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HALIFAX, N.S. — A new study suggests Atlantic Canada’s labour market is catching up to the rest of the country but is still suffering from unemployment and seasonality due to a number of job creation barriers.
A Fraser Institute study released on Dec. 9 found that high tax rates, a comparatively large government sector relative to the size of the economy and a lack of private sector investment were barriers to job creation in Atlantic Canada.
“A mix of high tax rates, lower productivity and an economy dominated by the government sector has hindered private-sector investment and job creation in Atlantic Canada,” said Fraser Institute resident fellow Fred McMahon.
The study suggested the issues persist despite the Atlantic region moving closer to national norms in unemployment and seasonal work. The study noted that reforms to employment insurance in 1996-97 contributed to lower regional unemployment, seasonality and employment insurance dependence.
The study noted that the market was disproportionately rewarding seasonal labour and a higher level of unemployment, especially in rural areas.
It also found that governments in Atlantic Canada are larger and spend equal to 54 per cent of the regional economy compared to 40 per cent nationally, leaving less room for private-sector job growth.
Additionally, high tax rates reduce incentives for investments, entrepreneurship, job creation and skill development and productivity rates remain below the national average, leaving labour costs comparatively higher.
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