Martin's economic record marked by increased income inequality, no real wage gains for workers

December 10, 2003

OTTAWA--While Paul Martin points to a strong record of economic growth and rising employment during his tenure as Finance Minister, his overall economic record is flawed when viewed from the perspective of working families, according to a study released today by the Canadian Centre for Policy Alternatives.

Paul Martin's Economic Record: Living Standards of Working Families and Prospects for Future Prosperity, by economist Andrew Jackson, notes that despite the impressive growth of real GDP per person between 1993 and 2003, working families mainly increased their incomes by working longer hours. These gains in labour income from higher employment were offset by lower income transfers to households from all levels of government. Additionally, corporate pre-tax profits have grown as a share of national income at the expense of wages and salaries.

Income inequality and poverty have both increased when account is taken of the state of the business cycle and re-distributive economic transfers, economic security, and access to public and social services were all undermined by Mr. Martin's spending cuts--particularly cuts to EI and transfers to the provinces.

"Poverty rates for the working-age population in 2001 were still well above the level of 1989, when unemployment was at about the same level," says Jackson. "The fact that the child poverty rate was about the same in 2001 as in 1989 is no reason for great celebration, given that this was the decade for the elimination of child poverty."

There has been a major convergence of Canada towards the small government/high inequality/high insecurity U.S. social model. International data show that the incidence of low pay in Canada is, among the advanced industrialized countries, second only to the U.S.

"The clear bottom line is that income inequality increased significantly in the Martin years, mainly because the increasingly unequal distribution of market income was not offset to the same extent as in the recent past by government transfers to lower income families. And poverty rates remained disturbingly high," concludes Jackson.