"Google will keep its employees home until at least next July 2021, making the search-engine giant the first major U.S. corporation to formalize such an extended timetable in the face of the coronavirus pandemic. The move will affect nearly all of the roughly 200,000 full-time and contract employees across Google parent Alphabet Inc., and is sure to pressure other technology giants that have slated staff to return as soon as January. The Wall Street Journal, July 27, 2020
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Thanks to Greg The Analyst's April 22, 2020 blog entry "Why I view this cycle as deflationary, not inflationary." for his unsourced reproduction chart of the "Income Share of Top 1% Relative to Bottom 90%" since 1920 (chart left).
I added to the chart mashup the closest comparison I could find to reflect Canada's wealth gap. The two countries track the same trend in income disparity rising from the early 1980's when state mandated interest rate inflation peaked, to now the end of 2Q 2020 when our new Bank of Canada Governor, Tiff Macklem said on June 22nd, "Our main concern is to avoid a persistent drop in inflation by helping Canadians get back to work." "avoid a persistent drop in inflation" oh oh... apparently the members of the The Canadian Club of Montreal who are mainly from the business and professional communities addressed by the Governor are not to be exposed to the apparently scary noun... "deflation" I will highlight below the main points of Greg's argument. We are indeed beginning to see the elements unfold for another great cycle of deflation, not official yet, but the evidence mounts. |
Below is a mashup of "FRED" charts on Velocity of Money and the Probability of Deflation. The Bank of Canada does not publicly publish those metrics.
Money Velocity
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M1 Money Velocity has been trending down since 4Q 2007 (the "Great Recession") as unemployment rates have been rising (the 10 year change in unemployment in Canada is up 38.4% on the May 2020 data chart). The unemployed consume less; hence they save more. As consumption rates fall, GDP drops: (from 4Q 2008 to 4Q 2009, GDP dropped 1.9% and with the Covid 19 shutdown the March 2020 GDP print is down 6.8% since 4Q 2019).
M2 Money Velocity was trending up until 3Q 1997 and both employment and greater consumption (inflation) increased. The first hit to consumption came with the DotCom crash in 1Q 2000 and the Consumer Price Index began to drop and then plunge into the March 2009 Great Recession. By 2011 the commodity super cycle peaked (see the Deflation Probability chart below and the TSX Indexes chart)
The Bank of Canada's 2% CPI target and their policy framework (ZIRP & NIRP) is to "avoid a persistent drop in inflation". The most recent CPI print (April 2020) was negative at -0.2% via pandemic repricing.
M2 Money Velocity was trending up until 3Q 1997 and both employment and greater consumption (inflation) increased. The first hit to consumption came with the DotCom crash in 1Q 2000 and the Consumer Price Index began to drop and then plunge into the March 2009 Great Recession. By 2011 the commodity super cycle peaked (see the Deflation Probability chart below and the TSX Indexes chart)
The Bank of Canada's 2% CPI target and their policy framework (ZIRP & NIRP) is to "avoid a persistent drop in inflation". The most recent CPI print (April 2020) was negative at -0.2% via pandemic repricing.
Deflation Probability
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Theses are still early days in the pandemic. New deaths from the novel coronavirus today (June 28, 2020) are the highest in Mexico. The U.S. is ranked 7th and Canada is ranked 72nd (Worldometers). Trade wars are intensifying, supply chains are being disrupted and cash flows are being diverted towards turning debt into equity. Let's take a look at Greg The Analyst's argument and the charts he used:
Charts Used:
Argument Bullet Points: Why Greg's view is that this cycle is deflationary, not inflationary.
Charts Used:
- Kondratieff investment "Seasons".
- U.S. income share of the top 1% relative to the bottom 90% since 1920.
- U.S. Dow Jones industrial price index with notations of Fed action and market reaction 1920 through 1932.
- April 2020 forecast of U.S. job losses by sector.
- U.S. share of wealth of the top 1% relative to the bottom 90% from 1960 to 2014.
- U.S. distribution of wealth from 1917 to 2017.
- U.S. velocity of M2 money stock since 1960.
- U.S. corporate profits and employee compensation as a percentage of GDP since 1947.
- U.S. milk production output since 2001.
Argument Bullet Points: Why Greg's view is that this cycle is deflationary, not inflationary.
- (Chart 1) Disinflation periods see asset prices and debt levels rise as CPI, interest rates, fixed income yields drop and commodity prices drop eventually leading to stock market drops (equity share pricing).
