OECD Economic Surveys : Canada, 1995-1996.

200 Pages·11.572 MB·English

by  OECD

CANADA
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OECD
ECONOMIC
SURVEYS
1995-1996
CANADA
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
Pursuant to Article 1 of the Convention signed in Paris on 14th December I960,
and which came into force on 30th September 1961, the Organisation for Economic
Co-operation and Development (OECD) shall promote policies designed:
- to achieve the highest sustainable economic growth and employment and a rising
standard ofliving in Member countries, while maintaining financial stability, and
thus to contribute to the development ofthe world economy;
- to contribute to sound economic expansion in Member as well as non-member
countries in the process of economic development; and
- to contribute tothe expansion ofworld trade on a multilateral, non-discriminatory
basis in accordance with international obligations.
The original Member countries of the OECD are Austria, Belgium, Canada,
Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the
Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the
United Kingdom and the United States. The following countries became Members subse¬
quently through accession at the dates indicated hereafter: Japan (28th April 1964),
Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973),
Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary
(7th May 1996) and Poland (1996). The Commission ofthe European Communities takes
part in the work of the OECD (Article 13 ofthe OECD Convention).
Public également en français.
© OECD 1996
Applications for permission to reproduce or translate all or part ofthis
publication should be made to:
Head of Publications Service, OECD
2, rue André-Pascal, 75775 PARIS CEDEX 16, France.
Table of contents
Assessment and recommendations 1
I. The current cycle in perspective 9
A moderate economic recovery 9
The short-term outlook 24
A medium-term scenario 28
II. Economic policies 31
The overall strategy 31
Progress in implementation 32
The challenges ahead 52
III. Implementing the OECD Jobs Strategy 57
Labour market and employment performance 59
Policy requirements 69
Recent policy actions 99
Assessment and scope for further action 104
IV. The pension system: problems and options for reform 113
Main features of the system 116
Problems with the system 122
Reforming the system 130
Overall assessment 146
Notes 148
Bibliography 155
Annexes
I. Estimates of the structural rate of unemployment 157
II. The impact of minimum wages on youth unemployment 162
III. The Quebec Pension Plan 165
IV. Chronology of economic events 167
Statistical annex and structural indicators 173
Box
The OECD Jobs Strategy: synopsis of recommendations for Canada 67
Tables
Text
1. Demand and output 13
2. Labour supply and demand 17
3. Wages, profits and prices 21
4. Balance of payments 22
5. Short-term projections 25
6. A medium-term scenario 28
7. Money and credit 38
8. Federal deficit: projections and outcomes 41
9. The 1995 and 1996 Federal Budgets 43
10. Provincial deficits and debt 46
11. Evolution of the Unemployment Insurance system since 1971 78
12. Public expenditure on labour market programmes 89
13. Participants covered by ALMPs 90
14. Evaluation of training measures 92
15. Estimated public pension expenditure and implicit replacement
rates 1 14
16. Public pension programmes 117
17. Income replaced by public pension programmes 120
18. Schedule of CPP contribution rates set in 1991 122
19. Projected CPP pay-as-you-go rates in 2030 126
20. The projected levels of the "Seniors Benefit" in 2001 144
Annexes
Al. Recent estimates of the structural rate of unemployment in Canada 159
Statistical annex and structural indicators
A. Selected background statistics 174
B. Supply and use of resources 175
C. Industrial production, employment and other business indicators 177
D. Prices, wages and finance 178
E. Balance of payments 179
F. Public sector 180
G. Financial markets 181
H. Labour market indicators 182
I. Production structure and performance indicators 183
Figures
Text
1. The recovery in perspective 10
2. Determinants of growth 11
3. Business fixed investment 14
4. Household demand 15
5. Inflation indicators 19
