ST. JOHN’S — Implementing the ‘Big Reset’ recommendations in the Premier’s Economic Recovery Team (PERT) report will create unnecessary suffering and make the economic crisis in Newfoundland and Labrador worse, finds Unifor Economist and ‘A Fair Reset’ blog author Kaylie Tiessen.
“We’ve learned through experience in other jurisdictions that cutting wages and public services to deal with debt and deficits can actually deepen an economic crisis,” said Tiessen. “Massive cuts can create an unemployment crisis that further erodes a government’s ability to pay by reducing the tax base and increasing the need for services. It’s a downward spiral that drags more and more people into poverty or insecurity or both.”
The ‘Big Reset’ calls for drastic measures that include cutting thousands of jobs and slashing key services while evidence clearly shows that creating higher quality employment and investing in stronger public services would grow the economy and make higher levels of debt more manageable. The downward pressure on jobs and services recommended by PERT would more daunting, maintains Tiessen.
In October 2020, the International Monetary Fund (IMF) released a report highlighting the value of public investment in programs, such as health care, stating they can actually speed up economic recovery. The researchers found an investment in public programs equal to 1% of Gross Domestic Product increases economic activity by 2.7%. Further, private investment increases by 10% and jobs increase by 1.2%. The Bank of Canada has also highlighted the need for inclusive growth by focusing on creating sustainable growth that leaves fewer people behind in order to make higher levels of debt more manageable.
Newfoundland and Labrador already has the highest rate of unemployment in the country. 25% of workers earn minimum wage and a full 30% earn below $15 an hour. The province is one of the most unequal in the country. The share of income brought home by the top 10% of income earners has steadily grown over the last 20 years while the share brought home by the bottom 10% has declined.
“These trends will only increase if the PERT recommendations are adopted, with increased inequality as more people are pushed into low wage work. The fact is that inequality is a drag on economic growth and actually holds us all back,” Tiessen stated.
‘A Fair Reset’ blog will be published weekly until the week before the scheduled resumption of the Newfoundland and Labrador House of Assembly on October 18.
For media inquiries or to arrange a phone or Zoom interview with Kaylie Tiessen please contact
Unifor Communications Representative Kathleen O’Keefe at firstname.lastname@example.org or 416-896-3303 (cell).