CANADA ECONOMICS

MONETARY POLICY

BANK OF CANADA. October 31, 2017. Opening Statement before the House of Commons Standing Committee on Finance. Opening Statement. Stephen S. Poloz - Governor. House of Commons Standing Committee on Finance

Ottawa, Ontario - Good afternoon, Mr. Chairman and committee members. Senior Deputy Governor Wilkins and I are happy to be before you today to discuss the Bank’s Monetary Policy Report (MPR), which we published last week.

When we were last here in April, we were celebrating the fact that we had upgraded our economic forecast following a long period of disappointment. I am happy to tell you that many of the positive trends that we saw then have continued. Sources of economic growth have broadened across sectors and regions, and the process of adjustment to the oil price shock is essentially complete.

The Bank raised its policy interest rate twice since our last visit, in July and September. We did this in the context of very strong economic growth over the first half of the year and solid progress in the labour market. Over the summer, we saw evidence of firming inflation and an economy that was rapidly closing its output gap. With these two rate increases, we have taken back the cuts we made in 2015, which were crucial in helping the economy adjust to the oil shock.

Growth in the first half of the year averaged just over 4 per cent at an annual rate. This reflected strong consumer spending backed by rising employment and income, together with increased business investment and a jump in energy exports. We are now starting to see signs of moderation in the second half, which we forecast in July. Growth in consumption and investment is expected to ease, and growth in housing is projected to slow further, in part because of the measures introduced by the Ontario government in April.

All told, we forecast that the economy will expand by 3.1 per cent this year, before slowing to 2.1 per cent in 2018. This is still faster than the growth rate of potential. We estimate that the economy is now operating close to its capacity. Inflation should reach our 2 per cent target in the second half of next year, a little later than earlier projected because of the temporary impact of the stronger Canadian dollar this year.

We are at a crucial spot in the economic cycle, and significant uncertainties are clouding the way forward. In our MPR, we identified the four most important sources of uncertainty. I will touch on these now.

The first issue is inflation itself. There have been several conjectures about the apparent softness of inflation in Canada and many other advanced economies. Some have argued that globalization is restraining inflation. This could be due to increased imports from lower-cost countries, for example, or the effect of Canadian companies participating in global supply chains. Others point to the impact of digitalization on the economy. They suggest that digital technologies could lower barriers to entry in some sectors and lead to more competition. The rise of e-commerce may be changing price-setting behaviour. And digital technologies could promote innovation and higher productivity, which could create disinflationary pressure.

The second issue is the degree of excess capacity in the economy. We note several signs that point to slack remaining in the labour market. For example, the participation rate of young workers is still below trend, and average hours worked are less than we would expect. With the economy now operating close to capacity, we expect to see investment by companies, together with job creation by new and existing firms, and rising productivity. This should serve to raise the economy’s potential output, increasing the amount of non-inflationary growth that is possible. However, this process is highly uncertain and not at all mechanical, so we have built it into our projection in a conservative way.

The third issue is the continued softness in wage growth. While employment growth has been strong in Canada, wages have not kept pace. The slack in the labour market is certainly responsible, in part, for this effect, and there will be a lag between the time this slack is used up and when we see stronger wage growth. However, other factors, including globalization, may also be affecting wage dynamics.

Finally, the fourth issue is the elevated level of household debt and how that might affect the sensitivity of the economy to higher interest rates. Bank staff have recalibrated our main economic model used for projections to capture key information about housing and debt. This work tells us that the economy is likely to respond to higher interest rates more than it did in the past. However, we will watch incoming economic data closely for evidence to support this idea. We will also look to see how the household sector is responding to the new rules about mortgage underwriting.

We also outline several other risks in the MPR. Taken together, these give us a balanced outlook for inflation. We have not incorporated into our projection the risk of a significant shift toward more-protectionist trade policies in the United States, given the range of potential outcomes and the uncertainty about timing. However, we acknowledge that uncertainty about future US trade policy is having some impact on business confidence and investment spending, and this impact is reflected in our outlook.

In this context, Governing Council judged that the current stance of monetary policy is appropriate. We agreed that the economy is likely to require less monetary stimulus over time, but we will be cautious in making future adjustments to our policy rate. In particular, the Bank will be guided by incoming data to assess the sensitivity of the economy to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation.

