Canadian labour market developments in international context: Flexibility, regulation and demand

Canada's labour market performed badly in the 1990s, compared both to the set of industrialized countries and to its main comparator, the United States. This has prompted numerous calls for measures that would make Canada's labour market more "flexible." Much evidence suggests, however, that Canada's labour market is not at all "inflexible," in the common sense of being able to change and to adapt to change. Advocates of labour market flexibility are often actually calling for policies of labour market deregulation. While Canada's labour market is more regulated than that of the US, by international standards it is relatively deregulated. There is no correlation, however, between the intensity of labour market regulation and the employment performance of OECD countries during the 1990s; aggregate demand conditions are a more powerful predictor of employment performance than are comparative regulatory structures.