Recession Watch Bulletin

Issue 1



This is the first in what we expect to be a series of short analytical reports from the Social and Economic Policy Department of the Canadian Labour Congress, digging into and reporting on Statistics Canada Labour Force Survey and Employment Insurance data.



This report focuses on rising unemployment and shows that―when the rise of “hidden” unemployment is taken into account―we have already hit double digit levels.


Rising unemployment is entirely driven by major job losses which have affected almost every community in Canada. Since October 2008, we have lost more than 300,000 full-time jobs, and most of these are the result of permanent layoffs.


Surprisingly, public sector jobs are being hit proportionally harder in the recent downturn than private sector jobs.


Recessions lead not just to higher unemployment, but also to a shift to more insecure and lower paid jobs. It is early days yet, but we find some evidence of a shift to more insecure work and lower wages.


Our Employment Insurance system continues to leave the majority of unemployed workers out in the cold, especially in those areas which began the recession with relatively low unemployment rates.



Canada Enters Deep Recession:

Job Losses Mount and Unemployment Soars


The economy fell into a recession in the last quarter of 2008. The impacts on the job market began to be felt almost at once.


The national unemployment rate bottomed out at 5.8% in June 2008, and rose gradually to 6.3% in October 2008. Since that time, it has jumped sharply, to 7.7% in February 2009, the last month for which we had data at the time of writing. Many economists now expect the unemployment rate will rise above 10% by late 2009 or early 2010.



Table 1 summarizes some key labour market trends between October 2008 and February 2009.




Unemployment:



Statistics Canada publishes supplementary unemployment rates (shown in Table 2) which take into account the fact that the headline national unemployment rate does not include:


As shown in Table 2, below, the broadest measure of unemployment (R8), which includes all of these groups, rose from 8.0% in October 2008 to 11.7% in February 2009. These data are not seasonally adjusted, but the “real” rate of unemployment was also up sharply compared to February 2008.




The Labour Force Survey shows that in February 2009, there were 1,430,000 persons who were either unemployed or not working who had left their previous job because of a job loss. Of that number, just 167,500 or 11.7% were on a temporary layoff. The remainder―1,262,000 workers―had been permanently laid off.

One year before, in February 2008, there were just 884,500 persons not working who had been permanently laid off from a previous job, so the increase in workers affected by permanent layoffs over the year was 42.6%.



Appendix Tables 3a to 3c provide the most recent data for December 2008 on the proportion of unemployed workers who are receiving EI regular benefits (with no earnings). As shown, by this definition, only about 4 in 10 unemployed workers (47% of men and just 35% of women) were collecting benefits in December, with this proportion being much lower at one-third or less in Alberta, Ontario, and British Columbia. EI regions which began the recession with low unemployment rates have low rates of receipt of benefits since qualifying hours can be as high as 700 hours, and benefits in low unemployment regions can be exhausted in as few as 19 weeks. Regular EI weekly benefits averaged just $348 in December, well below the maximum of $447. The maximum in the last recession was $600 per week.



Quality of Work:



As noted, the part-time rate (the proportion of workers working part-time) has risen. While we do not have seasonally adjusted data for this indicator, there are clear signs that some people who want full-time jobs are being pushed into part-time jobs.

Compared to one year ago (February 2009 compared to February 2008), the proportion of all part-timers working part-time hours due to business conditions (as opposed to expressing a preference for part-time work) rose from one in five (20.7%) to one in four (24.9%). For women, the proportion of involuntary part-timers rose from 20.3% to 22.5%.

There are also signs of growth in the most insecure and usually lowest paid form of self-employment―“solo” self-employment (defined as the self-employed who do not employ other workers).


Between February 2008 and February 2009, the proportion of all self-employed workers who had no employees rose from 66.6% to 69.3% (and from 73.5% to 77.4% among self-employed women).



There are some very early signs that the loss of well paid jobs due to rising unemployment and―perhaps―wage reductions in existing jobs such as those being imposed on unionized auto workers are reducing earnings.


Between January and February 2009, average hourly earnings as reported by Statistics Canada’s Labour Force Survey fell from $22.11 to $21.97, and average weekly earnings of full-time workers fell from $930.84 to $926.34. (Data are not seasonally adjusted.) The fall in average weekly earnings of full-time workers is not explained by shorter hours, since these remained unchanged at 39.3. And the December 2008 Survey of Employment, Earnings and Hours reported that the average weekly earnings of employees decreased 0.1% from November to $801.92 in December.


Economy-wide wage cuts on top of job losses would, most economists agree, worsen the economic downturn.



Sectors and Regions:



Most people believe that public sector jobs are more secure than those in the private sector. In fact, as shown in Table 3, 2.4% of public sector jobs were lost between October 2008 and February 2009, compared to 1.9% of private sector jobs (looking just at employees)―81,500 public sector workers lost their jobs over this period.


Public sector jobs are to be found in many sectors. As shown in Table 3, there were significant job losses in public administration and in education (which is predominantly but not exclusively in the public sector). It is clearly not just private sector employers who are cutting jobs in this recession, and government jobs cuts are making the downturn worse.




As shown in Table 3, below, the biggest job losses by industry between October 2008 and February 2009 were in manufacturing (down another 100,000 jobs bringing the total job loss since 2002 to over 400,000) and construction (down 81,000).


There were also big job losses in transportation and warehousing (down 30,000), and professional services (down 24,500). In both cases, job losses likely reflect the impacts of the industrial crisis. The trade sector cut 43,000 jobs.



Appendix Table 1 summarizes key labour market data for the provinces for October 2008 to February 2009. Almost nowhere in Canada has been unaffected by the jobs crisis.



Appendix Table 2 shows the rise in the unemployment rate for economic regions across Canada (based on a three-month moving average). Only a handful of regions escaped the sharp rise in unemployment.














AJ:SS:TH:lh:jc:cope*225 • revised March 27, 2009

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1This figure is not seasonally adjusted.


Canadian Labour Congress

March 2009 13