Canada’s job market is in bad shape and may be the worst it has been in decades, except for the periods when the economy was in recession.
That’s the assessment of the CIBC chartered bank, which regularly tries to assess both the number and quality of jobs being created in the economy.
According to its latest “employment quality index,” which declined by one point in the past year, CIBC says the situation is bleak by either standard.
It says not only has jobs growth stalled over the past half year — and declined in real terms over the past three months — but the quality of new jobs is generally poor.
While full-time employment rose 1.5% during the 12 months — a good indicator — many were in the less desirable self-employment class, and low-paying work rose four times faster than high-paying, CIBC senior economist Benjamin Tal said Wednesday.
“With both quantity and quality of employment falling in tandem, it is hardly a surprise that real disposable income was unchanged in the first three quarters (nine months) of 2011 — the worst showing in 15 years,” Tal said.
“We haven’t seen this kind of softening in a non-recessionary period since all the way back to the 1970s.”
The paper says many new jobs in the past year have come in low-paying sectors such as hotel services, restaurants, wood and miscellaneous manufacturing, and personal care. Meanwhile, there are fewer high-paying jobs in public administration as well as in manufacturing, chemical, computer, electronic, petroleum and coal industries, mining and transportation.
The report is the latest in a series of indicators pointing to worsening labour market conditions in Canada, where the jobs recovery from the recession has been better than most the G7 big industrial nations.
That was before this summer, however, when jobs growth basically ground to a halt. Although December saw a modest pick-up of 17,500 in employment, the last three months accumulated saw a total loss of 55,000 jobs.
Canada’s national unemployment rate has also been rising from a post-recession low of 7.1% in September to 7.5% in December, the most recent period for which there is data.
And the Conference Board’s help-wanted index fell for the fourth time in five months in December, suggesting labour market weakness is continuing.
Tal says he expects quality jobs will remain scarce this year because governments are cutting back on the public service, and the combination of the cooling housing market and the end of stimulus infrastructure projects will hit the construction industry hard.
“Those two extremely important elements of the job market will not be there in 2012 and both are high quality industries,” he said.
Tal cautions that the softening labour market needs to be put into perspective. Since the 2008-9 recession, 600,000 jobs have been created, more than were lost, while many countries, including the United States, are still well below pre-slump levels.
In absolute terms, however, there are more Canadians unemployed today than at the peak of employment prior to the recession because more people have entered the labour force.
“Everything is relative. Three years ago, we were talking about 1929,” he pointed out. “These are not normal times.”
One of the peculiarities of the times, he said, is that while many are unemployed, some employers are having difficulty filling vacancies because they cannot find Canadians with the appropriate skills. This is especially true in low-unemployment provinces in the West.
“The most important challenge we will face in the next five or 10 years is a significant mismatch in the skill set of labour — what companies want, people don’t have,” he said.