Getting government out of the way not working for jobs

The successful provincial Liberal campaign of 2013 was politically brilliant but policy stupid. We had another glimpse of that last week as a roomful of lawyers and experts appeared before the Public Utilities and Review Board to act out a melodrama called “Breaking the Nova Scotia Power monopoly.” The title of the show, which has been burning up time and money for two years now, comes from the Liberal campaign platform. In the real world of power utility regulation “Much Ado about (almost) nothing” would be a more apt title.

The likely outcome of all of the activity will be the enabling of consumers to buy green electricity from a supplier other than NSP at a rate close to the 15 cents per kilowatt hour NSP charges. This could turn out to be a good thing if it leads to more green power and less electricity from fossil fuels, but it will hardly put a dent in NSP’s (natural) monopoly. But at least, with the UARB and the consumer advocate on hand, it’s unlikely the monopoly-busting charade will cause serious harm to ratepayers.

The same hopeful outcome can’t be predicted for the other big Liberal promise that made up two-thirds of the three-punch knockout of the NDP – no more handouts to corporations. (The third biggie was the $65 million increase to school boards without much in the way of accountability guidelines- but that’s another story).

That crowd-pleasing campaign promise on corporate handouts hasn’t quite materialized. Corporations, especially banks and financial service outfits, are still benefitting from government subsidies. Unfortunately, “No more handouts” has morphed into doing nothing, expressed in the mantra Stephen McNeil uses to ward off critics – “get the government out of the way and let the private sector grow the economy.” After two-plus years of that policy/non-policy, it’s fair to ask, paraphrasing Sarah Palin, “how’s that gettin’ out of the way, private sector growth thing workin’ out for ya? “

Well, the employment and wage numbers for 2015 are in and the answer is “not so hot, the private sector dropped the ball” Many fewer people are working, and they are working for lower pay. On both counts, Nova Scotia has the dubious distinction of leading the country. And although the rhetoric has been about reducing the size of government, it is private sector employment that’s been shrinking.

Thousands of jobs gone

The December labour force survey from Statistics Canada revealed that while the number of employed in Canada increased by 23,000, 3,000 jobs were lost in Nova Scotia. This left the province’s average monthly employment for all of 2015 at 448,100, up 500 from the 2014 monthly average but down 9,400 from 2012, our best year ever. [1] In recent days, the news has been dominated by reports of job losses in Alberta and the oil-producing provinces. But despite that, Nova Scotia’s 2012-2015 drop of 2.1% in average monthly employment is the worst employment record of any province. New Brunswick (-0.4%) and Newfoundland and Labrador (-1.9%) also lost jobs over the period, but every other province, including Alberta, saw increases, contributing to national employment growth of 2.8%.

So, getting the government out of the way has not led to overall labour force growth. Indeed, rather than leading growth, the private sector is leading the opposite. All of the 9,400 jobs lost since 2012, have been in the private sector. The number of private sector employees in Nova Scotia has dropped by 10,300 since 2012. After factoring in a small increase in self-employment, we are left with shrinkage in private sector employment since 2012 of about 3%. Slightly offsetting this has been a small increase in public sector jobs.

Average monthly employment (000)

                                                                2012         2015     Difference

Private Sector Employment                 288.7         278.4     – 10.3

Private sector self employment             58.0           58.6       +0.6

Public sector employment                    110.8           111.1       +0.3

Total                                                          457.5          448.1      – 9.4

The small 300 increase in public sector employment – which includes federal, provincial and municipal jobs is concentrated in the education and health care and social assistance sectors . Those sectors (teachers, nurses, doctors, paramedics, community care workers etc.) account for 62% of public sector employment increased and they increased by 1,900 over the period, off-setting a loss of 1,400 in the rest of the public sector.

In fairness to the Liberals over half of the drop in employment occurred in 2013 and the NDP was in power for most of that year. But over the last two years – coinciding with the Liberals making a virtue of doing nothing but relying on the private sector – job losses in the private sector have continued, 4,000 in all. The main losses have been in the goods-producing sector. The whole sector shed 3,700 jobs, mainly from construction (1,100) and manufacturing (1,900).