With that, Mr. Chairman, Senior Deputy Governor Wilkins and I would be happy to answer questions.

FULL DOCUMENT: http://www.bankofcanada.ca/wp-content/uploads/2017/10/opening-statement-311017.pdf

The Globe and Mail. 1 Nov 2017. ‘Back to reality’ as economy contracts. GDP: Economists still foresee growth in second half of year, picking up in fourth quarter
DAVID PARKINSON, ECONOMICS REPORTER

Canada’s economy took a surprise step backward in August, the latest and strongest evidence yet that the growth surge of the first half of the year has given way to a much more stunted second half.
Statistics Canada reported on Tuesday that real gross domestic product fell 0.1 per cent in August from July on a seasonally adjusted basis, the first decline in 10 months. The reading disappointed economists, who had estimated that the economy had eked out modest growth of 0.1 per cent in the month.
The dip comes on the heels a July GDP report that showed essentially no change. Taken together, the two months paint a picture of an economy catching its breath after a blistering few months of growth. GDP expanded at a 4.5-percent annualized rate in the second quarter, the strongest quarter in nearly six years.
“The two-month lull in activity pounds home the point that the frothy growth of the past year is over and done,” Douglas Porter, chief economist at Bank of Montreal, said in a research note. “The run of amazing Canadian economic data is officially over, with growth coming back to reality in hurry.”
But even though the weak August result suggests that growth was something less than 2 per cent annualized in the third quarter, economists believe that economic expansion remains on track in the second half of the year, albeit at a more moderate pace.
“One should be careful in not getting too gloomy on Canada’s softened growth in the third quarter,” said Bank of Nova Scotia economist Derek Holt, who estimated third-quarter growth at just 1.5 per cent annualized in light of the August decline. “After 4.5-per-cent growth in the second quarter … what did you expect?”
Economists also noted that the August setback wasn’t reflective of a broad-based slowdown, as 12 of 20 major industry sectors showed growth in the month. The overall result was weighed down largely by declines in manufacturing and in oil and gas extraction, both of which were slowed by temporary maintenance shutdowns.
“With much of the third-quarter weakness seemingly down to temporary factors, and growth still tracking above potential, there is no reason for Canadians to worry,” Brian DePratto, senior economist at Toronto-Dominion Bank, said in a research report.
The goods-producing side of the economy contracted 0.7 per cent, its second straight setback. Goods output was weighed down by a 5.2-per-cent slump in conventional oil and gas and a 7.3-per-cent plunge in chemical manufacturing, the sharpest single-month drop in 20 years. Both sectors were slowed considerably by maintenance shutdowns.
LARRY MACDOUGAL/THE CANADIAN PRESS
Pumpjacks draw crude oil near Halkirk, Alta., in 2007. A 5.2-per-cent slump in conventional oil and gas contributed to an overall setback in third-quarter GDP results.
But the larger services side of the economy grew 0.1 per cent, its 17th straight month of expansion. The gain was led by the wholesale sector, up 0.4 per cent, while the real estate and finance-and-insurance sectors each grew 0.2 per cent. But retailing fell 0.4 per cent, its second straight decline following several months of strong growth.
Economists still believe that the economy will likely grow at something near a 2-per-cent pace in the second half of the year, with growth expected to pick up somewhat in the fourth quarter after the third-quarter lull. Last week, the Bank of Canada estimated a third-quarter growth rate of 1.8 per cent annualized, accelerating to 2.5 per cent in the final quarter of the year.
Still, the August GDP report’s confirmation of a relatively sluggish third quarter should support the Bank of Canada’s recent cautious stand on further interest-rate increases, following its two rate hikes in July and September.
“The moderation of growth and still-mild inflation will be welcome by a Bank of Canada intent in delaying interest-rate hikes for as long as possible,” National Bank of Canada senior economist Krishen Rangasamy said in a research note.
Indeed, most economists don’t expect another rate increase until January at the earliest, and possibly not until next spring, as the central bank weighs the slower growth pace, still-below-target inflation, and the emergence of risks to growth in 2018 from new mortgage regulations and the uncertain North American freetrade agreement negotiations.
“My bias [is] that the BoC is on a prolonged hold, and more so because of question marks hanging over the 2018 economy than a [third] quarter it can’t do anything about anyway,” Bank of Nova Scotia’s Mr. Holt said. “Only time will help to inform those risks.”

