Trades, Outsourcing and Jobs Economics Challenge

3 06 2011


Key Concerns/Issues


– Strong Canadian dollar results in more expensive exports for other countries.

– China is becoming the centre of the international trade, and many countries are trying to take advantage of this

– Limited natural resources to export to other countries

– Not much diversity to whom we are exporting to (75% of exported goods is to US)

– Due to the financial crisis and other unforeseen natural disasters around the world, Canada’s ability to export have been hindered


– Jobs from our country are being offshored to other nations due to the low wages that exist for workers in other counties (i.e. China, Mexico)

– Outsourcing of government services may increase cost to consumers

– Unemployment rates is still very high

– The quality of the jobs being created now are inferior compared to the jobs we lost during the recession


Resulting Challenges to Canadians

– The strong Canadian dollar makes Canadian goods are not as attractive as they were before in the international market – this may bring huge losses to Canada’s GDP. Canada must find a way to remedy the detrimental effects of the strong dollar.

– As China is rapidly growing economically, it will become the centre of the international trade. If Canada does take action now, Canadian goods will not be competitive in the Chinese market

– Resources are becoming scarcer. If we run out of limited natural resources due to over exhaustion, we will have huge problems with trading with other countries

– If we continue to export most of our goods to US, and if the US suffers another serious recession, Canada will lose a lot of money in exports.

– Offshoring takes away many important manufacturing jobs from the Canadian economy. Therefore, Canada must seek to create different types of jobs in order to increase our economic welfare.

– There was a massive loss of jobs because of the recession. As a result, it has caused less revenue for the government, increasing their debts

– The types of jobs created should be redirected into manufacturing or some other sector instead than government that generates little or no wealth.



Falling Pork Export Market -(Dropped from $125 mil to $100 mil)

Potential Oil Exports to China – (Net profits approximately $ 270 billion)

Decreasing Oil Exports -(Expected surplus $500 million, actual surplus $382 million)

USA as Top Canadian Export Market -(USA will have approximately 75% of Canadian export market until 2040)


Consequences of Outsourcing Garbage Collection  – (Increased cost to consumers in the long run)

Offshoring and Inshoring of Jobs Balances Out -(1.9% of companies moved work out of Canada, while 1.8% moved work in)


Future Unemployment Rates -(Down from 7.7% in 2010 to 7% in 2014)

TD Forecasted Future Job Creations -(Forecasts decreased job creation in 2011 before it can increases in 2012)


Possible Solutions


– Government can intervene and weaken Canadian dollar on purpose to make importing from Canada by other counties cheaper and thus making Canadian exports more popular

– Canada should realize China’s economical potential and should start exporting competitive goods to China


– Currently, there is also a significant amount of inshoring to restore our number of jobs.


– Unemployment can naturally recover to its natural state since the economy is recovering

– Lower the value of the dollar to attract other companies to Canada. This would encourage businesses to expand in Canada, creating more jobs for Canadians, stimulating the economy, and generating wealth for the government through sales tax.

Income Inequality Summary Component

3 06 2011

Key Concerns/Issues

1. The gap between the rich and the poor is growing in Canada, since those earning the highest incomes are experiencing greater increases in their incomes than lower wage earners.
2. The economic recession has worsened income inequality in Canada. After the recession, high paying blue-collar manufacturing jobs have been replaced with low paying service sector jobs that offer fewer work hours, so although it appears that jobs have been recovered and unemployment has gone down, people are earning less money than before.
3. Businesses have been given a lot of wealth in order to create the trickle down effect, either through creating new jobs or expansion of the company. However, businesses are using the money instead in providing large bonuses and higher salaries for executives, keeping the money locked in at the top. Providing wealth to businesses has not benefited the poorer members of society as was expected.
4. Many Canadian jobs that require fewer skills are being outsourced to countries such as China, India and Bangladesh, where workers can be paid less to do the same job. This leaves the people who had the same jobs in Canada with no job or income.

Resulting Challenges to Canadians in the next 10 years

1. With income inequality exacerbated, the government has to dish out more tax dollars to spend on social welfare services. This reduces the amount of tax money available to fund activities that can stimulate real economic growth.
2. People with low incomes or reduced incomes have little money to spend. This reduces consumer spending, which can shift aggregate demand to the left and cause another recession.
3. Generally, extreme income inequality is connected to a lower quality of life. With income inequality becoming a bigger concern in Canada, it is likely that those with a lower-income will experience a lower quality of life e.g. shorter life expectancies, more health problems.

Supporting Statistics and Evidence

1. It costs more to provide emergency housing and hospital care for the homeless for a year than it does to provide supportive housing to the homeless for a year. Also, it costs more for a homeless person to stay at the hospital than for a non-homeless person:
2. Income of the top wage earners in Canada, and a graph showing increasing income inequality in Canada. Also, more people marry others with similar incomes now than before:
3. Gini coefficient increased in Canada, and number of hours worked by lower-income earners decreased:
4. Low income earners experienced less growth in income than high income earners, which worsens the income gap between the rich and the poor:

Possible Solutions

1. One solution to worsening income inequality is the Guaranteed Annual Income (GAI), which gives Canadian families with low incomes a guaranteed source of income so that they can provide for themselves sufficiently.
2. Increase income taxes for the rich, who have a large portion of Canada’s wealth. The tax revenue can be redistributed to increase income equality, for example by providing money to low-income families to boost consumer spending and increase aggregate demand. This can be done by increasing the tax rate in higher income tax brackets.
3. Increase corporate taxes. This would essentially have the same aim as increasing income taxes for the rich, as it will help redistribute Canada’s wealth more evenly. Also, corporate revenues may have been given to company executives, who would invest the money instead of spending it, which doesn’t increase GDP. If the government took this money, it would spend it, which would increase aggregate demand in the economy and cause economic growth.
4. Cut income taxes for the poor. This would increase their disposable income, which helps them live more sufficiently and increase their quality of life, as well as contribute to the economy through increased spending.