The current economic recession seems unforgiving toward Waterloo Region. The March 2009 unemployment data from Statistics Canada rated the Kitchener Census Metropolitan Area (approximating Waterloo Region), as having the second highest unemployment rate among Canada's 27 urban centres -- tied with St. Catharines-Niagara.
This is part of a trend in which the Ontario economy as a whole has experienced larger job losses over the past year than those in most of the rest of Canada. Industries such as services to business, manufacturing, resources and trade and transportation, have been hit particularly hard. Clearly, the region is in a huge transition, and optimism seems in short supply.
Yet, earlier this year, a report by the Martin Prosperity Institute, commissioned by the Ontario government, declared Waterloo Region and adjoining Guelph well-positioned for the "creative age" in which we live, and as such would be a "huge part of Ontario's future."
And the same labour force survey which produced the dreadful unemployment numbers also held some relatively positive news for the region. One positive indicator is that people are still pouring into the region to live and work. Waterloo Region ranks second in Canada (tied with Calgary) for growth in the labour force over the past year -- a more indicative sign of long-term economic vitality. Thus, the high unemployment rate is partly a short-term distortion of a much more vital long-term picture than in most other Canadian communities. Jobs are lost here -- but others clearly are being created despite the depth of the recession, and in that sense the region remains a beacon for Ontario's economy.
Another real reason for optimism is that governments around the world, including governments at all levels here in Canada, have shown leadership with timely monetary action, and are rolling out fiscal measures to an extent that now appears likely to succeed in stopping the sharp decline of confidence on the part of investors and consumers which began last year, and risked dragging private sector demand well below the long-term productive potential of our economy.
The groundbreaking meetings of the leaders of the G20 countries which took place first in Washington, D.C. last November, and subsequently in London, England, in April, were also instrumental in stopping the global slide in confidence.
Our own Waterloo-based centre has for the past four years vigorously promoted such meetings as a key to effectively deal with global crises. They have already helped governments in the large developed and emerging economies resist policy mistakes that have tended to make downturns worse in the past, such as the imposition of new trade barriers, and the reluctance or inability to provide necessary fiscal and monetary stimulus. For a trading country and a trading region such as ours, the shape of global economic leadership has rarely been more important.
Each country will decide how it will address the three types of spending needs that arise in the current circumstances: providing immediate stimulus, assist with transitional help and training programs, and invest for the long run. Ideally, spending measures will be calibrated to address all three types of needs.
Beyond short-term actions aimed at providing some measure of stability to workers and key sectors of the economy, measures need to aim in the medium-term at strengthening economic and social resilience and flexibility through training, education, better understanding of the challenges, and building bridges within the community and between the community and the outside world.
For the longer term, measures taken should aim not only at accumulating the building blocks of the creative economy of the future -- everyone jurisdiction will seek to do that -- but also to ensure that our decision-makers have the incentive to assemble and use them in a unique way that plays to our strengths. The focus here must be on the creative and innovative processes themselves, whether applied to science, to technical development, design, teaching or business practices, and indeed policy-making, across a whole series of endeavours.
In this context, many actors in the private and public sectors will need to operate under a dual mode of crisis management and rebuilding their vision for the future. Will financial institutions with relatively strong balance sheets be able to act in relief of those that have been cutting back on consumer and business credit? Will industries that have been battered not only by the recession, but by foreign competition and changing technology and consumer trends be able to reinvent themselves? Will governments be able to re-examine programs that have contributed to economic sclerosis?
The crisis has exposed the fault lines in many industries and sectors of our economy. It is our collective task to ensure that these are addressed, rather than forgotten once the recovery takes hold.
There is no doubt that the choices we make today as we react vigorously to the crisis will have a large impact on our ability to sustain high and growing incomes, pay for pensions and social services, and be more economically secure ten years from now.
Waterloo Region can take inspiration from its own economic history. While there are typically gut-wrenching stories behind every operation that closes its door, the local culture that has regularly seen new activities emerge in the place of old ones demonstrates a remarkable degree of local resilience followed by renewal, a strong reason to have confidence in the future.
Daniel Schwanen is deputy executive director of programs at the Centre for International Governance Innovation (CIGI) in Waterloo.
First in a series of 11 essays on the global economic crisis by experts from the Centre for International Governance Innovation