Job losses sharper but shorter in this recession
StatsCan says new immigrants especially hard hit
Last Updated: Thursday, November 12, 2009 | 5:44 PM ET
CBC News
Jobs disappeared much faster at the beginning of the latest recession than at the start of the slumps of 1981 and 1990, Statistics Canada reported Thursday.
The study also found, however, that employment levels over the next seven months were more stable compared with the two previous recessions, when layoffs kept snowballing.
Young people bore the brunt of the job losses while those over 55 gained employment. (Chuck Stoody/Canadian Press) Employment dropped by 2.1 per cent from its all-time high in October 2008 during the following five months. It fell 0.8 per cent over a similar period in 1981 and 0.6 per cent in 1990.
But while job losses continued for 17 months in 1981-82 and for 11 months in 1990-91, employment in recent months has been relatively unchanged.
Michael Gregory, senior economist with BMO Nesbitt Burns, wasn't surprised by the recession's harsh initial impact on jobs.
Gregory told CBC News the sharp slide of the U.S. financial sector last autumn, especially with the sudden collapse of investment banker Lehman Brothers, caused a sense of panic that spread quickly around the world, making Canadian consumers curtail spending and prompting employers to cut jobs.
"Canada's recession turned out to be quite violent for a very short period of time," he said. "The first quarter, for example, was the worst single quarter Canada has ever experienced."
Benjamin Tal, senior economist with CIBC World Markets, noted that corporate Canada "took a pre-emptive downsizing plan in which they basically downsized their operations in a very rapid and significant way."
Construction and manufacturing workers have lost the most jobs. (CBC) Tal said this accounts for why business bankruptcies did not rise in this recession for the first time ever.
"Those companies are still kicking. They're around. They did not have to go under like in the U.S. where business bankruptcies are rising at the 40 per cent year-over-year basis, the highest rate since 1975."
Tal predicts that means Canada will avoid a jobless recovery, in which modest growth and high unemployment would exist side-by-side. Although the economy will grow only slowly, he said, it will outperform the rest of the Group of Seven wealthy countries.
Ontario and Quebec are expected to continue struggling because of their manufacturing links with the still-floundering U.S., but Western Canada will likely pick up as the trade in commodities to emerging Asian economies improves.
BMO's Gregory, too, believes consumers will start spending as they become convinced that Canada is poised to return to expansion.
'I think we'll start to see very moderate employment growth.'—Michael Gregory, BMO Nesbitt Burns economist
"I think we'll start to see very moderate employment growth," he said. "We are beginning to see the natural resources sectors begin to ramp up in the wake of higher prices and, importantly, we're beginning to see sectors like housing come roaring back from very depressed levels. That's helping construction and the financial services."
In all, Canada lost 400,000 jobs between October 2008 and last month, and the unemployment rate rose to 8.6 per cent from 6.3 per cent.
The manufacturing and construction sectors were hardest hit in all three recessions. Manufacturing lost 218,000 jobs, or 11 per cent, in the past 12 months. Construction fell by 73,000, or 5.8 per cent, all during the first five months of the slump.
Real estate and leasing experienced a modest job gain as did two other statistical categories: information, culture and recreation, and health care and social assistance.
Young people, low-paid workers and families with children have borne the biggest share of job losses in this downturn, while those aged 55 and over had modest employment gains.
Private-sector jobs fell by 449,000 in the past year while government jobs contracted by 55,000. Self-employment rose by 104,000.
New immigrants hard hit
Statistics Canada found that immigrants who had arrived in the last five years were hit much harder by the recession than the Canadian-born. Their employment fell 12.9 per cent during the past year, more than five times as much as for workers born in Canada. However, immigrants who had arrived five to 10 years earlier had smaller losses than those born in Canada — and immigrants here for more than 10 years actually showed modest employment gains.
That newly arrived immigrants are hit harder than others was no surprise to Tanya Chute Molina, executive director of the Mennonite New Life Centre, which counsels immigrants in Toronto.
Job searches for immigrants were difficult long before the recession, she said. "People [are] really struggling with being out of work and trying to find ways to get back into work and not always finding channels into meaningful employment."
Many jobless immigrants become self-employed
Tal said there's a link between high unemployment among the newly arrived and the increase in self-employment, as many recent immigrants who lose their jobs set up shop on their own.
"That's one of the main reasons why self-employment is the fastest-growing segment of the labour market today," said Tal. "It's actually rising very, very quickly, and close to 17 per cent of all workers in Canada are now self-employed. Many of them are forced self-employed, but that's better than no employment at all."
Chute Molina said self-employment isn't always as positive as it sounds.
"There's a lot of grey lines between what is genuine self-employment and what is temp agency work under the guise of self-employment," she said. "In some cases people are told they are private contractors as a way for employers to get out of paying them benefits."
The Centre has called for governments to enact various measures to help new immigrants find jobs, including subsidies or tax breaks for paid internships, as well as enforcement of legislation requiring equitable hiring practices, such as preventing employers from requiring previous work experience in Canada.
