Canada’s Labour Market Sputtered in 2013

Did you know?

Employment growth for 2013 as a whole was a mere 0.6 per cent, the slowest pace recorded since 2009.

Employment gains were concentrated among men and women aged 55 and over.

95 per cent of the net jobs created were in part-time positions.

All the net jobs created were in the services sector.

More than 86,000 net new positions were created in one industry.

Almost 70 per cent of the net new jobs were in concentrated in one province.

These are some of the interesting labour markets dynamics in what was a year of lacklustre job growth in Canada.

A total of 99,000 net new positions were created in 2013, or 8,250 per month on average. Compare this with an overall job gain of 307,900 in 2012 or 25,658 per month.

The unemployment rate stood at 7.2 per cent in December 2013, up from 7.1 per cent a year ago.

The private sector created 120,500 net new jobs in 2013. Public sector payrolls shrank by 25,600, while 4,100 more Canadians became self-employed. Almost 2.7 million Canadians were self-employed at the end of 2013, representing 15 per cent of employed Canadians.

Almost 95 per cent of the net new jobs started last year were in part-time positions, raising concerns about the quality of jobs being created. In sharp contrast, all the net new jobs created in 2012 were full-time positions. Part-time positions made up nearly one-in-five positions in 2013.

Older Workers Outperform

The segment of the population aged 55 years and over posted the largest increase in employment in 2013. In particular, employment among older women surged 5.5 per cent last year, by far the largest increase of all demographic groups. Older men fared well, too, with their employment levels jumping 4.0 per cent. 

The unemployment rate of older workers was 6.0 per cent in December 2013 — 6.7 per cent for men and 5.2 per cent for women. Older women had the lowest jobless rate among all groups.

A recent Statistics Canada study noted that “many older workers who leave long-term jobs do not fully enter retirement. In fact, over one-half of workers aged 55 to 64 who left long-term jobs between 1994 and 2000 were re-employed within a decade.”

The number of employed Canadians of prime working-age (25 to 54) declined slightly in 2013. The unemployment rate for men and women in this age bracket sat at 6.4 per cent and 5.7 per cent, respectively, in December 2013.

The unemployment rate among Canada’s youth (15 to 24 years of age) remained above pre-recession levels as 2013 came to an end. It clocked in at 14.0 per cent, up slightly from the rate registered 12 months earlier and is almost double the overall jobless rate.

As of December 2013, the national unemployment rate among recent immigrants in the prime working-age group (25 to 54) was more than double that of Canadian-born individuals in their prime working years. More than half (i.e. 55.8 per cent) of recent immigrants had a university degree compared to a quarter of the Canadian-born population. Still, the unemployment rate for recent immigrants with a university degree was five times the unemployment rate for university-educated, Canadian-born individuals. The most significant obstacles to success in the labour market are language barriers, a lack of Canadian work experience, and difficulty receiving recognition for foreign credentials.

Services Sector Comes Out Ahead

The majority of the jobs created in 2013 were in the services-producing sector, with the largest gains in the areas of professional, scientific and technical services (+86,500), health care and social assistance (+34,900) and accommodation and food (+17,200). Two notable areas within the services sector that experienced net job losses were educational services (-39,600 positions) and public administration (-29,600).

The goods-producing sector as a whole shed 6,800 jobs in 2013, with the manufacturing sector losing 35,100 jobs. Natural resources, utilities and construction registered gains.

Seventy-eight per cent of employed Canadians worked in the services sector as of December 2013. As in other advanced countries, there has been a shift in employment toward services during the past three decades.

There is the perception that fewer manufacturing jobs and more service sector jobs have meant fewer higher-paying jobs. This is not the case. Fields like professional, scientific and technical services, health care, natural resources and utilities—where the bulk of the jobs have been created in the past 12 months—pay above-average wages.
Labour Market Conditions Vary Considerably Regionally

Five of Canada’s 10 provinces — Alberta, Saskatchewan, Ontario, Quebec and New Brunswick — registered higher employment in December 2013 compared to a year ago.

Alberta saw the biggest increase, with 67,900 net new jobs created (up 3.1 per cent, year-over-year). The province accounted for 68.6 per cent of the net new jobs created in Canada last year.

