That which cannot continue will stop – Stein’s Law. Whether it is the higher cost of servicing government debt, government austerity following an election, or an unanticipated global event further interrupting supply chains, it appears that when rates fall they may fall sharply. Why is this the lead in an employment blog, you ask?…Well:
After historic rate highs, within two years of the first reduction, Bank of Canada rates have then fallen sharply and unemployment has risen significantly. Will this happen in Canada again, inevitably. Will it happen following unprecedented Bank of Canada rates in 2024? We can’t know but those who don’t know their history are doomed to repeat it.
Employers:
- Review headcount and staffing needs now. Termination costs will be higher when there is no mitigating employment; and
- Consider wage bands against labour availability not just in the near or immediate term. Termination costs are calculated against wages at the time of termination.
Employees:
- Short service employees should review their employment agreements and know their rights on termination;
- Long service employees should review their financial plan as they near retirement and build in contingencies against early involuntary retirement; and
- New hires should benchmark their compensation against their productivity and the prospect of a tighter labour market.
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