- (Chart 1) Deflation periods see asset and consumer prices drop along with consumer confidence as rising unemployment leads to consumption and production drops as well as debt repudiation, credit contraction, spiking interest rates and currency repricing.
- (Chart 1) Inflation reignition requires demand to be much greater than supply which requires deflationary deleveraging (turning debt into equity).
- (Chart 2) In this last cycle of Disinflation, production supply became much greater than demand consumption and as the stock market equities boomed the ongoing transfer of wealth accelerated towards the top 10% leaving the bottom 90% of earners stuck at late 1990's real wages producing a collapsing middle class and no further possibility of inflation. Hard deflation rebuilds the middle class.
- (Chart 3) In the Great Depression of the late 1920's and early 1930's, the Fed tried its then version of QE but it did not prevent the Dow from a 2+ year crash. Very low operating margins from overcapacity (high supply exceeding low demand), coupled with high levels of debt creates the scenario of weak hands capitulating.
- (Chart 4) Commodity prices, manufacturing, retail and wholesale trade, service industries and the travel, accommodation and food service sectors have all been hit by Covid 19 wiping out a decade and more of high employment.
- (Chart 5+6) A key feature of the early 1930's depression was, as it is today, the wealth gap and the broken structure of the middle class. (see my June 20, 2020 post "Household Net Worth")
- (Chart 7) The slow down in the velocity of money results from the deflationary transfer of wealth from the middle class to the top 10% which produces a change from a productive economy and investing in people to unproductive investment in financial engineering. (see my June 11, 2020 post on "CDOs Then CLOs Now")
- (Chart 8+9) The commodity super cycle ended in 2011 and by 2012 as a percentage of GDP, employee compensation crashed and corporate profits peaked. QE bailouts of corporations and the bond market by central banks over the last decade have not been inflationary for employment wages but has only exaggerated the wealth gap and increased the supply side. Inventories have spiked while demand has been dropping and now has plunged with the plague. Booms and over supply lead to busts. Rebuilding the middle class demand leads to productivity.
Reopening Canada: 3 stages of recovery
Financial Post’s Larysa Harapyn speaks with FP’s Kevin Carmichael and Manulife Investment Management’s Frances Donald about what’s ahead as Canada starts to re-open following the COVID-19 pandemic. June 25, 2020
DEPRESSION DEFINITION
(✓) = now occurring in various global economic centers.
Depressions are characterized by their length, by abnormally large increases in unemployment (✓), falls in the availability of credit (✓) (often due to some form of banking or financial crisis (✓)), shrinking output (✓) as buyers dry up (✓) and suppliers cut back on production and investment (✓), more bankruptcies (✓) including sovereign debt defaults (✓), significantly reduced amounts of trade and commerce (✓) (especially international trade (✓)), as well as highly volatile relative currency value fluctuations (✓) (often due to currency devaluations (✓)). Price deflation (✓), financial crises (✓), stock market crash (✓), and bank failures (✓) are also common elements of a depression that do not normally occur during a recession. (Wikipedia)
CLICK TO ENLARGE CHARTS
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Today we see fear in the headlines. Fear in the Party of Trump (Bolton's book is leaked), fear in the contagion pipeline ("At this time, it’s unclear how easily or sustainably this virus [Coronavirus] is spreading between people...” the CDC says. [2700 confirmed case and 60 million Chinese residents in lockdown provinces] via CNN JAN 27th) and fear in the stock market indexes (1st chart left).
