number of monthly visitors. According to him, “it is the employees who dominate the labor market”. And Sébastien Lavoie underlines: “The problem linked to recruitment difficulties is even more important for local companies than that of the bottlenecks which destabilize production chains and logistics at the global level…”
In this tense context, employers compete to attract candidates by offering attractive salaries, very often above the legal minimums. “Since the pandemic, we have lacked delivery people, workers, drivers and cashiers. However, in these sectors, the most important criterion is the salary”, confirms Yannick Paradis. As for white-collar workers, it is especially in commercial activities that employers are the most demanding – and the most spending – according to data from Talent.com.
Other sectors are experiencing slightly less strained situations, notably information technology and computing (in particular developer and data analyst positions).
More than ever, Canada therefore remains an Eldorado for those who want to emigrate and change their lives. Especially since the country relies heavily on immigration to meet its labor needs. A contrast with the European Union!
*1$CAD = 0.74€