Recent commentaries from CIBC and Export Development Canada argue that the manufacturing crisis is not eroding job quality. Both note that a surge in construction employment, added to the relatively few new jobs in non-renewable resource extraction, nearly equals the number of manufacturing jobs lost in recent years.
As emphasized on the front page of yesterday’s Financial Post, this argument contradicts what the Canadian Labour Congress has been saying. It also contradicts a previous CIBC study that linked an overall decline in job quality to reduced manufacturing employment.
The more recent CIBC document and Export Development Canada’s document overlook a critical fact: average hourly wages (for hourly-paid employees) are more than 10% higher in manufacturing than in construction. Including overtime, manufacturing paid $23.61/hour and construction paid $21.20/hour in May 2007. Excluding overtime, these figures were $22.90 and $20.46 respectively.
Certainly, increased construction employment is good news. The building-trades unions, supported by the labour movement in general, are working to improve construction wages. However, the fact remains that replacing manufacturing jobs with construction jobs tends to reduce average wages.
Another important difference is that, whereas manufacturing employment is rooted in particular communities, construction employment is temporary because it is tied to particular projects. Construction and non-renewable resources are notoriously volatile. Canada’s current position at or near a cyclical peak in these sectors does not compensate for the underlying loss of stable manufacturing jobs.
One must also ask why Export Development Canada would seek to downplay the manufacturing crisis. Could it be because the federal government is currently negotiating a “free trade” agreement with Korea that would eliminate even more Canadian manufacturing jobs?
The loss of jobs in manufacturing, an industry heavily engaged in international trade, reflects poorly on Canadian trade policy. It seems odd that Export Development Canada’s countervailing success story is construction, the classic non-tradeable industry.
UPDATE (June 28): The following letter was printed in yesterday’s Financial Post:
Job quality declining (June 27, FP 17)
Re: Most New Jobs Full-Time, High Pay, June 25
Contrary to statements in Jacqueline Thorpe’s article, declining job quality is not a myth. The article presents Stephen Poloz of Export Development Canada as arguing that the manufacturing crisis is not eroding Canadian job quality. This analysis misses at least two important points.
First, over the past year, more Canadians have taken up self-employment than have found jobs paid by an employer. While rising self-employment may reflect ingenuity and a strong work ethic among Canadians, it also implies that Canada’s labour market is not creating enough paid positions.
Second, construction and non-renewable resources (mining, oil and gas) are notoriously volatile and cyclical. Canada’s current position at or near a cyclical peak in these sectors does not compensate for the underlying loss of stable manufacturing employment.
Given CIBC’s conclusion that Canadian employment quality has fallen to its lowest level since the early 1990s, why would Export Development Canada seek to play down the manufacturing crisis? EDC’s argument mirrors the federal government’s denial that the trade agreement it is negotiating with Korea would eliminate even more Canadian manufacturing jobs.
Ken Georgetti, president, Canadian Labour Congress
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