The second chart to the left shows the "un-growth" of Canadian Labour Productivity since the peak in the 1980's punctuated by two major global stock market selloffs (fear). In OCT 1987 "Black Monday", every major world market experienced a decline. Measured in USD, 8 declined by 20-29%, 3 by 30-39%, 3 by more than 40%. In OCT 2007 through MAR 2009 (17 months) during the Global Financial SubPrime collapse, the Dow Jones Industrial Average dropped 53%. |
Chuck Schumer speaks following leak of Bolton book excerpt
Senate Minority Leader Chuck Schumer addressed reporters Monday on Day 6 of the Senate impeachment trial of U.S. President Donald Trump, after an excerpt from a book written by former National Security Advisor John Bolton was made public. Global News JAN 27, 2020
 CLICK CHART TO ENLARGE | While we wait for the July Canadian housing data to trickle out, let's return to Japan and their housing price experience after nearly 20 years of ZIRP and NIRP. I have posted charts about Japan since 2012 to illustrate the folly of global central banks and their monetary policies of instituting ZIRP & NIRP to stimulate inflation > consumption > production, the by-product of which, has been the manic search for yields as the underlying asset class values became stretched to perfection under pressure from the FOMO crowd. Instead of using fiscal policy which requires long term planning and socially cohesive agreements directed towards production and well being, the quarterly knob twiddling monetary policy has in part, along with the rise of a digitized global financial network, unleashed "megabyte" money laundering which the UNODC estimates at 2-5% of global GDP per year. It has also crushed the incentive to save for a future funding of investment into productive assets. The Household Saving Rate in Canada has decreased to 1.1% in the first quarter of 2019. |
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Commodity Super Cycle - 10 Years into the Bear
After 20 years of monetary suppressed-yield policy in Japan and 10 years in Canada we still see long term inflation in a grinding downtrend, and peak commodities have come and gone.
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| Here is a chart I published in a 2012 post "What Do You Do During a Housing Bust". The answer is "save". If the CRB chart above has correctly identified a cyclical swing between bull and bear commodity production, then we should expect another "lost decade" of balance sheet repair especially in the over-speculated and now depreciating housing asset markets of Canada. |  CLICK CHART TO ENLARGE |
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CMHC launched a new report earlier this week that will focus on mortgage market trends in Canada on a quarterly basis. This first report entitled "Mortgage Market Slowing & Share of Uninsured Mortgages Increasing" indeed highlights 2 major trends in place:
#1 above suggests that housing unaffordability continues to grow as fewer potential buyers can qualify for a high ratio debt to equity insured mortgage. #2 suggests that reducing mortgage rates by 75% over the last thirty-plus years has led to debt revulsion as identified in my Household Debt chart which shows a peak and flattening since the hot market price peaks of 2017 |
Earlier this year in an effort to underline the end of the secular credit surge, I posted MAXED OUT in April and LATE STAGE DELEVERAGING in June. The insistence of the Bank of Canada to join in the decade long global experiment of ZIRP and NIRP has not ignited CPI much beyond their target mandate of 2% per year (spread chart). But it has forced tax payers to move away from the diligence of savings, investment and productiveness to the chasing of yields, to the consumption of depreciating assets and to the blowing up of the biggest bubble in major asset classes in both the equity and debt sectors, the fall out of which is also identified on my Household Debt Chart that includes a plot of Federal Direct Investment data which shows the dramatic and widening divergence between investment into and out of Canada taking place in the last 3 years but has also been trending towards this conclusion each year for the last 20 years.
These trends have taken 10, 20, 30 and 40 years for the credit cycle to fully manifest and now the effects of unproductive capital have emerged with a nascent transition to the early stage of a new credit cycle where companies and households will try to deleverage by reducing the amount of debt they hold while risk appetite is low and the cost of risk taking is high.
These trends have taken 10, 20, 30 and 40 years for the credit cycle to fully manifest and now the effects of unproductive capital have emerged with a nascent transition to the early stage of a new credit cycle where companies and households will try to deleverage by reducing the amount of debt they hold while risk appetite is low and the cost of risk taking is high.
...History has shown that it takes a “long, long” time to restore household balance sheets, a situation that will be all that more difficult with trade and business spending hampered...
David Tulk, International Portfolio Manager for Fidelity Investment Canada, March 2019
...The nation may already be in recession after growing at an annualized pace of just 0.4 per cent in the fourth quarter (2018) and a pretty “soggy” start to the year (2019)...
David Wolf, Asset Allocations for Fidelity Investment and Former adviser to the Bank of Canada
...Canada’s households are clearly more stretched in terms of debt and spending than their American counterparts... There’s just no latent capacity to spend or to buffer a shock in Canada... They just have less room for error, less room to cushion any kind of hit with spending, before they would actually fall into outright dissavings...
Eric Lascelles, chief economist at RBC Global Asset Management Inc
Source of Quotes above from Financial Post.com June 2019
One of the problems facing our "economy" is the rampant flow of hard to track global criminal capital moving into jurisdictions attractive to money laundering... in this case Canada. The World Bank and the International Monetary Fund produces corruption ratings and by their measure British Columbia ranked fourth for money laundering among six regions in Canada. Manitoba and Saskatchewan combined were said to have more money laundering activity than B.C.
