(The following article is from the February 15-28, 2009, issue of People's Voice, Canada's leading communist newspaper. Articles can be reprinted free if the source is credited. Subscription rates in Canada: $25/year, or $12 low income rate; for U.S. readers - $25 US per year; other overseas readers - $25 US or $35 CDN per year. Send to: People's Voice, c/o PV Business Manager, 133 Herkimer St., Unit 502, Hamilton, ON, L8P 2H3.)

PV Vancouver Bureau

     The Canadian Labour Congress has responded to news that Canada lost 129,000 jobs in January with a renewed call for the federal government to make urgently-needed improvements to the Employment Insurance program.

     "This is stunning," says Ken Georgetti, president of the CLC. "It's an economic tsunami for Canadian workers and there's more to come. We have now lost 213,000 good full-time jobs in the past three months and the unemployment rate is at 7.2 percent."

     The total number of "officially-unemployed" workers in Canada is now at 1,310,000. Georgetti says many laid-off workers and their families will be left out in the cold because governments have changed the rules for EI, making it harder to qualify and chopping the benefits for those who do.

     "The effects of the government's economic stimulus package won't kick in for months but workers who are innocent victims of this recession need help right now," he warns, adding that unions will keep up the pressure to improve the EI program. "People have paid their premiums believing that they would receive their insurance when they find themselves unemployed. Rainy day funds are supposed to be there for rainy days."

     Senior CLC Economist Sylvain Schetagne notes that the loss of jobs in January is a deterioration well beyond anything seen in the past three decades.  With the loss of almost a quarter of a million full and part-time jobs in the past three months. Canada is now back to levels of employment experienced 15 months ago, in October 2007.

     The unemployment rate increased from 6.6% in December to 7.2% in January, back to the levels of five years ago. The increase would have been even higher if 29,000 workers had not left the labour market during January.

     Most of the jobs lost were full-time (114,000), with the biggest totals in Ontario (71,000), British Columbia (35,000) and Quebec (26,000). The majority of economic sectors, both public and private, saw a decline in employment, with a significant decrease concentrated in manufacturing (100,900).

     Meanwhile, despite the rosy predictions of right-wing politicians and pundits, the International Monetary Fund says the recession in Canada this year will be "much deeper" than projected in the Jan. 27 federal budget, and that next year's hoped-for recovery will be much weaker than forecast by the federal government and the Bank of Canada.

     On Feb. 4, the IMF cut its projections for global growth in 2009 to 0.5 per cent, the weakest performance since the end of the Second World War. It also projected a three per cent recovery next year, weaker than its previous forecast in November.

     "A sustained economic recovery will not be possible until the financial sector's functionality is restored and credit markets are unclogged," according to the IMF, which also increased its projection for global banking losses due to toxic U.S. assets to $2.2 trillion US, up from the $1.4 trillion US anticipated last fall.

     The IMF now predicts the Canadian economy will shrink by 1.2 per cent this year, worse than the 0.8 per cent decline forecast in the Tory budget. For 2010, the Fund predicts a 1.6 per cent recovery, well below the 2.4 per cent projected in the budget and the 3.8 per cent forecast by the Bank of Canada.

     The global outlook could be even gloomier, with a global depression on the horizon if stimulus efforts in the United States fall short, says Robert Ward, director of global forecasting at the Economist Intelligence Unit, a sister organization to the Economist magazine.

     Ward was in Quebec City recently as a guest of the city's convention centre and the Pele Quebec Chaudiere-Appalaches, an economic development organization. He said the world economy will contract by "nearly one per cent" this year, much worse than the IMF projects.

     The crisis which began in financial markets, Ward said, will now enter the "nastiest bit" with huge job losses.

     His warning coincided with the shocking news of 598,000 jobs lost in the United States during January. This marked the biggest single monthly drop in 34 years, pushing the U.S. unemployment rate to 7.6 percent, up from 4.9 percent a year ago, and the highest level since 1992.

     Ward is also concerned about where the U.S. will borrow the $3 trillion needed to cover its deficit, not to mention the funds for President Obama's stimulus package. China has been using its trade surplus to buy U.S. treasury bonds, he noted, but China is looking to diversify its portfolio into other investments. He forecasts a 4 percent GDP decline this year in the European Union and Japan, and growth of only six percent in China, marking a major slowdown for that country's booming economy. All these factors will likely combine to dramatically cut resource exports from Canada, shredding the relatively optimistic Tory forecasts for the Canadian economy.