MANUFACTORING

REUTERS. NOVEMBER 1, 2017. Canada manufacturing growth cools in October, export orders contract

OTTAWA (Reuters) - The pace of growth in the Canadian manufacturing sector slowed to a nine-month low in October as firms’ supply chains were disrupted by a hurricane in the United States and as new export orders contracted, data showed on Wednesday.

The Markit Canada Manufacturing Purchasing Managers’ index (PMI), a measure of manufacturing business conditions, declined to a seasonally adjusted 54.3 last month from 55.0 in September, the lowest level since January. A reading above 50 shows growth in the sector.

The manufacturing sector continued to feel the effects of Hurricane Harvey, which hit Texas in late August, the report said. This meant longer supplier delivery times for Canadian firms, with the gauge contracting further to 40.4 from 40.6.

Supply shortages due to the hurricane also kept costs elevated, with the measure of input prices holding at 62.6.

Forward-looking new orders declined to 53.2 from 54.9, while new export orders contracted to 49.8 from 51.3 as firms cited less international demand. It was the first time export orders have fallen below 50 since last October.

A slowdown in the manufacturing sector is in line with expectations that the broader Canadian economy will slow in the second half of the year following strong growth in the first half.

Still, the measure of manufacturing employment rose to 55.4 from 54.4 as backlogs of work increased to 51.5 from 50.8, suggesting firms’ capacity was being pressured.

Reporting by Leah Schnurr; Editing by Chizu Nomiyama

AVIATION

BOMBARDIER. AIRBUS. The Globe and Mail. 1 Nov 2017. European plane maker tells U.S. it may have broken military-arms-export rules. Airbus alerts U.S. of possible rules breach. European plane maker says it discovered ‘certain inaccuracies’ in applications for defence export licences
NICOLAS VAN PRAET, MONTREAL

Airbus Group SE has alerted U.S. authorities that it might have breached rules on military-arms exports, an unexpected disclosure that extends the European plane maker’s regulatory trouble to North America as it works to finalize a partnership with Bombardier Inc.
The France-based jet manufacturer said on Tuesday that following an internal review of its U.S. regulatory compliance procedures, it discovered “certain inaccuracies” in applications for defence export licences to the U.S. Department of State and informed regulators about them. The company said it is co-operating with U.S. authorities and can’t estimate how long it could take to resolve the issue.
The development adds the United States to the list of countries where Airbus faces regulatory scrutiny over its business practices. The company is already under investigation in Britain and France over the possibility it used middlemen to pay bribes that helped it win commercial aircraft contracts. Germany and Austria have launched investigations into the purchase of Airbus jet fighters.
The probes have shaken investor confidence and raised doubts about Airbus’s ability to execute a deal to take control of Bombardier’s C Series airliner program in the months ahead.
Additional regulatory trouble in the United States now raises questions about how that country will respond to Airbus. Chicago-based Boeing Co. has been battling Airbus for years over state aid and also launched a trade challenge against Bombardier over the legitimacy of the C Series.
In an industry that relies heavily on ties with government, Airbus now faces the prospect of probes in the United States and could be frozen out of future contracts, The New York Times reported.
“Ordinarily, I wouldn’t think that there would be much read-through [from this] with respect to a commercial aviation deal like the AirbusBombardier arrangement,” said Dan Fong, an analyst with Veritas Investment Research in Toronto. “However, this is clearly a very different U.S. administration than we have ever seen, so I would not be surprised to see the Airbus-Bombardier deal be swept up into more politics than the C Series has already experienced.”
Bombardier spokesman Simon Letendre said the company does not expect Airbus’s U.S. defence issues to impact the C Series partnership. “We don’t see this as an issue,” he said.
Airbus said it continues to do business in the United States “as usual.”
Airbus chief executive Tom Enders wrote a letter earlier this month warning staff that the company could face “significant penalties” as a result of the investigations. Chairman Denis Ranque was subsequently summoned by the French government to outline the measures put in place to end alleged bribery practices and curb the involvement of third-party sales agents, according to Bloomberg.
The use of third-party agents is also at issue in the United States. Harald Wilhelm, Airbus chief financial officer, told reporters on a media call on Tuesday that the violation related to the company’s failure to properly document the outside sales agents used to help broker defence equipment deals. The relevant rules fall under a section of the U.S. International Traffic in Arms Regulations policy that requires proper disclosure of political contributions, fees and commissions.
Bombardier announced an agreement with Airbus on Oct.16 that will see it relinquish majority ownership of its C Series program to the European plane maker for no cash consideration. In exchange, Airbus agreed to put its global sales and logistics power behind the C Series in a bid to make it a commercial success. Airbus will launch a C Series production line at its Mobile, Ala., assembly facility, a move the partners say will allow the aircraft to become a domestic product and escape preliminary duties of 300 per cent imposed on C Series imports into the United States.
Boeing, whose trade challenge against the C Series led to the duties, says building the aircraft in the United States won’t allow Bombardier to skirt U.S. rules. “The law prevents subsidized foreign manufacturers who have dumped their products into the U.S. from evading its requirements in this way,” Boeing spokesman Charles Bickers said in an e-mail. “Any C Series planes, or parts of planes, imported into the U.S. will pay the duty.”