6. The current balance and its major components 23
7. Inflation targets 33
8. Monetary conditions 35
9. Interest rate and exchange rate developments 37
10. Decomposition of the general government financial balance 40
11. Direct budget savings 43
12. Government debt 48
13. Key developments in the labour market 58
14. Labour force participation rates 61
15. Youth participation and enrolment rates 62
16. The composition of the labour force 63
17. Long-term unemployment and inflows 64
18. Regional unemployment rates 65
19. Incidence of low pay and earnings inequality 70
20. The minimum wage 71
21. Net transfers under UI 76
22. Index of unemployment insurance disincentives 77
23. Unemployment and social assistance caseloads 81
24. Social assistance caseloads in Ontario 82
25. Social assistance benefit rates and minimum wages 83
26. Disability beneficiaries 85
27. Components of payroll taxes 86
28. Payroll taxes in major OECD countries 88
29. Public expenditure on active labour market measures 89
30. Educational attainment in OECD countries 94
31. Unemployment rate by level of education attained 95
32. Distribution of population by literacy level 95
33. Projected expenditures on public pensions 115
34. Elderly dependency ratios 124
35. Scenarios for alternative contribution rates to the Canada
and Quebec Pension Plans 134
36. Scenarios for reducing expenditure of the Canada and Quebec
Pension Plans 139
Annexes
Al. Unemployment rates in Quebec and Ontario 163
A2. Relative youth unemployment rates and the minimum wage 163
BASIC STATISTICS OF CANADA
THELAND
Area(thousandsq. km) 9976 Populationofmajorcities,including
Agriculturalarea(1990.aspercent metropolitanareas(thousands):
oftotal area) 6.4 Montréal 3 127
Toronto 3 893
THE PEOPLE
Population(1995) 29571 305 Civilian labourforce(1995) 14927600
Numberofinhabitantspersq. km 3.0 Employmentagriculture(1995) 430700
Population,annualnetnaturalincrease Immigration(annual average 1991-1995) 233233
(average 1991-1995) 187 100 Averageannualincreaseincivilian labour
Natural increaserale per 1 000inhabitants force(1991-1995,percent) 0.8
(average 1991-1995) 6.6
PRODUCTION
GDPin 1995 (millionsofCanadiandollars) 776299 Originofgrossdomesticproduct
GDPperhead(Canadiandollars) 26300 (1995,percentoftotal, 1986prices):
Grossfixed investment(privateandpublic) Agricultural, forestryand fishing 2.8
perhead(Canadiandollars) 4543 Miningandquarrying 4.4
Grossfixedinvestment(privateandpublic) Manufacturing 18.9
aspercentofGDP 17.3 Construction 5.0
Non businesssector 16.9
Other 54.8
THEGOVERNMENT
Governmentcurrentexpenditureongoods Numberofseats
andservices(1995. aspercentofGDP) 19.4 CompositionofParliament Houseof <.
Governmentgross fixedcapital formation (June 1996): Commons Senate
(1995,aspercentofGDP) 2.3
Federal Governmentcurrentrevenue ProgressiveConservative 2 50
(1995,aspercentofGDP) 19.1 Liberal 176 50
Federaldirect andguaranteeddebt NewDemocratic 9
(1995, percentofcurrentexpenditure) 58.6 Blocquébécois 53
Independent 2 3
Reform 51
IndependentLiberal 2
FOREIGN TRADE
Exports(1995) Imports(1995)
Exportsofgoodsandservices,aspercent Importsofgoodsandservices,aspercent
ofGDP 37.4 ofGDP 34.9
Mainexports(percenl ofcommodily Mainimports(percentofcommodily
exports): imports):
Wheat 1.7 Industrial materials 19.1
Naturalgas 2.2 Motorvehiclesandparts 22.4
Lumberandsawmill products 5.4 Producers' equipment 33.5
Pulpandpaper 8.7 Consumergoods 11.3
Othermetalsandminerals 10.0 Mainsuppliers(percentofcommodily
Molorvehiclesandparts 24.3 imports):
Othermanufacturedgoods 27.9 UnitedStales 75.0
Maincustomers(percentofcommodity EEC 8.9
exports): Japan 3.7
UnitedStates 79.6
EEC 6.3
Japan 4.5
THE CURRENCY
Monetaryunit: Canadiandollar CurrencyunitperUSdollar,average
ofdailyfigures:
Year 1995 1.372
Note: Aninternationalcomparisonofcertainbasicstatisticsisgiven inanannextable.
This Survey is based on the Secretariat's study
prepared for the annual review of Canada by the
Economic and Development Review Committee
on 9 September 1996.
m
Afterrevisions in the lightofdiscussionsduring the
review,final approval ofthe Surveyforpublication was
given by the Committee on 25 September 1996.
The previous Survey of Canada was issued in
November 1995.