Canada — particularly Ontario and Quebec — is losing tens of thousands of its best and most productive workers in the manufacturing slump caused by stiff foreign competition, the high dollar and the U.S. recession, says a new bank report.
  
The Toronto-Dominion Bank estimates Canada lost 130,000 factory jobs in 2007 and will likely lose more this year as conditions worsen for manufacturers, epecially in Ontario and Quebec.
  
"In short, we are losing many of the high-quality, high-productivity jobs in manufacturing, not just the jobs in low-productivity industries," writes Beata Caranci, the bank's director of forecasting.
  
Prime Minister Stephen Harper and Finance Minister Jim Flaherty have often noted that Canada's strong job market has fortunately been able to replace those lost manufacturing jobs by strength in other areas of the economy.
  
But TD's nine-page report disputes the notion that these jobs are of the lower-end variety that would be lost to cheap-labour economies like China and India in any case, or that laid-off workers find comparable jobs elsewhere.
  
While many have found new jobs in the growing services sector, TD's report says on average the displaced workers wind up making about 25 per cent, or about $10,000 a year, less than what they were earning before.
  
The report found that 55 per cent of the 212,000 jobs lost in the sector in the past five years have been unionized, which tend to be higher paying and more productive.
  
"It's been an unfortunate set of circumstances. The auto sector for instance is facing a lot of global competitive pressure and slowing U.S. demand and that's been made worse by the fact we have a high Canadian dollar," said Caranci in an interview.
  
"Those conditions are worsening, so it's going to get worse as the year goes on," she added.
  
Canadian Auto Workers economist Jim Stanford said the report confirms what the union and others have been saying for years.
  
Stanford added that the findings should send government alarms ringing because the manufacturing slump will eventually be felt in other sectors of the economy.
  
"We've lost 400,000 jobs since the peak in 2002, and we'll see another 400,000 losses in the next few years if the U.S. has a recession and the dollar stays high," he said, noting that his estimate of job losses is higher than the TD Bank's.
  
"The reason we've had more jobs created than lost is consumer spending and construction has continued growing while the export side has been contracting, and that dichotomy can't last forever," Stanford said.
  
"Sooner or later as we export less, our domestic economy will slow down."
  
The bank report titled "Is Canada's Job Machine Unstoppable?" presents a generally positive view of Canada's labour market.
  
It says the economy created a whopping 379,700 net jobs in 2007, pushing the unemployment rate to a 33-year low, and the employment rate to a new record high at 63.5 per cent of the adult population.
  
And though the situation is reversing this year in the face of the economic slowdown, Canada is unlikely to experience the job losses occurring in the United States, it said.
  
Instead, Canada is expected to add between 3,000 and 5,000 new jobs a month this year, a far cry from last year's 32,000 monthly average, but still a measure of growth.
  
"It's not going to be 2007 again, but are we expecting job losses? No," said Caranci.
  
But the report noted some troubling trends.
  
The tight labour market last year triggered the fastest average wage growth in a decade at 3.5 per cent, but that bounty went disproportionately to employees earning above $100,000 and to those in the hot economies in western Canada.
  
As well, employment growth has outstripped output growth, meaning that more Canadians are working to produce proportionately less.
  
Canadian labour productivity actually fell a steep three per cent in the fourth quarter, limiting growth for the year to 0.5 per cent, well below the quarter-century trend of 1.4 per cent annual growth.
  
Caranci said the numbers may overestimate the problem. She explains that several factors could have kept productivity down, including a growth in self-employed workers whose productivity is hard to gauge, strong labour growth in the relatively less productive younger and older age groups and the fact that many workers have been hired in oilsands mega-projects that won't start producing oil for years.