NAFTA

The Globe and Mail. 1 Nov 2017. Forward, faster: BMO’s new CEO charts his course. With 200 years of history on his side, Darryl White sees a high-speed future. White: Uncertainty about NAFTA renegotiations are a particular concern for the self-dubbed largest trade bank in Canada
JAMES BRADSHAW, BANKING REPORTER MONTREAL

Darryl White is not sure what is ailing his beloved but slumping Montreal Canadiens. “It’s confidence, right? It’s got to be confidence,” he ventures.
Mr. White officially starts as Bank
of Montreal’s new chief executive officer on Wednesday and also happens to serve as a director of the storied hockey club. At 46, with close-cropped brown hair, he is youthful, trim and small in stature. But he radiates confidence.
Striding past the polished marble columns and century-old teller windows in BMO’s historic Montreal main branch to sit for an interview days before taking over as CEO, Mr. White seems to embody a new generation of bankers tasked with leading Canada’s oldest bank into its third century in business – and determined to push ahead at a faster pace.
His ambition at the outset is not to change the bank’s fundamental course. Board chairman Robert Prichard said Mr. White’s priority will be keeping “continuity of strategy and continuing acceleration of performance.” That means driving faster growth – particularly in BMO’s U.S. operations – by boosting spending on technology and “actually thinking like a customer,” Mr. White said.
“I think we’ve been doing a pretty good job of it,” he said. “I think we can do a better job as we go forward.”
Yet, squeezing more performance out of an established bank that ranks as Canada’s fourth-largest will be no simple task. BMO’s share price has hovered around the $100 mark of late, but has gained only 2.3 per cent year-to-date – which trails all of its Canadian peers. The bank’s return on equity, watched closely by shareholders, stood at a healthy but unspectacular 13.4 per cent at the end of its most recent fiscal quarter. And red flags are on the horizon. Uncertainty about the fraught renegotiation of the North American free-trade agreement (NAFTA) could spell particular trouble for BMO, which calls itself Canada’s largest trade bank. At the same time, there are continuing concerns about Canadians’ high consumerdebt load and soaring urban-housing prices, as interest rates begin to rise from historical lows. And new technologies are threatening to upend banking conventions, forcing financial institutions everywhere to adapt quickly.
DARI
Darryl White, right, will inherit the position of BMO chief executive in a better economic Bill Downe, left, who stepped into the job amid the 2007 global financial meltdown.
Unlike departing CEO Bill Downe, who stepped into the job in early 2007 and quickly faced a global financial meltdown, Mr. White inherits BMO on a stronger footing, with a more optimistic economic outlook. On Mr. Downe’s watch, total assets roughly doubled to $709-billion, while its U.S. footprint through the BMO Harris Bank subsidiary, which will be crucial to its growth prospects, expanded to serve more than two million personal and commercial customers with 600 branches across the U.S. Midwest.
BMO has similarly lofty expectations for Mr. White, a father of three who has worked at the bank for half his life. For the lion’s share of that tenure, he was an investment banker in its capital-markets arms, known for giving sharp strategic advice to blue-chip companies and for his deep devotion to his roster of clients.
But last year, as his name rose to the top of the bank’s succession chart, Mr. White took on much broader duties as chief operating officer. That gave him global responsibilities spanning retail and commercial banking, wealth management, marketing and even technology. As he delved deeper into corridors of BMO that were less familiar to him, he discovered a willingness to adapt embedded in the bank’s culture that fuels his confidence in its prospects.
“I don’t want the culture to change,” he said. “And if there’s a change, it’s perhaps at a pace that’s taking advantage of the foundation that we’ve built – so a pivot from foundational investments to acceleration.”
Made in Montreal
As he prepared to lead BMO into the future, Mr. White took a step back into the bank’s past on Sunday, revisiting the city that raised him.
More than 100 current and former executives, board members and their families assembled in Montreal. It was a rare gathering of multiple generations of the bank’s most senior leaders: Mr. White and Mr. Downe, as well as previous CEOs Tony Comper and Matthew Barrett; Mr. Prichard, the current chairman; and past chairman David Galloway; plus an array of financial-sector heavy hitters, including Bank of Canada governor Stephen Poloz.
They came together for a ceremony unveiling a stone tablet in the foyer of the bank’s historic and opulent Montreal main branch, first built in 1847 and expanded in the early 1900s. The setting and timing were carefully chosen for their symbolism, as a culmination of a yearlong celebration of the bank’s 200th anniversary, which arrives on Friday.
Under the branch’s ceilings adorned with gold leaf, the tablet now bears brass lettering spelling out 66 names – Mr. White’s among them – of the bank’s foremost leaders through its most recent century, steps from a similar memorial erected in 1917. “Our chief financial officer is quite happy to know we don’t build [branches] this way any more,” Mr. Downe joked in a speech at the ceremony, before guests decamped upstairs to toast the retiring CEO’s career over a dinner of mustard-crusted rack of lamb and caramelized black cod.
Mr. White’s own roots in Montreal are more modest. He grew up in a middle class, West Island home five minutes from the city’s largest airport, before studying business at the University of Western Ontario and Harvard Business School.
Beginning at the bank with a gruelling apprenticeship with Nesbitt Thomson (now BMO Nesbitt Burns Inc.), he charged through BMO’s ranks. And eventually, in 2006, he returned to Montreal for a five-year homecoming that proved an important testing ground, where he caught the attention of senior executives.
Jacques Ménard, the current president of BMO in Quebec, was one of Mr. White’s mentors during his time in Montreal. “He made me look good every day,” Mr. Ménard said, but he eventually advised BMO’s leadership “to get him out of here” and see what he was capable of.