"B.C. Attorney General David Eby announced Justice Austin Cullen has agreed to lead what will be known as the Commission of Inquiry into Money Laundering in British Columbia, which is expected to produce a report in May 2021." Powell River Peak, May 2019
Meanwhile the "Vancouver Model" continues to move east across Canada (see my NOV 2018 post DIRTY REAL ESTATE); "The C.D. Howe Institute study estimates of money laundering in Canada range from $5 billion to $100 billion. SEP 2018"
That money after it's cleaned flows into business elements and hard assets throughout the "economy". It's going to take a new generation of activists to replace the mob model we find ourselves in.
One thing that generation could do is to replace our taxation system with an iteration of the APT tax which is an automated micro tax on any financial transaction. The authors of the APT tax model demonstrate the "desirability and feasibility of replacing the present system of personal and corporate income, sales, excise, capital gains, import and export duties, gift and estate taxes with a single comprehensive revenue neutral Automated Payment Transaction (APT) tax... In its simplest form, the APT tax consists of a flat tax levied on all transactions. The tax is automatically assessed and collected when transactions are settled through the electronic technology of the banking/ payments system... Real time tax collection at source of payment applies to all types of transactions, thereby reducing administration and compliance costs as well as opportunities for tax evasion."
Additionally, the APT can be adjusted easily so that it is revenue neutral, ie: we could as a society set our fiscal priorities to accomplish our social contract goals with a tax burden of less than 2% of ALL financial transactions throughout a computerized banking and financial system. We would not have to debate where the money comes from... there is more than enough of that... but we would only be left with a debate of how to invest the money. See my complete APT post of NOV 2012
Let the new digital generation take this challenge on.
Meanwhile David Rosenberg May 2019
The investor class is heading towards liquidity
in the form of U.S. Treasuries and the USD
Marc Goldfried, head of Canoe Financial Fixed Income talks with BNN Bloomberg about dropping yields confirming a weakening economy.
The Bank rate has been 2% for the last five months but the Bank of Canada 2yr and 10yr benchmark bond yields are indeed inverted to the Bank Rate as I have noted on my Yield Curve chart (FEB 2019)
On march 11th 2019, David Larock an independent full-time mortgage broker laid out his "Case for Lower Canadian Mortgage Rates", below edited, but read the whole feature report at MoveSmartly.com
On march 11th 2019, David Larock an independent full-time mortgage broker laid out his "Case for Lower Canadian Mortgage Rates", below edited, but read the whole feature report at MoveSmartly.com
The Bank of Canada acknowledged that our current economic slowdown is now “more pronounced and widespread” than it had previously forecast.
Global economic momentum is slowing.
Our economic slowdown has been sharper than expected.
Housing and consumption have slowed, and business investment and exports haven’t picked up the slack as the BoC had hoped.
Inflation expectations have been lowered.
Uncertainty is increasing.
Our output gap is widening because debt is choking off growth, and that is a powerful, long-term headwind, which will continue to exert itself long after global trade networks have been re-established.
CLICK CHART TO ENLARGE
Thanks to Jesse Felder @jessefelder and
Tuomas Malinen @mtmalinen for the charts above.
Today, March 13th 2019, the live
Canadian Productivity Chart exhibits a slowdown.
Tuomas Malinen @mtmalinen for the charts above.
Today, March 13th 2019, the live
Canadian Productivity Chart exhibits a slowdown.
 CLICK CHART TO ENLARGE | "New lending activity and refinancing have contracted significantly since the beginning of 2018, a culmination of regulatory pressure, enhanced scrutiny following the banking royal commission, and the self-fulfilling consequence of slowing house prices driving an investor pullback... A rising cost of credit represents a blunter instrument for slowing lending, since it impacts both owner-occupiers and investors in parallel,"JP Morgan's Henry St John |
The above sounds like it, but no,
that's not a quote about Canada;
but these are:
that's not a quote about Canada;
but these are:
Canadian real estate sales are feeling the pinch of higher interest rates, and consumer credit isn’t far behind. Bank of Canada (BoC) numbers show household debt printed a new record high. Despite the record high, the rate of growth continues to slow for consumer debt levels. The decelerating growth is yet another indicator that the credit cycle has peaked. Better Dwelling, July 2018
Market Rate Outlook: One more hike this year plus two more hikes next year. The market is not fully pricing in the next BoC rate increase until December... Canadians are now more sensitive to higher rates than ever before. That means consumption is slowing faster with every 1/4% BoC rate increase. RateSpy.com Sept 2018
Canada's economy is set to slow down even with a NAFTA deal, economists say:
"Our research finds that even with a NAFTA deal in place, the long-desired rotation in growth towards exports and business investment will be sluggish and won't offset the coming slowdown in household spending and housing activity," Royce Mendes, senior economist at CIBC Capital Markets
Sal Guatieri, senior economist at BMO Capital Markets, is also expecting growth next year to slow to 1.8 per cent, as reduced consumer spending and housing activity will weigh on growth.
