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A million more jobs, but Canadian labour in worse shape

When Prime Minister Stephen Harper and his Conservatives defend their economic record these days, their main message centres on the "over one million net new jobs since the recession" that the Canadian economy has produced under (and even thanks to) their leadership. But a more detailed look at Canada's pre- and post-recession jobs performance suggests that there's a big gap between the government's self-congratulatory boast and the less rosy reality.

Oh, the number itself is not in question. Canada does, indeed, have 1,076,900 more employed people today than it had in July, 2009, the nadir of the job market in the Great Recession. But as Andrew Jackson, an economist with the Broadbent Institute and York University, suggested in a Monday blog post, perhaps a more reasonable point of comparison would be before the recession even started (i.e. measure how the current employment level compared with the previous "normal," rather than comparing it with the worst financial crisis and economic downturn in 75 years or so). Even so, Canada's employment is up 738,000 since June, 2008, before the financial crisis and Great Recession hit.

Now, 738,000 is not a million, but it certainly suggests that Canadian employment has grown far beyond where it stood before the crisis hit – that we gained back what we lost and then some. Or have we? Mr. Jackson's reality check of the job-creation performance indicates that this job growth has been insufficient to keep pace with the population growth; relative to the total working-age population, employment is still well below its pre-recession norms.

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According to the latest Statscan data, Canada's employment rate – people employed as a percentage of the total working-age population – was 61.4 per cent in June, 2014 (seasonally adjusted), down significantly from 63.5 per cent in June, 2008. Indeed, the current rate is near its post-recession low. In essence, the proportion and number of Canadians not working is considerably higher than it was before the recession. If the employment rates had returned to their pre-recession levels, we'd have about 618,000 more people with jobs than we do today.

Mr. Jackson refers to these (using slightly different numbers) as the "missing" jobs in Canada's recovery. While I'm not sure I agree with the notion that they're truly "missing," at least in most people's notion of the word, it does highlight that the raw employment-growth numbers only tell one side of the story. Job growth hasn't kept pace with labour force growth, and there has been a disturbing drop in the proportion of the population who are active participants in the work force.

The first point is evident in the unemployment numbers. Despite Canada's nominal 738,000-job rise from its pre-recession employment level, the unemployment rate is 7.1 per cent – more than a full percentage point higher than its 6-per-cent reading in June, 2008. And the participation rate – the total of employed plus unemployed people as a percentage of the total working-age population – has declined to 66.1 per cent, its lowest since 2001 and well below its mid-2008 level of 67.6 per cent. This reflects working-age people who aren't officially considered "unemployed" because, for whatever reason, they aren't even looking for work; their numbers have grown significantly (as Ontario's provincial Tories were all too happy to point out during the recent provincial election campaign).

If you consider people who say they have given up looking for work out of discouragement, as well as workers who have taken part-time jobs even though they would rather be working full-time, we get an underemployment rate of 9.7 per cent in June (as reported in Statscan's "supplementary" unemployment measures) – well above the June, 2008 rate of 8.2 per cent. It has improved markedly from the recessionary peaks of more than 12 per cent, but clearly, work force participation and employment levels have not worked their way back to pre-recession norms.

There have been a lot of theories about why the participation rate has dropped; many experts believe it has more to do with shifting demographics than serious problems with workers giving up on the labour market to return to school, stay at home, retire early, etc. Nevertheless, the biggest employment-rate declines came with the youngest group of workers (age 15-24), down more than four percentage points – suggesting this isn't something that can be explained away by an aging work force.

The failure for the employment and participation rates to bounce back to their pre-recession levels raises questions about the true health of Canada's labour market. Political boasts or not, this is still an incomplete recovery.

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About the Author
Economics Reporter

David Parkinson has been covering business and financial markets since 1990, and has been with The Globe and Mail since 2000. A Calgary native, he received a Southam Fellowship from the University of Toronto in 1999-2000, studying international political economics. More

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