Mr. White moved to Toronto in 2011, but has kept close ties in Montreal. He keeps a summer home in Quebec, and pledged to maintain a regular presence in Montreal, which “will continue to be the heartbeat of the company.”
Day one and beyond
Mr. White’s first day as CEO, Nov. 1, will begin with client meetings and end with parent-teacher interviews at his children’s school.
In the intervening hours, he will fit in visits to two Toronto branches, to the bank’s computing centre in Scarborough to see its chief technology officer and to an off-site gathering on inclusion and diversity at the BMO Institute for Learning – which he calls “BMO University.”
The day marks a milestone for the bank, but Mr. White’s agenda is fairly typical of his own education over the past year. As COO, he has spent much of his time getting an immersion course in BMO’s diverse business lines, making countless branch visits, joining the phone lines at call centres and meeting an array of customers.
“For me, that’s been an extraordinarily valuable experience to cut across all of our businesses,” he said, and it has also made him more attuned to what’s happening outside the bank.
One of Mr. White’s early plans to hedge against uncertainty is to boost BMO’s spending on technology. He declined to attach dollar figures to the existing budget or the increase he has in mind, but pledged that the bank will stay disciplined about digital investments. “A strategy whereby one splashes capital at technology because it’s a trendy thing to talk about falls short,” he said.
In the United States, Mr. White expects to quicken the rise of BMO Harris as a share of the bank’s overall earnings. Like many of its Canadian peers, BMO has looked to the hard-fought U.S. banking market for an opportunity to grow faster than the mature Canadian market will allow.
Over the past six years, the bank’s U.S. arm has grown at a compound annual rate of 24 per cent and now contributes about a quarter of the bank’s income, with 70 per cent of that coming from personal and commercial banking, nearly 25 per cent from capital markets and the remainder from wealth management.
“That’s the earnings growth story in the U.S., and that’ll continue to be the case,” he said.
He is bullish on the prospects for U.S. tax reform, and sees room to grab market share. Within five years, he predicts the U.S. arm’s overall contribution to earnings may be “approaching a third” on the strength of its existing assets. “In order for it to be much greater than that, you’d have to look at growing by acquisition,” he said.
But Mr. White concedes that the prospect of a breakdown in NAFTA talks as Canada, the United States and Mexico struggle to make headway in negotiations could put the brakes on trade flows that are vital to BMO’s cross-border business.
“NAFTA’s important. If NAFTA goes away, would we see a slowdown in economic trade? Yes. How much? I don’t know,” he says, noting that 32 U.S. states count Canada as their biggest export market. “Is it an impact that we’re going to worry about unduly from the perspective of our delivery to our customers and our shareholders? No. We’re going to continue to serve those customers in the markets that we have under the regimes that will exist.”
The bank has also been adapting to a new reality for credit in Canada, as federal measures have been rolled out to tax foreign home buyers and require tougher stress testing on mortgages, just as interest rates have begun to climb. Mr. White reiterated that “we’ve been supportive of those” new regulations.
But he also believes “credit, writ large, is well managed,” and that the banking system, both in Canada and globally, is more sturdy than it was a decade ago.
“There’s always going to be risk in a system,” he said. “We’ve taken that risk throughout history, we have it today. But I think it’s in a reasonable place on the curve.”