RBC senior economist Nathan Janzen said the bank doesn't publish forecasts for 2020, but agrees that growth is shifting lower.
"We do expect a more modest pace of consumer spending going forward, and while housing activity should remain a contributor to growth, this sector as well should see more modest growth relative to the past," said Brian DePratto, senior economist at TD Bank.
Quote Sources: CBC News Sept, 2018
And as my long term chart study of Canadian Debt, GDP, Foreign Direct Investment and Balance of Trade shows, since the credit crash of 2009, Canadian's awesome consumption via debt has not led to higher wage employment production in Canada but to lower wage warehousing and transportation of goods and services that we import to maintain our lifestyles.
"The one-million square foot Toronto centre will be Amazon’s sixth facility in Ontario and ninth in Canada." Financial Post, July 2018
CLICK INFO-GRAPHIC TO ENLARGE
"Stabilization should not be interpreted as the start of another strong rally," they warned (TD Bank economists Derek Burleton and Rishi Sondhi). That's because mortgage rates are on the rise, and home affordability levels have reached their worst levels in a quarter century... in fact historical data shows that over the past half century, inflation-adjusted house prices in Toronto fell for about a third of the time. huffingtonpost.ca, Sept 2018
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"While there is a lot of talk about how employment is becoming more temporary, this graph from joint work with Alex Thomson and Arthur Sweetman shows that the average time that the currently employed has been with the same employer has been almost constant at just over 100 months since 1976." Hat Tip to Macleans.ca |
And for those of you who are under 40 years of age, you might end up changing employers 6 more times before you reach 70 years old.
That’s why, when you finance a real estate purchase, you should double check both your debt AND income amortization to see if they support each other.
If you have to move to a new city to get that better job, make sure your real estate asset can produce a net revenue stream.
Computer technology is already eating jobs and has been since 1990. To survive, get non-routine skill training. Thanks to Futurism.com for the chart below.
The Precarious Generation
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Canada is leading the way among OECD members in household debt measures. Also of note is that labour costs in Canada were negative at -0.4% Y/Y
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Debt has been fueling lifestyle especially in cities like Vancouver and Toronto where extreme speculation, serial flipping and inert local and federal officials stand by with failed policies and ineffective regulations. There is no cop on the beat; it's do unto others what you want.
In less than 2 decades we have gone from a country where the ability to easily change employment or one's residence has evaporated. Now we are pinned to our job and our postal code because leaving either results in lineups to fill our departure.
I suggest that both the opening of access to information via the internet and the collapse of bond yields sponsored and promoted by governments mirroring each other have left us with a country of over-consuming and under-producing populace.
My regularly updated Household Debt Chart includes the FDI-FDO plot which illustrates the point; we are a country of consumers highly prized by offshore producers, a situation that is now entrenched in our behaviour, modified by our regulations. Currently, for every $1.00 of Foreign Direct Investment into Canada, there is $1.27 of Canadian savings being invested offshore where the yield is greater.
The Paradise Papers underscores the problem; greater access to stealth information along with domiciled yield suppression has led to increasing capital flight by Canadians and Canadian corporations unwilling to invest in Canada. This and the vacuum created from interest rate suppression has turned a lot of us into serial house and condo flippers and the ease and return on investment has attracted a flood of offshore money wanting in on the fun.
Those of us who could not or did not participate in the mania have been left with the sorry reality that for the last 10 years, housing costs in the runaway markets have increased by 10-12% per year or more depending on location and product. Wages have not increased to the same degree but balance sheet debt to equity ratios have.
In less than 2 decades we have gone from a country where the ability to easily change employment or one's residence has evaporated. Now we are pinned to our job and our postal code because leaving either results in lineups to fill our departure.
I suggest that both the opening of access to information via the internet and the collapse of bond yields sponsored and promoted by governments mirroring each other have left us with a country of over-consuming and under-producing populace.
