Union predicts two private jobs lost for every federal job cut

 

By Derek Abma, Postmedia News       April 5, 2012

 

The Canadian Association of Professional Employees predicts 40,825 private-sector job losses as a consequence of government cutbacks that will see 19,200 federal workers lose their jobs over the next three years.

The Canadian Association of Professional Employees predicts 40,825 private-sector job losses as a consequence of government cutbacks that will see 19,200 federal workers lose their jobs over the next three years.

Photograph by: Chris Wattie , Reuters

 

OTTAWA — The 19,200 federal government jobs on the chopping block are just the tip of the iceberg in terms of the overall employment effect of the Harper government’s budget cuts, says one federal union.

The Canadian Association of Professional Employees, which is comprised mostly of economists and social science experts working for the government, said there will also be 40,825 private-sector job losses as a consequence of government cutbacks.

In its budget unveiled last week, the federal government said it is aiming to reduce spending by $5.2 billion annually over five years and cut 19,200 public-service jobs.

The process of job reductions has already begun.

Another union, the Professional Institute of the Public Service of Canada, said Wednesday that more than 400 of its members have received letters saying their jobs might end.

It said this included employees at National Defence, the Public Service Commission and regional economic development agencies for the West, southern Ontario, Quebec and Atlantic Canada.

To determine the effect of the government’s spending reductions and job cuts, the Canadian Association of Professional Employees said in a release issued Tuesday it used a model employed by Statistics Canada to determine how reductions in a particular sector can affect the whole economy.

Claude Danik, the union’s executive director of policy, said the forecast considers how spending cuts will affect companies that sell goods and services to the government, and also how spending cutbacks resulting at these firms will affect others that they in turn do business with.

Reductions in the personal spending of the government employees who lose their jobs is also considered, he said.

"The federal government is the largest consumer in Canada, and . . . if they significantly reduce their amount of spending, that’s going to have a negative effect on the economy," Danik said.

The union’s forecast sees Ontario taking the brunt of the expected private-sector job losses with 18,199. Next is Quebec at 9,314. Rounding out the regional job tolls, the Prairies are expected to lose 4,886 private-sector jobs, British Columbia 4,009 and the Atlantic provinces 4,286.

However, Avery Shenfeld, chief economist of CIBC World Markets, said the union’s forecast for two private-sector job losses for every one in federal government "sounds high."

Shenfeld agreed the government cutbacks will be "a drag" on economic growth.

However, he said the Bank of Canada is now likely to maintain interest rates at a level lower than it would have in order to offset the effect of government cutbacks. Danik said this was not considered in his organization’s forecast.

Shenfeld added that the overall job cuts planned are not as severe as they might sound when you consider they’ll be spread out over several years.

"Stretched out over three years, we’re talking about roughly 500 jobs a month being lost at the federal government level," Shenfeld said. "And in a typical month, the Canadian economy generates about 10,000 jobs.

"So (the federal job cuts are) a negative, but it’s not an overwhelming negative."

The Canadian Federation of Independent Business’s monthly index of small-business sentiment rose in March for the seventh-straight month. Expectations of government spending cuts are part of the reason why, said Ted Mallett, the group’s chief economist.

He said most business owners feel government spending restraint will lead to paying less in future taxes and more economic stability down the road if the government balances its budget.

"Even though unions say small firms benefit from a big government, small businesses don’t agree," Mallett said.

The union’s latest projection is milder in terms of job losses than what it said in advance of the budget, based on a more extreme scenario of the government cutting spending by $8 billion a year. It predicted 61,000 private-sector job losses if this happened.

Danik said, rather than issuing these forecasts out of self-interest, "we are producing information that underscores the effect on other people’s jobs. That kind of information hasn’t really been put out for the public to discuss. We thought there was something lacking there."

Danik said his union is likely to see about 1,000 of its members lose their jobs. Their cuts are proportional to the rest of the public service.

dabma@postmedia.com

Twitter.com/derekabma

© Copyright (c) Postmedia News

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