THE GLOBE AND MAIL. THE CANADIAN PRESS. OCTOBER 31, 2017. Air Canada CEO Calin Rovinescu ‘very concerned’ by NAFTA erosion
ROSS MAROWITS

The erosion of free trade with the U.S. and Mexico would be bad for Canada's largest airline, Air Canada's chief executive said Tuesday.

"We see the economic value and the economic contribution that NAFTA has facilitated," Calin Rovinescu told the Forum of the Americas in Toronto.

Although bilateral air agreements are not part of the agreement, he said the largest foreign carrier in the United States by flight frequencies and cities served has relied significantly on connecting and business traffic coming across the border.

Rovinescu said free trade has been good and will continue to be beneficial for Canada and the United States, in particular.

"I would be very concerned to see a further erosion of this," he said, referring to NAFTA.

"My confidence is there that the negotiators...will come to something sensible, but we certainly have seen the benefits of this."

The 23-year-old agreement faces an uncertain future after U.S. President Donald Trump launched renegotiations with a threat to tear up a deal he describes as being bad for the United States.

Rovinescu said Air Canada (TSX:AC) makes a $75 billion to $100 billion annual economic contribution when factoring in the model that estimates the economic benefit from airlines equalling five to seven times revenues.

"Serving those 70 or so cities in the United States has enabled us to make more than our fair share of economic contribution," he added in a question session with Canadian Chamber of Commerce president Perrin Beatty.

Air Canada's CEO added that he's disappointed by Boeing's trade action against Bombardier's C Series aircraft, which the airline has ordered.

He said the C Series is the first new innovation in the smaller narrowbody segment in more than two decades that is shaking up the 100- to 150-seat airplane market.

Airbus and Bombardier recently announced that the European aircraft manufacturer will purchase a majority stake in the C Series program and build an assembly line at its plant in Mobile, Ala., for the U.S. market. The move is aimed at allowing the aircraft to avoid the imposition of export duties.

CANADA INFRASTRUCTURE BANK - CIB

THE GLOBE AND MAIL. NOVEMBER 1, 2017. Canada's infrastructure bank on track to open by end of year: Sohi. Minister of Infrastructure and Communities Amarjeet Sohi responds to a question during question period in the House of Commons on Parliament Hill in Ottawa on May 30, 2017.
MATT SCUFFHAM

TORONTO - Canada's new infrastructure bank is on track to be up and running by the end of the year and will look to attract investment from major pension funds, the country's infrastructure minister said on Wednesday.

"We can tap into pension funds and institutional investors. Those institutions are looking for more stable, predictable returns over the longer term," Amarjeet Sohi told a conference in Toronto. "If we can find projects that generate revenue and there's a return on their investment I think there's potential for us to work with the private sector."

