Job-Creation Needed

Both employment and unemployment edged down between November and December, reflecting a smaller total labour force. This news raises concern that some jobless workers are leaving the labour force altogether. However, the labour-force decrease was only 9,000, far smaller than the previous monthly increase.

Overall employment changed so little because private-sector payrolls stabilized. While stability is welcome after the recent plunge in private-sector employment, it does not create job opportunities for the 1.6 million Canadians who are officially unemployed.

Notable monthly changes occurred in the two smaller categories of employment. Self-employment rose by 15,000 while the number of public-sector employees fell by 22,000 in December.

Both developments continue larger trends. Since October 2008, self-employment is up by 87,000 and the number of government workers is down by 23,000. Given widespread layoffs and much higher unemployment, one suspects that the ongoing surge in self-employment is mostly involuntary. Workers are struggling to generate income through self-employment since jobs are unavailable.

The drop in public-sector payrolls is striking given that the federal government and some provincial governments have increased expenditures to combat the recession. While the stimulus was largely focused on creating private-sector jobs (e.g. hiring construction workers to repair infrastructure), one might have expected more public programs to support somewhat more public-sector jobs. A possibility is that municipal governments and other public institutions are cutting costs by reducing staff.

With some signs of output beginning to recover but employment still flat, governments should be contemplating job-creation programs in preparing their upcoming budgets. One obvious starting point would be to stem the loss of jobs in the public sector itself.

UPDATE (January 9): Quoted by The Toronto Star

One comment

  • Couple extra comments on this month-

    1) The US numbers this morning came in very bad! -80K, but making it much worse- a huge drop in participation rate, that is a whole pile of people 500k+ left the labour market, which would have produced a huge increase in the unemployment rate. Add in the net revisions from the last two months that were included in the US release, and it gives a further decline in the labour market of our largest trading partner.

    2) Erin I would suggest that given a long look at the qualitative and the reactions from the Public Sector unions- cuts within public sector employment, especially at the provincial level, have only begun.

    The connect the dots issue between stimulus spending and government employment cuts have seemed to become unconnected. Now we have this threat at the Federal level as well. Word within the Public Sector- get ready for cuts! So -22K for this month could just be the thin edge of the wedge.

    Dramatic cuts in public sector employment will most definitely push us back into recessionary territory. The small grow activity witnessed within the the private sector, and you may need a magnifying glass to see it in the numbers- will positively be crushed with the negative demand shock associated with any major cutbacks in public sector employment.

    Despite the fact that any sane economist within Treasury board or provincial counterparts would agree with that statement- the cuts are made anyway and more are already in the queue.

    I would also agree w2ith you that I think we can now officialy say that Self Employment has become a factor in this recession. It has rocketed and dipped month to month but overall it has been on the incline. If you look at the data you will note that, the precarious nature of such employment has a negative impact rather than a positive impact on the labour market. Much of this self employment- is what I would label as fictional employment- i.e. people recently laid off have a stickiness to actually admit they are indeed unemployedor actually start working on personal projects that they deem self employment. Of course I would need a long study to quantify this.

    3) In conclusion- the bottom still keeps falling albeit less quickly and policy makers are content to drag along the falling bottom rather than addressing the situation. This is essentially very dangerous for our soci-economic system as the fabric it is built upon- like families, education, health care, and people in general are continued to be hammered, beaten and ripped apart.

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