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Secure jobs on the rise in Canada, but the young are still shut out of the jobs market

January 4, 2013

Mr. Carney can’t push on a string. And he knows it.

His now famous comment labelling the stockpiles of retained earnings held by Canadian firms  as “dead money”, while perhaps being the most memorable quote of 2012, must also have been made out of a certain frustration that even this superstar central banker faces limits in his powers to push, encourage, and otherwise jumpstart business investment.

The Governor of the Bank of Canada knows that the flip side of dead money is insecurity in the jobs market.

While it is certainly true that the Canadian economy has more than recovered the job losses experienced during the recession, on its own this is a weak marker of prosperity and recovery.

Today’s release of the employment numbers for December by Statistics Canada complete the picture for the year that was.

They are consistent with the view that many firms face fundamental uncertainty about future profitability, and in response hold back investment. The complement to stockpiles of cash is anemic job growth, tentative hires, and insecure jobs.

Employment peaked in 2008 at 17.1 million, dropped by more than 200,000 in the following year only to recover in 2010 and surpass the pre-recession high and reaching 17.3 million in 2011, and fuelled by another 200,000 in 2012.

Compared to Greece, Spain, and the United States, this is a story of robust growth. But Canadians live in Canada, and the working age population has been steadily increasing. This has left the fraction of the population without a job still below its pre-recession high, and virtually unchanged since 2009.

While Mr. Carney may not be able to push on a string, the Minister of Finance Mr. Flaherty can certainly pull it. But it is clear that deficit reduction is now a priority, and that Canadians cannot count on public sector job growth.

The heavy lifting is going to have to be done by the private sector. Employment growth in the public sector has distinctly slowed, amounting to only 1% in 2012, down from 2.8% during 2010. It has now been outpaced by the private sector for two consecutive years. But even so private sector employment grew by only 1.5%, compared to almost 2% in 2011 and still a far cry from about the 2.5% growth rates before 2008.

One important bright spot in this picture is that 2012 may mark a turning point in the number of permanent jobs created.

Statistics Canada defines a temporary job as having a predetermined end date, or is slated to end when a specific project is completed. These numbers are dominated by term or contract jobs, but they also include seasonal jobs.

About 218,000 more Canadians were employed in 2011 than in 2008, but the number of permanent jobs was actually 50 thousand lower. All the increase in employment between these years reflected a small increase in the number of self-employed and substantial growth in temporary employment, which rose 222,000.

What growth in employment that occurred reflected more precarious jobs, not offering the kind of security Canadians were accustomed to before the recession.

But during 2012 the increase in employment was virtually all in permanent jobs.

The downside of this is that all these jobs are going to older workers, as if businesses were expressing confidence only in their core workers. Newcomers and the young are continuing to be shut out of the labour market.

There has been very little growth in the employment of 15 to 24 year olds since 2008, to say nothing of the employment rate of this population. Virtually all of the jobs that have been created have been temporary jobs; permanent jobs have not recovered from the substantial drop during the recession and are now at level not seen since 2002.

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From → unemployment

8 Comments
  1. Completely missing from all jobs reports is corresponding “drill down” data on mobility: median salaries, professions, level of education, percentages of folks who are underemployed (and by how much and by profession), etc. Data for the entire picture that adds to, or detracts from, an economy is needed. This lack of information is a constant in Canada as well as the US. A job is a job, right? Wrong.

    Questions we need answers to:
    – What about median consumers’ / workers’ real purchasing power? Declining? Increasing? And why?
    – Did the lowering of Canada’s corporate tax rate create (or save) any jobs? Or did the saved revenue just get stacked along the other that was sitting there already in corporate accounts?
    – Are well-paying industrial or professional jobs being replaced by low-paid call center workers and retail? (e.g. how many pre-recession $60/hour people with undergrad or graduate degrees are now taking customer service calls at Staples for $12?)

    Of course, these are metrics most politicians in power would want to be kept out of the public domain. Raw unemployment statistics as released by Ottawa or Washington mean close to nothing. With real “Big Data,” and a correct analysis, we would know if folks made lateral salary moves, their pay went up, or it was drastically decreased. That information would be a much better and more concise indicator on the direction of the economy.

    • Thank you for your feedback Jonathan, and for raising the general point that there is a need to take a well rounded view of these statistics. That is certainly the case, and as you suggest wages and other measures of the labour supply and unemployment are particularly important. I agree.