CANADA - COLOMBIA

The Globe and Mail. 1 Nov 2017. Santos envisions peace in Colombia. As he revises the country’s ‘war on drugs’ and sees through the demobilization of FARC, the President asks for patience
STEPHANIE NOLEN, TORONTO

Colombian President Juan Manuel Santos said the country must reimagine the “war on drugs” and take a new, health-based approach to addressing the production and trade in narcotics and other drugs.
“We’re like a static bicycle – pedalling, pedalling and you’re left in the same position – so something is wrong with this war on drugs: It’s not working,” he said in an interview at The Globe and Mail on Tuesday. “We need a less punitive, more health[-based] approach.”
And he said the United States, which has spent billions of dollars attempting to eradicate cocaine production in Colombia, endorses the policy shift.
In September, the White House said it “seriously considered” adding Colombia to its blacklist of countries failing to crack down on the global drug trade. Mr. Santos’s office responded angrily.
“Colombia is the country that has made the largest sacrifice in the last 40 years [in the ‘war on drugs’]: We lost our best journalists, best judges, best policemen, it was a very high cost,” Mr. Santos said on Monday.
However, he said that just five days ago, U.S. President Donald Trump sent him a letter that acknowledged his country’s efforts and its new approach.
“I trust that your efforts will help improve the problem,” Mr. Trump wrote in a copy of that letter released by Mr. Santos’s office. In Colombia, many saw the letter as a backpedal on the original threat to “de-certify,” which jeopardized the U.S. government’s strongest alliance in Latin America.
Colombia remains a major focus of the U.S. Drug Enforcement Agency, as the source of 90 per cent of the cocaine consumed by Americans – whose cocaine use is growing even as opioid use surges. The United States says cocaine production in Colombia has grown by 133 per cent in the past three years.
The Santos government has abandoned aerial spraying of coca crops and forced eradication, and instead is engaging former coca growers in a crop-substitution project. As part of the peace deal with the Revolutionary Armed Forces of Colombia, or FARC in its Spanish acronym, signed just more than a year ago, the ex-guerrillas have renounced all participation in illegal activity. But many Colombians question whether they have indeed truly abandoned the drug trade while, at the same time, other criminal actors – ranging from former right-wing paramilitaries to Mexican cartels – have moved in to the territories and businesses vacated by FARC.
FARC fighters have moved into demobilization camps and handed over their weapons, but other tangible signs of the peace process are few and far between – leading to frustration in many quarters in Colombia. The President said he understands that feeling, but people have unrealistic expectations.
“People get a bit exasperated – they need results faster – and the realities make this very difficult,” he said. “Constructing peace is like constructing a cathedral. You go brick by brick and you have to lay the foundations in a solid way, otherwise the cathedral will not work – so that’s what we’re doing now.”
More than 80 community leaders – from Indigenous, Afro-Brazilian and rural farmer communities – have been assassinated in Colombia since the deal was signed, more than double the number killed in the previous year. Many of those who have been killed warned, in the days before the deal was signed, that they would be targets for violence at the hands of new actors who sought to move into their areas, and said they feared the government lacked the motivation or the ability to protect them.
Mr. Santos said his government is “concerned” about the killings. “We have specific plans with the armed forces, with police, with the Attorney-General, with the justice department – and we are being quite successful in getting to these areas and trying to calm the people and tell them, ‘Listen, the state will come here and we will be present, we are going to defend you.’ ”
He said that investigation by the Attorney-General has not identified any systematic pattern to the killings – an assertion that civil-society organizations in Colombia angrily dispute.
“What we have discovered is that a big percentage of these are [motivated by] personal reasons because these are areas that have been very violent for many, many years – the other sources are criminal bands that are involved with drug trafficking that don’t want them to support the substitution,” the President said.
Some of the murders have been carried out by the National Liberation Army (ELN), another rebel organization in peace talks with the government, and who are seeking to maintain control over a chunk of territory, and “a small percentage” have been the armed forces, he said.
“But in a nutshell: We are working on that, we are concerned and we will guarantee the control of the territory in these areas,” he said. The question from Colombians, of course, is, “When?” “This is a process,” the President said.
Mr. Santos said much of the criticism originates with his political enemies, who are more invested in spin than in facts.
“There are a lot of people interested in showing that this has not worked or is not working – these are the same people who always said that the FARC will never disarm, the same people who said that we were going to expropriate every landowner, the same people who said that we are going to become a communist country and now they are saying this is not working because we are not moving as fast as many people would expect.”
Colombia’s former president, Alvaro Uribe, for whom Mr. Santos once served as minister of defence, has emerged as an intractable political enemy, bitterly opposed to negotiating with the FARC. He led the successful No side in the referendum on the deal a year ago and has kept up his criticism of the deal even after an amended version was adopted in Congress.
Mr. Santos said peace makers must be prepared to stake their political popularity on the deal, and his has suffered – although a series of corruption scandals have also contributed to his low public approval, currently about 23 per cent. Polling suggests that the next election could be won by an opposition candidate; even Mr. Santos’s former vice-president, German Vargas Lleras, currently running second, has been publicly critical of aspects of the deal recently.
But Mr. Santos said the process will not be jeopardized if a critic wins the presidency.
“We have advanced enough to make this process irreversible no matter who succeeds me,” he said. “Because by the time the next president comes in to power, things will have advanced enough for this to become irreversible.” The firm international backing for the deal also serves to entrench it, he said.
“No president will dare to go against what everyone in their right mind sees as the correct way out.”

