Q & A: Amanda and Craig Alexander discuss Canada's employment picture
Craig Alexander is the Senior Vice President and Chief Economist for TD Bank Financial Group.
Amanda: Can we say with confidence that we are now on the road to recovery?
Craig: There is no question that an economic recovery has taken hold in North America. In fact, economic growth in both Canada and the United States resumed in mid-2009. Moreover, both economies have now recovered all of the output lost during the recession. However, it was a long and painful recession. As a result, the economies need to make up for not only the ground that was lost during the downturn, but also the growth that should have otherwise occurred over the recession. This is why there is considerable slack in the economies, as evidenced by the still-elevated unemployment rates in each country.
Amanda: Job numbers are on the rise, both in Canada and the U.S. What does that mean for those of us looking for a job?
Craig: Canada has had a very job-filled recovery. Statistically speaking, the Canadian economy has replaced numerically all of the jobs that were lost. The Canadian economy lost 415 thousand jobs during the downturn and prior to this Friday’s job numbers had already created 465 thousand positions during the recovery. The challenge for Canada is that the employment creation has not occurred in the industries that felt the brunt of the recession. Canada had an export-concentrated manufacturing recession, so this is where most of the jobs were lost. During the recovery, most of the new positions have been in services or the public sector.
For most Americans, the recovery has not felt like one, because of continued weakness in the labour market. More than 8.7 million workers lost their jobs during the U.S. recession. It is really only the last few months that we’ve had signs that the U.S. labour market is starting to recover. While I believe that more than 2 million jobs will be added in America this year, it will only make a dint in unemployment. Many workers gave up looking for work during the recession and recovery. As a result, they stopped being counted as unemployed. As workers re-enter the labour market, they will start to count as unemployed. So, while employment growth should pick up in the coming months, the U.S. unemployment rate will be very slow to decline.
Amanda: In which sectors do you see gains, as far as job numbers go?
Craig: In the case of Canada, I think we will see broad-based job creation. However, as governments turn their attention to deficit fighting, I believe more employment growth in Canada will come in the private sector. Canadian manufacturing employment will pick up, but I believe it will take time for the sector to fully recover. Commodity-related industries are likely to continue to have strong demand for skilled labour. On a trend basis, I think we will see more creation in full-time positions than in part-time positions. Overall, the pace of job creation in Canada will likely rise at a slower pace than last year, but the quality of the jobs will improve.
Amanda: And which are the sectors that are not showing growth?
Craig: I think we will see weaker employment growth in the public sector, particular government administration. The fact that Canadian residential real estate will be fairly flat suggests that construction will not be adding jobs at a strong pace.
Amanda: The recession was hard, but it seems that the recession was hardest on three groups in particular; people under 24, immigrants, and men between the ages of 25 and 54. What advice do you have for men who were hit particularly hard by the recession?
Craig: There will be good employment prospects in Canada. However, some workers may find that they cannot easily find employment in the industries for which they trained. Many of these workers are likely to be males of ages 25 to 54. This group was hard-hit by the recession, likely reflecting the blow to manufacturing. The main recommendation to workers that can’t find positions is not to become discouraged. Keep looking and if require seek out opportunities to retrain and develop skills that will make you more attractive to other employers. There are many programs and government initiatives available to help with skills training.
Amanda: As for new Canadians, they lag in this recovery, and stats show their incomes, in general, lag behind Canadian-born citizens. What can be done about this?
Craig: Immigrants are another group hit hard by the recession. When employers look to cut staff, they tend to cut the last workers hired. So, as you might expect, newcomers to Canada were often the last put on the payrolls, so they were vulnerable during the recession.
However, I would say that Canada was not integrating immigrants into the economy even before the downturn. Immigrants have been experiencing high unemployment rates, a widening income-gap with Canadian-born workers, and high incident rates of experiencing poverty. This is a reflection of poor recognition of foreign education credentials and inadequate valuation of foreign work experience by Canadian employers. This has to change, particularly since immigrants will make up the bulk of Canadian labour force growth in the future due to an aging Canadian population. I also believe that mastery of English/French literacy for many newcomers may be lower than desired for success in a modern knowledge based economy. Both governments and the private sector should support newcomer literacy programs.
Amanda: What about young people who are frustrated by the lack of available jobs. Are you worried about a "lost generation", and what advice would you give to young people?
Craig: There should be good job opportunities for Canada’s youth. However, while the labour market is recovering, some recent, or approaching, graduates may want to stay in school to build their skills. If new entrants to the workforce can’t find appropriate work using their skills and talents, it is often a bad decision to simply take whatever job is available. The reason is that being in a job that underutilizes their skills can often make it difficult for future career progression.
Amanda: Finally, is there bad news or good news on the horizon? For all the folks out there looking for jobs, is it looking promising, or are there more hard times ahead?
Craig: As I said, the Canadian economy is doing well. In fact, the recovery is pretty much over, and we are now entering the expansion phase. This will lead to further improvement in labour market conditions, although I do think that the unemployment rate will decline more slowly than it has over the past year. Employment should average a gain of 20-25 thousand net new positions each month. The unemployment rate is expected to dip to 7.5% by the end of this year and slip to 7.0% by the end of 2012.