Public-Sector Recession?

Layoffs Continue

Today’s Labour Force Survey indicates that full-time employment declined by 4,000 in August. There were 7,000 fewer jobs in goods-producing industries.

Retailers Hire

A surprising 21,000 new jobs in retail and wholesale trade propelled economy-wide employment up by 27,000. This increase consisted entirely of part-time jobs.

While any employment gain is welcome news, the quality of these new jobs is doubtful. In 2008, average hourly earnings were $13.90 in retail compared to $20.16 across all industries.

More Unemployment

Unemployment rose by 22,000 in August, surpassing 1.6 million for the first time since February 1994. While output may be starting to grow again, there is little evidence of a sustained recovery in employment.

Even after such a recovery begins, unemployment will continue rising as Canada’s population grows and formerly discouraged workers return to the labour force. We need not only a return to economic growth, but enough growth to create jobs for a larger workforce.

Whither Stimulus Spending?

Governments appear to have eliminated 12,000 positions in August. Like total employment, public-sector employment peaked in October 2008, when the global financial system imploded. Since then, the number of public employees has fallen by 65,000.

This decline is less bad than the corresponding decline in private-sector employment. However, Canadians might ask why there was any decline at all. Surely the purpose of government stimulus is not to reduce public-sector employment at a slower pace than private-sector employment. Government hiring should increase to at least partially offset private-sector layoffs.

A possible explanation is that public employment was uniquely high in October 2008 because of Elections Canada hiring to administer the federal vote. If so, perhaps Canadians should hope for another election this fall to create public-sector jobs?

However, one would hope that a deliberate stimulus program could create more jobs than the number of people temporarily employed to run an election campaign. In any case, even going back a full year (before the last election), the number of public employees is down by 20,000 from August 2008 to August 2009.

UPDATE (Sept. 12): Quoted by Reuters


  • There seems to be an internal restraint program going down in the university sector. Here at Laval we have been directed to make 1% cuts across the board for 2009\2010. I have heard that it is much the same situation at York.

    Those who believe there is 1% of fat that can be trimmed on any given day in the university sector without effecting jobs are kidding themselves. Indeed, if we look at the LFS there has been a a 2.2 % decline in educational employment from this time last year and a decline of 1.4 % month over month decline. Quite why the respective provincial governments are pulling back on education and training during a recession which they all admit is going to be characterized by deteriorating and then sluggish job growth in the upswing is beyond me. Well actually it is not really beyond me it makes good political sense but lousy macroeconomic sense to be engaging in restraint in the education when that is where traditionally young (but not exclusively) labour reserves are housed during downturns and jobless recoveries .

  • I track job numbers for the National Capital Region / Ottawa-Gatineau CMA and the complete opposite has occurred in terms of public admin employment. Jobs in this sector have increased 14,800 or 9.8% since Oct 2008 (not seasonally adjusted) in the CMA. Looks like all the stimulated civil servants are all in the Capital.

  • Travis, we have encountered similar austerity at the University of Toronto, where support staff comprise Canada’s single largest Steelworker local.

    The contraction of public-sector employment appears to be concentrated in Ontario.

  • And if the qualitative counts for anything, you might soon start seeing some contraction in the BC public sector employment as announcement wise they seem to be leading the pack in planned cut backs, all coming at the a very delicate time in the economic future of the land.

  • Might soon? BC at least in the education sector had already started cutting back before we ever got into recession. We’ve had freezes and lost jobs left and right. Every time someone retires (unless they’re supervisory, and sometimes not then) they don’t get replaced.

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