LABOUR

StatCan. 2017-11-01. Study: Linking labour demand and labour supply: Job vacancies and the unemployed

In the two-year period from January 2015 to December 2016, there was an average of 1.33 million unemployed persons and 390,100 vacant jobs in Canada. Taken together, there were 3.4 unemployed persons for each job vacancy.

Since the beginning of 2017, labour market conditions have improved. In the second quarter of 2017, unemployment averaged 1.28 million and the number of job vacancies was 460,000, meaning that there were 2.8 unemployed persons for each job vacancy.

A new study, "Linking labour demand and labour supply: job vacancies and the unemployed," combines data from the Job Vacancy and Wage Survey (JVWS) and the Labour Force Survey (LFS) to provide a more complete picture of labour market supply and demand.

A key measure used in the study is the ratio of unemployed people to job vacancies. When the ratio is lower than 1.0, this indicates that there are more job vacancies than the number of unemployed persons. When the ratio is higher than 1.0, there are fewer job vacancies than unemployed people.

This ratio can be used to identify sectors of the economy where there is a shortage or excess of labour. It can also help in understanding whether the skills that are sought by employers differ from the ones available on the labour market.

Fewer unemployed workers per job vacancy in health occupations
The ratio of unemployed persons to job vacancies varied across occupations and across regions of Canada.

Results by occupation are obtained by taking the number of unemployed with recent work experience in a given occupation, and dividing them by the number of job vacancies in the same occupation.

Of all major occupation groups, health occupations had the lowest unemployment-to-job vacancy ratio, at 0.7. This indicates that there are fewer unemployed persons with suitable health experience or qualifications than there are job vacancies in health occupations.

Regardless of the region in Canada, the unemployment-to-job vacancy ratio was lower than 1.0 for health occupations.

Within the health sector, the ratio was lowest among professionals in nursing (0.3 unemployed persons for each job vacancy).

Other occupations had higher unemployment-to-job vacancy ratios. These include trades, transport and equipment operator occupations (3.5 unemployed persons per job vacancy) and natural resources, agriculture and related production occupations (3.0 unemployed persons per job vacancy).

Regionally, signals were mixed for these occupations. For example, in the Atlantic provinces, there were 13.3 unemployed people per job vacancy in natural resources, agriculture and related production occupations, compared with 1.7 unemployed persons per job vacancy in the same occupations in Ontario.

In sales and service occupations, there were 1.6 unemployed persons per job vacancy. Sales and service occupations typically account for a high number of both job vacancies and unemployed persons, because they are often characterized by higher levels of job turnover.

The ratio for sales and service occupations was higher in Quebec and the Atlantic provinces, and lower in Ontario and Western Canada.

Job vacancies do not always match the education level of the unemployed
Nearly half of unemployed persons had at least a postsecondary degree or diploma. However, more than two-thirds of job vacancies did not require more than a high school education, indicating a potential mismatch between the skills of the unemployed and job openings.

If unemployed university-educated persons restricted their job search only to jobs requiring a university education, there would be over 5.9 unemployed university graduates per job opening.

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/171101/dq171101a-eng.pdf

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