My regularly updated Household Debt Chart includes the FDI-FDO plot which illustrates the point; we are a country of consumers highly prized by offshore producers, a situation that is now entrenched in our behaviour, modified by our regulations. Currently, for every $1.00 of Foreign Direct Investment into Canada, there is $1.27 of Canadian savings being invested offshore where the yield is greater.
The Paradise Papers underscores the problem; greater access to stealth information along with domiciled yield suppression has led to increasing capital flight by Canadians and Canadian corporations unwilling to invest in Canada. This and the vacuum created from interest rate suppression has turned a lot of us into serial house and condo flippers and the ease and return on investment has attracted a flood of offshore money wanting in on the fun.
Those of us who could not or did not participate in the mania have been left with the sorry reality that for the last 10 years, housing costs in the runaway markets have increased by 10-12% per year or more depending on location and product. Wages have not increased to the same degree but balance sheet debt to equity ratios have.
- CBC News November 23, 2017 - Canadian households lead the world in terms of debt.
- Toronto Sun July 2, 2017 - Canada's middle class shrinks.
- Market Watch November 3, 2017 - Blame the Internet for your stingy paychecks.
- Stats Can November 11, 2017 - Housing prices, social ties and transfer payments may inhibit mobility.
- Stats Can March 24, 2017 - Canadian waste management revenues increased 11% in two years to 2014.
- CHPC.biz Ongoing Chart - Foreign Direct Investment OUT higher than IN over the last 20 years means Canadian companies are investing outside of Canada to get a better return on Capital and Labour.
- CBC News November 6, 2017 - More than 3,000 Canadian names in the Paradise Papers.
-
Globe and Mail October 15, 2017 - The CRA is unable to identify the assignors who sell (flip) their contracts.
Millennials on Money: 'I am working two jobs right now’
CBC News - January 5, 2017
 CLICK CHART TO ENLARGE | The worsening of (housing) affordability in Q4 (2016) was the sixth quarterly deterioration in a row, the longest run in almost 20 years. National Bank of Canada FEB 8, 2017 Report My long term chart study of housing starts vs population growth currently projects a 7% Y/Y decrease for full year 2017. |
This suggests that indeed more starts could be consumed especially in this low interest rate environment.
Unfortunately the market place is skewed not to what is needed, eg: affordable family units close to appropriate services, but to what attracts non resident owners, flippers and FOMO driven investors who keep throwing greater amounts of leveraged capital at negative yielding and depreciating piles of steel, concrete and wood while governments at every level stand by in fear that they might lose this historic bonanza of property tax and transfer revenue.
My too-far-left radical idea of ending private fee simple land ownership is never going to happen in my lifetime as written. It is my expression of the frustration one feels at the polarity of choice:
Most people are at best only aware of two choices, two patterns, for land ownership – private ownership (which we associate with the industrial West) and state ownership (as in the Communist East).
The Idea of Owning Land by Robert Gilman 1984
But as Gilman points out in his piece, there are other examples of strategies between the two poles, ie: Landtrusts not only for conservation but for community purposes as well. Unfortunately:
"We don't have a national housing policy in this country and we should," "We're probably one of the few OECD [Organization for Economic Co-operation and Development] countries that don't have one."
TheTyee.ca June 2013
But now we have some Federal money being directed at that lack of policy:
Budget 2017 includes new national housing strategy. Canadian Finance Minister Bill Morneau handed down a budget Wednesday, March 22 that includes a new $11.2 billion national housing strategy
Business Vancouver March 22, 2017
Meanwhile the market grinds on. I suggest that individuals should consider investment in themselves rather than negative yielding real estate because there is no guarantee that the debt positions currently being created will be transformed into equity. What is more enduring is the ability to leverage one's skill set into cash flow as the OECD studies show:
The evidence on how well countries are prepared for the digital economy is rather disturbing. The OECD’s Survey of Adult Skills (PIAAC) suggests that more than 50% of the adult population on average in 28 OECD countries can only carry out the simplest set of computer tasks, such as writing an email and browsing the web, or have no ICT (Information and communication technologies) skills at all. Only around a third of workers have more advanced cognitive skills that enable them to evaluate problems and find solutions (OECD, 2013). As a result, many workers use ICTs regularly without adequate ICT skills: on average, over 40% of those using software at work every day do not have the skills required to use digital technologies effectively (OECD, 2016a). Skills for a Digital World OECD December 2016
CLICK CHART TO ENLARGE
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