Canada's Weak Employment Market

Now that Stephen Harper's long-serving Finance Minister, Jim Flaherty, has resigned, it's time to take a look at how Canada's economy is really doing, particularly on the employment front since this is where the Harper government really likes to promote its accomplishments through those nauseating Economic Action Plan promos that have cost Canadian taxpayers tens of millions of dollars.

Let's open by looking at what has happened to Canada's unemployment rate since 2006:

While the job situation in Canada has improved, the jobless rate is still elevated compared to pre-Great Recession levels.  

A policy brief by the Canadian Chamber of Commerce looked at the performance of Canada's labour market in 2013 and found the following:

1.) In 2013, net new job positions totalled only 99,000, down from 307,900 in 2012.  This works out to 8,250 net new jobs per month in 2013 compared to 25,658 per month in 2012, a decline of 17,408 jobs per month or 67.8 percent.

2.) The private sector created 120,500 net new jobs in 2013 and public sector payrolls dropped by 25,600.

3.) Of the net new jobs created in 2013, 95 percent were part-time jobs in contrast to 2012 where all of the net new jobs created were full-time jobs.  This is of great concern because it means that many Canadian workers are underemployed.

4.) Nearly 70 percent of the net new jobs were created in one province and more than 86,500 or 87.4 percent of the net new jobs created were in one industry, the services-producing sector which includes professional, scientific and technical services.  This sector includes legal services, surveying and mapping, design, scientific research and development and advertising among others.

5.) Job areas with significant net losses included educational services which saw a net decline of 39,600 jobs and public administration which saw a net decline of 29,600 jobs.

6.) The average duration of unemployment remained at elevated levels in 2013 compared to pre-Great Recession levels.  In 2013, the average length of unemployment was 20.7 consecutive weeks compared to only 15 weeks prior to the 2008 recession and down only slightly from the  post-recession peak of just under 23 weeks in 2011.

Here is a chart showing the year-over-year changes in employment by industry for 2013:

Here's how the provinces performed:

Of the 99,000 net new jobs, 67,900 or 68.6 percent of the total were created in Alberta.  Canada's unemployment situation would look far worse if Saskatchewan and Alberta statistics were not included.  With Alberta and Saskatchewan excluded, Canada would have only created 18,600 net new jobs, hardly a shining example of federal fiscal success.  Canada's unemployment rate would also jump substantially to somewhere in the mid-eight percent range rather than the headline 7.2 percent rate.

Lastly, some provinces are still experiencing very high levels of labour market slackness which is defined as the number of unemployed people for every job vacancy.  Here is a graph showing how difficult the situation still is for unemployed workers in Eastern Canada:

In Alberta and Saskatchewan, there were only 2.2 and 2.4 unemployed workers respectively for every job opening compared to 14.3 in Newfoundland and Labrador, 9.4 in Nova Scotia, 11.1 in New Brunswick and a whopping 15.0 in Prince Edward Island.  This explains the great exodus to the west from Maritime Canada.

According to the Bank of Canada, a recent survey of businesses found that 53 percent of businesses expected to add employees during 2014 with 36 percent planning to keep the employment level status quo and 11 percent decreasing their level of unemployment.  With Canada's number of potential workers growing through both immigration and maturing of the post-baby boomer generation, it will be interesting to see whether the economy can create enough new jobs to push Canada's unemployment rate down to its pre-Great Recession level of 6 percent anytime soon.  In any case, we can clearly see that the Harper government's bragging about their economic prowess may be a bit overstated, particularly given the weakness in Canada's labour market in 2013.