OTTAWA – Good news on Canada’s labor front has been sparse.
Lower oil prices means energy companies are firing workers. So too are retailers, with Target Corp. deciding last month to close its Canadian operations. Central bank policy makers are adding to the gloom, estimating last week the nation’s economy has 270,000 fewer jobs than it should.
Yet job security remains at elevated levels, Nanos Research polling shows. The share of Canadians who describe their job as secure has averaged about 72 percent over the past month, the highest since 2011 when the economy was emerging from the recession.
Why are Canadian workers so unworried? After all, Canada’s job gains in 2014, at about 121,300, were the fewest outside of a recession year since 2001. Bank of Canada officials cited “material slack” in the labor market as one of the primary reasons for their Jan. 21 decision to cut interest rates.
The central bank’s assessment of the labor market isn’t without its critics. At 6.6 percent, Canada’s unemployment rate is at the lowest since the recession, even with the slowing employment growth that has been among Bank of Canada Governor Stephen Poloz’s main concerns.
“I’m not completely on board with the bank’s view that the labor market is a great deal weaker than the headline number suggests,” Doug Porter, chief economist at BMO Capital Markets, said in a telephone interview. “The unemployment rate gives us a lot of information to start with and that is currently sitting at one of its lowest levels in the last four years.”
There is also little evidence the recent high-profile layoffs from companies such as Suncor Energy Inc. and Target are the norm. Recently unemployed workers— those jobless between one and four weeks— have averaged about 2.5 percent of total employment over the past year, near the least in 15 years. Canadian workers who are employed feel secure because fewer of them are getting fired.
These workers are also becoming more productive, as companies produce more with their existing employees, a fact pointed out by Bank of Canada Senior Deputy Governor Carolyn Wilkins in a speech last week.
Yet, for those unlucky enough to be unemployed, the picture changes. The likelihood of an unemployed worker leaving the jobless rolls has hovered at around 33 percent over the past 12 months, little changed in three years and well below levels in the decade that preceded the 2008-2009 recession, according to Bloomberg calculations using Bank of Canada methodology.
The average duration of unemployment, at 21 weeks, is also well above pre-recession levels.
Wilkins, in her speech, said evidence of a persistent labor gap in the economy included low participation in the labor force by prime-aged workers and the number of part-time jobs.
The biggest gap may be whether one has a job or not. Whatever problems exist in Canada’s labor market, the numbers suggest that while employers aren’t letting go workers, they aren’t hiring many either.
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