      However, I should point out that the surveys used to produce the monthly employment and unemployment numbers—the Current Population Survey in the US and the Labour Force Survey in Canada—are in some sense much more comprehensive. They do have information on average wages, on hours of work, on different measures of unemployment. You can access the Canadian results from the Labour Force Survey through something called CANSIM on the Statistics Canada site. Here is a link http://www5.statcan.gc.ca/cansim/a31?lang=eng&actionMode=tableDefinitions&id=3701 .

      The fact that a fuller picture of labour market developments does not get reported regularly by the press during the monthly release probably has more to do with the time pressures and news cycle that the media face. But the numbers are certainly there.

  2. Dr. Corak,

    I agree with your point about data being available from StatsCan. However, typical Canadians will not seek it out, nor know how to number crunch it once they got there. Journalists are MIA on this issue: most simply seem to report what is fed to them from the government, with very few exceptions.

    One of your reTweets from yesterday took me to the only Canadian article I’ve seen to date on such an analysis, although it was somewhat brief: “Hot or not? Canada’s sturdy job market varied below the surface” (Globe & Mail, January 8). Buried at the bottom was the disquieting news that 70,000 well paid professional and technical jobs disappeared in the 12 months ending in December 2012. This constitutes a “sturdy” job market? If Canada had the population of US, that would extrapolate out to about 700,000 middle class jobs gone. Also mentioned, but not shouted, was the fact that youth employment has been sliding sideways for 2 years. All front page stuff, or one would assume so.

    Where was this article? Buried in the depths of the business section. I would never have seen it if you did not call my attention to it. Only 6 reader comments resulted, unlike the hundreds or thousands left on a typical G&M unemployment headline story. Obviously, not many others paid attention, or perhaps they couldn’t even find it.

    This all prompted my article that is a wagging of a finger at the sleeping-on-the-job news media that would apparently rather just read or report and not investigate:

    “The front page ‘Jobs Report’ is never what it seems: Raw statistics don’t tell The Real Story.”

    http://jonathanblaine.com/wpress/2013/01/jobs-report-is-never-what-it-seems/

  3. Ron Wray permalink

    Speaking of youth (U.S. that is)………

    The Missing “One-Offs”: The Hidden Supply of High-Achieving, Low Income Students

    Caroline Hoxby & Christopher Avery
    NBER Working Paper, December 2012

    Abstract:
    We show that the vast majority of very high-achieving students who are low-income do not apply to any selective college or university. This is despite the fact that selective institutions would often cost them less, owing to generous financial aid, than the resource-poor two-year and non-selective four-year institutions to which they actually apply. Moreover, high-achieving, low-income students who do apply to selective institutions are admitted and graduate at high rates. We demonstrate that these low-income students’ application behavior differs greatly from that of their high-income counterparts who have similar achievement. The latter group generally follows the advice to apply to a few “par” colleges, a few “reach” colleges, and a couple of “safety” schools. We separate the low-income, high-achieving students into those whose application behavior is similar to that of their high-income counterparts (“achievement-typical” behavior) and those whose apply to no selective institutions (“income-typical” behavior). We show that income-typical students do not come from families or neighborhoods that are more disadvantaged than those of achievement-typical students. However, in contrast to the achievement-typical students, the income-typical students come from districts too small to support selective public high schools, are not in a critical mass of fellow high achievers, and are unlikely to encounter a teacher or schoolmate from an older cohort who attended a selective college. We demonstrate that widely-used policies – college admissions staff recruiting, college campus visits, college access programs – are likely to be ineffective with income-typical students, and we suggest policies that will be effective must depend less on geographic concentration of high achievers.

  4. In terms of contract and term employment (i.e. non-permanent) between 2008 and 2012, there was an increase of 165.4 thousand in term or contract employment. Out of that total, 79.4 thousand of the increase was in health and social assistance (36.6) and education (42.8) Only 23.5 thousand came in the goods sectors in total. It seems to me that this is a government issue. Note, There are strong unions in the health and education sectors.

    • Paul, thanks for this comment, which clearly gives more detail and appropriately redirects the story I was trying to tell in the post. It always pays to dig a bit deeper into the data.

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  1. Jonathan Blaine Musings » The front page “Jobs Report” is never what it seems

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