While the Canadian unemployment rate is at a 30-year low and the pace of job creation shows continued strength, job quality lags, according to a report released today by CIBC World Markets.

The firm said is employment quality index (EQI) declined 1.4% in 2005, even as the economy churned out 255,000 new jobs.

“The Canadian economy is generating jobs at a very rapid pace, but the quality of these jobs is on the decline,” said Benjamin Tal, senior economist, CIBC World Markets, in a release.

“Even though all the jobs created in Canada in 2005 were full-time jobs, we need to look beyond the part-time versus full-time distribution because not all full-time jobs are created equal – some of them are low-paying and low-stability jobs,” added Tal.

Since 2003, the number of full-time jobs in low-paying sectors, such as many in the service industry, retail and wholesale trade, has risen by 7.9%, compared to only 4.8% in high-paying sectors, which include manufacturing, primary industries (logging, mining), as well as transportation and electronics.

“Granted, a low quality job is better than no job, but the headline employment figures exaggerate the real strength of the Canadian labour market,” said Tal.

The report notes that a direct consequence of the declining job quality is the relatively slow growth in labour income, which averaged only 0.5% annual real growth per worker since 2002.

“Looking ahead to 2006, we expect employment quality to remain low,” commented Tal. “With the real estate market poised for a soft landing, the growth in high quality construction jobs will likely lose momentum. At the same time, with the Canadian dollar remaining strong, the number of manufacturing jobs is projected to continue to decline.”

The EQI combines information on three factors: part-time versus full-time employment; paid-employment versus self-employment; and the relative level of compensation associated with a given full-time paid employment position.