OTTAWA – Canada’s labour market may be more structurally sound than many may believe, according to two new reports that paint a relatively stable picture of jobs growth and wage distribution.
Following two downward months that were backed by a 22,000-job setback in January, the Conference Board of Canada said Tuesday its forward-looking help-wanted index is pointing to a rebound in employment this month.
That number won’t be known until next Friday when Statistics Canada publishes its labour market survey results, but the index’s jump of 10 per cent from the previous month strongly suggests February could produce a sizable rebound.
“It’s a pretty big jump and it does suggest there will be a turnaround in February,” said Alan Arcand, the think-tank’s principal economist.
Yet Arcand cautioned that given the weak economy, Canadians should not expect a large number of new jobs.
The Bank of Canada warned this week that economic growth has been slower than expected, with some economists now anticipating the fourth quarter — the last three months of 2012 — will come in below one per cent, as it did in the third, when the data is released on Friday.
“The economy has clearly underperformed the bank’s prior growth expectations and, more importantly, the economy’s two per cent potential growth, lending credence to our view that Canada’s economy will continue to underperform potential over the first half of this year,” said David Madani of Capital Economists in a note to clients.
However, most economists also agree Canada has experienced an enviable jobs market since the recession despite ongoing economic risks, particularly in relationship to its major trading partners in the United States and Europe.
While the U.S. has only recovered about two-thirds of the jobs it lost in 2008-09, Canada’s economy has churned out about 900,000 new jobs, twice what it lost in the slump. In January, the unemployment rate dropped to seven per cent, the lowest level in four years.
The Conference Board data found help-wanted activity rising in 25 of 27 municipalities across Canada, with the other two — Sherbrooke, Que., and St. Catharines-Niagara in Ontario — stable. No municipality saw a fall-off in activity.
In a separate report, TD bank said its analysis of the labour market in Canada shows that although more and more of the job growth is going toward what would be considered higher-skilled workers, there has been relatively little “polarization” in terms of wage growth between job categories.
Between 1999 and 2010, high skilled jobs have seen a 3.2 per cent annual increase in wages. But wages in medium-skilled jobs have also risen, by 2.6 per cent, and wages in lower-skilled jobs rose fastest at 3.4 per cent.
TD economist Derek Burleton said the findings are somewhat surprising, given that corporations and Ottawa policy-makers have been warning about an approaching crisis in the lack of high-skilled workers. The numbers suggest the problem may not be as acute as the rhetoric, he said.
“We’re seeing a big shift to higher-skilled work as a share of the market, that’s not surprising,” said Burleton. “The bigger surprise is that the middle-skilled area is holding out better… and that comes down to the structure of our economy in that we have more resource employment and construction has done better.”
The report defines high-skilled as managers, professional and technical workers with university degrees. Medium-skilled workers would typically have more than a high-school diploma, but less than a four-year university degree, while low-skilled workers would typically hold down jobs in personal, food, janitorial and security services that require mostly “on-the-job” training.
Burleton said the balance in wage growth between the groups suggest that while there has been a gravitation toward higher-skilled jobs, the “cries” of major shortages in this group of workers may be overstated.
“If you are running up against shortages, you would think those wages would get bid up,” he said. “I’m not saying (shortages) don’t exist… but I think it’s a little muddy how the skills match is playing out.”
Even in Alberta, where shortages for skilled workers have been reported, wage growth among the groups has been remarkably equitable over the past decade, he said.