A key factor behind recent job losses has been the sharp and continuing increase in the exchange rate of the Canadian dollar against the US dollar.

Driven up partly by the global energy and resources boom, the high dollar has cut into our exports of manufactured goods, and has led to a surge in imports from China and other Asian countries.

Between 2002 and 2005, our trade deficit with China jumped from $12 billion to $22 billion, and the raw natural resources share of our exports has soared at the
expense of manufactured goods.

Adding to the problem in a major way, Canadian manufacturers have traditionally relied on a low dollar, rather than investing enough in new machinery and equipment, research and development, and worker training. The statistics clearly show that Canadian corporations have under-invested in innovation and in skills training compared to more successful industrial economies.

The constant mantra of the corporate elite – repeated by most politicians – has been that free trade deals and low-corporate taxes plus attacks on the living standards of workers will lead to increased international competitiveness.

That strategy has clearly failed. Free trade agreements modelled on the Canada-US deal have led to job losses, unbalanced trade outcomes, and relentless downward pressures on wages, benefits and working conditions. Even unionized manufacturing workers have seen little increase in wages and benefits even as work demands and productivity have increased. 

As a country, we have become more rather than less dependent on raw resource exports. High corporate profits have not been ploughed back into major new investments.

In the background paper for this conference, the Canadian Labour Congress has put forward the beginnings of a plan for good jobs and wealth creation.

Let me quickly just go over a few key elements of our plan.

We need monetary policies which help contain the sharp rise of the Canadian dollar. It’s true that the Bank of Canada cannot control resource prices, or the level of the US dollar.

But they do control interest rates here in Canada, and these were higher than in the US for most of the period since 2002 when we have been losing jobs by the thousands.