The Recession’s Impact on Canada’s Labour Market

  • Philip Cross C.D. Howe Institute


Canadians have heard concerns from news reports and economists that the last recession accelerated the rise of a contingent labour force made up of precarious part-time, contract, temporary or self-employed workers. But the evidence contradicts that. The share of those jobs has not increased significantly and, anyway, the vast majority of people who work part time do so voluntarily, not for lack of other options. Meanwhile, self-employment is growing as a lifestyle choice among older Canadians, especially in the strongest provincial economies. Given workers’ demand for part-time work and self-employment, we should worry not about the rise of these kinds of jobs, but whether the economy is creating enough of them to ensure maximum labour participation for the students and older workers who would prefer to have them. Currently, it is not. Increasing labour force participation by youths poses unique challenges in Canada. In Ontario, youth unemployment has never been higher, while in recent years in Alberta, unemployment has never been lower. And yet, these underutilized workers are largely immobile: although, historically, Canada has had a remarkably mobile labour force, these youths seem lately unwilling to go to where the jobs are, reducing the efficiency of Canada’s labour market. In the meantime, while immigration has been a key part of replenishing our aging labour pool, immigrants still tend to migrate to Toronto and Montreal, while at the same time their workforce participation rates have diminished. There is nothing to suggest that this regional employment imbalance will correct itself at a different point in the business cycle. Unlike in the U.S., manufacturing jobs are still a powerful force in the Central Canadian economy, but these jobs are not growing, and will likely not grow in the future, as manufacturers now rely more on automation and boosting productivity. What is more, evidence suggests that employers often do not regard today’s youths as reasonable substitutes for older workers approaching retirement. They are seen as lacking the right skills, which may indicate that our post-secondary system is not effectively serving the labour market. In the meantime, Alberta and Saskatchewan have had to become more innovative in managing the reality of tighter labour markets. Those provinces now boast higher participation rates among older workers, and employees willing to work longer weeks than workers elsewhere. There still remain untapped labour pools among aboriginals, the disabled, and non-participating mothers, which Western businesses (and others) could and should find better ways to mobilize. Still, it is nevertheless alarming that, while the West continues to search for workers, young people in Central Canada sit unemployed, many of them not even adding greater skill development, while their futures become increasingly uncertain.
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