“The growing number of Canadians struggling with debt is a result of the increase in income inequality. To tackle problems like the personal debt crisis we need to be taking action to reduce income inequality.” — Larry Brown, NUPGE President
Ottawa (25 Jan. 2019) — Almost half of Canadian households are $200 or less away from insolvency, reported the CBC. In Manitoba and Saskatchewan, 56 per cent of households are close to insolvency. These numbers are up significantly from 3 months earlier.
The most recent numbers come from a poll carried out in December 2018 by MNP Ltd, an insolvency firm. These numbers reflect a problem that has been decades in the making. As a 2016 report by the Parliamentary Budget Officer showed, household debt has been rising steadily as a percentage of disposable income since 1990.
People are going into debt for basic living expenses
People aren’t going into debt because they’re being extravagant. A 2017 report by another insolvency firm, Hoyes, Michalos and Associates Inc., explained that people with low incomes were going into debt to cover basic living expenses. One of the authors of the report is quoted by the Globe and Mail as saying, “Debt is a symptom — it's not the problem. If anything, we have an income problem.”
The problem is a lack of good jobs, not a lack of jobs
The personal debt crisis in Canada isn’t a result of unemployment. Unemployment is at its lowest level since 1976, reported CTV News.
Instead, the problem is that good jobs have been eliminated and precarious work has grown. People who would once have been able to find jobs with pensions and benefits that paid enough to support a family are now struggling to get by stringing together temporary or part-time jobs.
Harder for Canadians to turn bad jobs into good jobs
Most of the jobs that are considered “good jobs” are good for one reason — unions. Workers have been able to get decent pay, pensions, benefits, safer working conditions, and a host of other improvements because of their ability to organize into unions and force concessions from employers.
As the percentage of Canadian workers in unions has dropped, it’s become harder for Canadians to find jobs that provide a decent standard of living. Adding to the problem are trade agreements that increase the power of corporations at the expense of their employees and the public.
Cuts to public services drive up costs for most Canadians
For most Canadians the value of the public services they receive is far greater than what they pay in taxes. It’s estimated that the value of public services middle income Canadians use is equivalent to 63 per cent of their income. Government cuts to public services have transferred the cost to individual Canadians and made life less affordable for all but the wealthiest.
Rich getting richer at our expense
The reason so many Canadians are struggling to keep their heads above water isn’t because there is less wealth in this world than there used to be. It’s because growing income inequality has meant that the world’s wealth is concentrated in fewer and fewer hands. And as the Guardian reports, we’ve reached the point where Oxfam says 26 people own as much as the poor 50% of the world’s population — 3.8 billion people.
To tackle personal debt crisis, we need to reduce income inequality
NUPGE recognizes that the personal debt crisis can’t be viewed in isolation.
“The growing number of Canadians struggling with debt is a result of the increase in income inequality,” said Larry Brown, President of the National Union of Public and General Employees (NUPGE). “To tackle problems like the personal debt crisis, we need to be taking action to reduce income inequality."
NUPGE was a leader in raising the issue of income inequality with its All Together Now! campaign. Now with the second phase of the campaign, we’re focusing on how we fix the problem.
“Now the challenge is how to turn things around. With the work we’ve done, we think we have some good suggestions to start that discussion,” said Brown.