Here is my take on todayâ€™s Labour Force Survey:
Aprilâ€™s apparent gain in employment was entirely due to increased self-employment. Specifically, total employment rose by 36,000 while self-employment rose by 37,000, meaning that 1,000 fewer Canadians were paid by employers last month.
One must ask whether more Canadians are becoming self-employed voluntarily or because they cannot find jobs paid by an employer. The fact that self-employment is surging amid a severe economic downturn suggests that workers are turning to this option by necessity rather than by choice.
Indeed, Canadian self-employment reached its highest level ever in April, both in both raw numbers and adjusted for seasonality. (Labour Force Survey figures on self-employment go back to January 1976.)
Youth Leave Labour Force
In April, the number of Canadians aged 15 to 24 in the labour force declined by 20,000. Unemployment among this age group also declined by 21,000, suggesting that young unemployed workers are abandoning the labour market because of the lack of job opportunities. The threshold for new workers to qualify for Employment Insurance (EI) benefits is especially high: 910 work hours.
Because most unemployed workers do not receive EI benefits, many are pushed into marginal forms of self-employment or out of the labour force altogether. Due to more self-employment and youth leaving the labour force, Canadaâ€™s official unemployment rate did not increase between March and April. However, the accessibility and duration of EI benefits are explicitly based on the official unemployment rate.
Therefore, the unavailability of EI benefits threatens to become a self-perpetuating problem. The solution, of course, is for the Government of Canada to reform EI. Specifically, it should reduce the eligibility standard to 360 hours and extend the maximum duration of benefits to 50 weeks across the country.
Even though much unemployment was masked as increased self-employment and youth leaving the workforce, official unemployment still rose by 8,000 people in April. The total now stands at 1,464,600, its highest level since November 1996.
Of course, the increase in official unemployment was greater if youth are factored out. Among workers aged 25 and older, official unemployment rose by 29,000 in April.