Saskatchewan and New Brunswick also experienced robust employment growth of 2.3 per cent and 1.6 per cent, respectively, far outpacing the national average growth rate of 0.6 per cent.

Employment was up slightly in Ontario (+0.3 per cent) and Quebec (+0.1 per cent).

Saskatchewan and Alberta boasted the lowest unemployment rates in the country as 2013 came to a close, at 3.9 per cent and 4.8 per cent, respectively. Prince Edward Island registered the highest unemployment rate at 11.6 per cent.

A Number of Indicators Suggest Some Labour Underutilization

There were approximately 1.27 million unemployed Canadians as 2013 came to close. The unemployment rate, at 7.2 per cent in December 2013, was still higher than the 5.9 per cent pre-recession low reached in February 2008.

The average duration of unemployment, at 20.7 consecutive weeks in December 2013, remained above its pre-recession average. Residents of Alberta remained unemployed for the shortest amount of time, averaging 14.1 weeks. Workers in Ontario and New Brunswick experienced the longest duration of unemployment (22.4 and 22.1 weeks, respectively).

The number of businesses reporting labour shortages remained relatively unchanged in the final quarter of 2013 compared to a year ago. According to the Bank of Canada’s Business Outlook Survey, 26 per cent of firms responded “yes” to the question, “Does your firm face any shortages of labour that restrict your ability to meet demand?” As in the previous survey, instances of labour shortages were not widespread and were cited largely in relation to hiring for specific positions, skills sets or regions.

As of October 2013 (the most recent data available at the time of writing), there were 231,100 job vacancies among Canadian businesses, a decline of 37,000 compared to October 2012. For every job vacancy, there were 5.7 unemployed people, up from 5.1 in October 2012.

There was more slack in labour markets in Atlantic Canada compared to other regions of the country. In Newfoundland and Labrador, there were 14.3 unemployed people for every job vacancy. In Nova Scotia, the ratio was 9.4. It was 11.1 in New Brunswick and 15.0 in Prince Edward Island. In Central Canada—Ontario and Quebec—the ratio was 7.5 and 7.1, respectively.

Labour market conditions were tighter in western Canada. The Prairie provinces (Alberta, Saskatchewan and Manitoba) accounted for 12.8 per cent of all unemployed people in Canada but 30.1 per cent of all job vacancies. As a result, their unemployment-to-job vacancy ratio was the lowest in the country. In Alberta, there were 2.2 unemployed Canadians for every job vacancy. In Saskatchewan, there were 2.4 unemployed people per vacancy, and in Manitoba, the ratio was 3.7. The unemployment-to-job vacancy ratio in British Columbia stood at 5.1.

On a sectoral basis, tight labour market conditions prevailed in a number of industries. Health care and social assistance had the lowest unemployment-to-job vacancies ratio (1.5); followed by information and cultural industries (1.6); professional, scientific and technical services (2.2); and finance and insurance (2.3). By comparison, in educational services there were 9.7 unemployed people for every job vacancy.

Average hourly wages for permanent workers rose 2.0 per cent, year-over-year in 2013, following a 2.9 per cent increase in 2012. Wage pressures were particularly intense in Alberta, New Brunswick and Newfoundland and Labrador where average hourly wages increased 4.3 per cent, 3.9 per cent and 3.1 per cent, respectively, in 2013. Average hourly wages were $6.30 higher in Alberta than in Atlantic Canada. Wages in Alberta were also $3.15 higher than in Ontario and $3.65 higher than in British Columbia. Higher paying work is one factor behind the migration of labour to Alberta.

2014 Job Prospects

In the Bank of Canada’s winter Business Outlook Survey (conducted from November 18, 2013 to December 12, 2013), 53 per cent of firms said they intended to add employees over the next 12 months, 36 per cent planned to keep their firm’s level of employment about the same and 11 per cent anticipated a decrease in their level of employment.

With Canada’s economy projected to grow 2.3 per cent in 2014, we anticipate Canada’s economy will generate, on average, about 15,000 jobs per month in 2014. The jobless rate should ease modestly to 6.7 per cent by year-end 2014.

By Tina Kremmidas

Tina Kremmidas is the Chief Economist of the Canadian Chamber of Commerce