News and Blogs

Canada's over-hyped jobs recovery


The Conservative Party recently launched the “We're Better off with Harper” campaign with the claim that “with over one million net new jobs created in the recovery, Canada's economy is on the right track – thanks to the strong leadership of Stephen Harper and Canada's Conservatives.” 

There have indeed been more than one million jobs created since mid-2009 when the recovery began. But the job market in Canada is still far weaker than was the case before the recession.

The national unemployment rate in June 2014 was, at  7.1%, still much higher than 6.0% in June 2008.

And Canada's employment rate – the proportion of the working age population with a job – is even further below pre-recession levels. 

Between June 2008 and June 2014, the employment rate (seasonally adjusted) fell from 63.5% to 61.4%., a fall of 2.1 percentage points. The fall was much greater for men (2.7 percentage points) than for women (1.5 percentage points). 

While the employment rate has fallen slightly because of population ageing, the youth (persons aged 15 to 24) employment rate fell sharply from 59.5% to 55.0%, and the so-called core age group (ages 25 to 54) employment rate fell from 82.3% to 80.6%.

Among the provinces Ontario and British Columbia, often considered the key battlegrounds for the next federal election, are the furthest away from returning to the job market conditions of 2008.

Further, as of June 2014, the proportion of part-timers seeking full time time work was 31.0%, up from 25.7% in June 2008 (not seasonally adjusted).

Partly because there is still so much slack in the job market, the quality of the new jobs created in the recovery leaves a lot to be desired.

Between June 2009 and June 2014, the economy created over one million (1,066,600) paid jobs (not seasonally adjusted).  But one in four (23.7%) of the new employees were in temporary positions, meaning that they were term jobs with a defined end date, casual jobs, or seasonal jobs. The big growth has been in contract and casual employment.

This recent growth in temporary employment has been much greater than one would have expected, given that such jobs made up just 14.1% of all employment back in June 2009.

While there has been little difference in the growth of temporary work for women and men, the increase has been most noticeable among younger workers.

An increase in temporary positions accounted for all net job growth for those aged 15 to 24, as permanent employment fell while temporary employment rose modestly. For those aged 25 to 44, temporary employment rose by 30.3% over the period of recovery, much greater than the 10.5% of persons in this age group in temporary employment back in June 2009.

Contract jobs are more insecure and also generally pay less than permanent jobs, and are certainly less desirable for most workers other than students and some older workers.

While there has been significant job creation across most industries and occupations in the recovery, it is also notable there has been a modest tilt towards employment in low-skill and low-paid occupations. Between June 2009 and June 2014, 27.9% of the net new jobs were in the two lowest-skill/lowest-paid occupational categories (ie sales and service workers) and labourers in construction and industry.

Finally, worth noting is the fact the median hourly wage (half earn more and half earn less) has not kept pace with price increases in the recovery. Between May 2009 and May 2014, wages by this measure increased by 0.5% less than the consumer price index.

Put it all together, and for all the hype about one million net new jobs, Canada's job market is still very weak.

This article originally appeared in the Globe & Mail's Economy Lab.