FIRE up, film down

The picture was not as bleak in the services producing sector, which accounts for over 80% of employment in Nova Scotia. But when the growth in public sector employment in education, health and social services is excluded from the calculation, the overall services producing sector was also down by 3,700 between 2013 and 2015. The biggest drop was in retail trade. There were 3,100 fewer Nova Scotians working as retail salespersons, clerks and cashiers, home support workers, butchers, bakers and service station attendants. There were both gains and losses in other services-producing industries, but two stand out, both sectors in which the government did not get out of the way.

One of the few areas in which employment increased is “finance, insurance, real estate and leasing” or what is sometimes known as FIRE. Under previous governments, FIRE has been a darling of Nova Scotia Business Inc. This continues to be the case under the Liberals, with NSBI entering payroll rebate deals in 2015 with the likes of RBC, Butterfield Bank, Conifer Financial Services and Global Relay. Last year there were 2,500 more Nova Scotians working in banking, securities, financial , insurance, real estate and leasing than there were in 2013.[2]

So having the government in the way seems to have paid off for the financial sector, The film industry was not so fortunate. Government meddling with the film tax credit dealt the industry a devastating blow, evidence of which may already be showing up in the job numbers. Over the same 2013-15 period there were 900 fewer people working in “information, culture and recreation,” a category that includes film and video production, sound recording and broadcasting, The loss of 900 information, culture and recreation jobs over two years is a result of an increase of 800 jobs in 2014 and a loss of 1,700 in 2015. That’s almost one in ten jobs gone from that sector in 2015.

Depending on your perspective, putting banking and finance ahead of culture could go down as a signature achievement/failing of the McNeil government. In that respect, there will be competition from that other Liberal pre-occupation, wage restraint. The Liberals are intent on limiting the wages of public sector workers. Recent data from Statistics Canada show that Nova Scotia workers already have a head start in the wage race to the bottom.

Average wages drop

Average hourly wages of employees were 2.1% lower in December 2015 than in the same month a year earlier, falling to $21.98 an hour from to $22.45. Nova Scotia and Newfoundland and Labrador were the only provinces to experience a year-to-year drop. Nationally, average weekly wages went from $24.84 an hour in December 2014 to $25.55 in December 2015, an increase of 2.9%. [3]

The only age group in Nova Scotia to get a raise was the 15-24 cohort, whose average wage went from $14.05 an hour to $$14.34 an hour, probably the result of a government-mandated increase in the minimum wage. Workers 55 and over suffered a 5.6% drop in their average wage. Those in the middle (25-54) experienced a drop of 2.2%. Among occupations, one of the hardest hit was the health sector. Employees in that group, the main target of the Liberals’ assault on public sector collective bargaining, saw their average weekly wage drop from $27.72 to $26.51, a decline of 4.4%.

So it is no wonder that provincial revenues are dropping – albeit not as fast as the government would like us to believe. (see post of  Jan. 7) Fewer people working for lower wages equals lower tax revenues. In one of the few sectors where there are more jobs – health care – wages are declining. And the government, with its labour legislation, wants to ensure they stay down.

The McNeil government may pay a political price for attacking collective bargaining rights, but it’s unlikely it will suffer from the inanity of its economic development policy. Thanks to public money from the ship-building contract and the much-anticipated federal infrastructure program, private sector employment numbers are likely to start looking better in the future. Voters may once again come to believe that the Liberals know what they are talking about.

-30-

 

[1] Statistics Canada CANSIM Table 282-0012

[2] Statistics Canada CANSIM Table 282-0008

[3] Statistics Canada CANSIM Table 282-0069

About Richard Starr

RICHARD STARR has had careers as a journalist, public servant, broadcaster, political staffer and freelance policy adviser. He is author of numerous newspaper and magazine articles, appearing in everything from Atlantic Insight to Atlantic Progress. A lifelong student of Maritime history, Starr is married to playwright and former MP Wendy Lill. They live in Dartmouth.
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