Canadian unemployment since 1920

Jan.25, 2009

One of the more serious features of a deep recession is the sharp and prolonged rise in the rate of unemployment even after the negative growth aspect of the recession has come to an end.If we look at recent   Canadian recessions in 1991-92;82-83 and 1974-75 we see this pattern at work.
Here are the unemployment statistics for those years , the year or two immediately preceding the recession and for four years following the end of the recession.

1972   6.2 %
1973   5.5
1974   5.3 %
1975   6.9
1976   7.1
1977   8.1
1978   8.4
1979   7.5
1980 7.5
1981   7.5
1982   11.0
1983   11.8
1984   11.2
1985   10.5
1986   9.5
1987   8.8
1988   7.8
1989   7.5
1990     8.1
1992     10.5
1993     10.8
1994     10.6
1995     9.5
1996     9.6
1997     8.4
1998     8.3
1999     7.6
2000     7.0
2001     7.1

It is very clear particularly from the recessions of 1982 and 1992 that the rise in unemployment has a much longer staying power than the typical one to two year recession. Hysterisis prevails as the rate of unemployment among those who have lost their jobs during the recession continues to stay elevated despite the resumption of growth.Hence the need for substantial active stimulus both to shorten the recession and to reduce the duration of the increased unemployment.

Since 1920 in Canada we have had 22 years in which unemployment exceeded 9 %. Ten of those years were the decade of the 1930s. One occurred in 1940. The others were from 1982 through 1985 and 1991 through the end of 1996. for many people these were very difficult years. It is a great pity we may have to revisit them again. Preventative action on the policy front is essential.Only a very major deficit financed stimulus targeting employment generating infrastructure, income and job training assistance for the unemployed, and employment generating procurement as well as investments in energy conserving projects and public services can do the job.