Toronto – April 20, 2015 – According to a new study by the CIBC, profits for corporations in Canada have hit a 27-year high, however it does not seem as though the increased revenue in the form of profits has trickled down to workers, as Canada's economy shrunk, due to mass layoffs, store closures and a reluctance from corporations to invest into people. Corporations have also been enjoying record profits due to high corporate tax cuts.
Profit margins for corporations in Canada have been reported currently at 8.2%, the highest it's been in nearly three decades. This number is due to a shrinking labour force and a low Canadian dollar.
Canada's GDP (Gross Domestic Product, the total value of all goods and services within a country - often looked to as a sign of economic health) fell 0.1% in January 2015.
Canada's manufacturing sector lost 20,000 jobs in February 2015 alone, manufacturing is down 0.07% as jobs in the sector plummeted to a near record low.
During 2009 to 2013, average hourly wages adjusted for inflation rose by a total of 2.3% , or about 0.5% per year.
No less than one third of Canadian GDP in 2014 was produced by sectors with falling labour costs.
According to a CIBC report, the quality of Canadian jobs is the lowest it's been in 25 years. "Our measure of employment quality has been on a clear downward trajectory over the past 25 years," said CIBC's deputy chief economist Benjamin Tal.
The pace of growth in labour costs dropped from 3.5% in 2012 to 1% in 2014
The Canadian dollar has depreciated by almost 25% since 2012.
According to a CCPA study conducted in 2011, 198 companies on the S&P/TSX composite from 2000 through 2009 were being 20% less than they were in 2000.
If the 198 companies paid the same tax rate as they had in 2000, federal and provincial governments would have collected an additional $12 billion/year in revenue.
Sources: CIBC, 2015. "Higher Levels of Profit Margins are Here to Stay." Canadian Centre for Policy Alternatives, 2011. "Corporate Income Taxes, Profit, and Employment Performance of Canada's Largest Companies."CIBC, 2015. "Employment Quality - Trending Down." Press Progress, 2015. "Canadian manufacturing jobs plummet to near record low: Statistics Canada."