Strong employment numbers mask concerns over job quality, report says

Although Canada is adding more full-time jobs than part-time jobs, the quality of employment in the country continues to deteriorate, finds a new report from CIBC Economics.

The bank’s index of employment quality—which compares data from part-time versus full-time jobs, self-employment versus paid employment and compensation rankings from more than 100 industry groups—declined by 1.4% during the year ending May 2019.

CIBC found that while full-time employment accounted for 81% of the jobs created over the past year, the growth was strongest among low-paying jobs and weakest among high-paying jobs. Growth was particularly strong in low-paying sectors such as food services, accommodation, personal services, administration and personal care.

The report also found that the majority of workers paid below the average wage continues to rise. These workers accounted for just under 61% of the labour force in 2018.

“That trend is consistent with a widening wage gap symptomatic of deteriorating labour market quality,” wrote report author Benjamin Tal, deputy chief economist with CIBC Economics.

Growth in jobs that pay between 50% and 100% of the average wage was strongest over the past year, a trend that has been consistent over the past few decades, the report noted. Workers in this wage range accounted for 51% of total employment.

The report observed that, although Canada currently has the lowest unemployment rate since the 1970s, new jobs aren’t adding much to the country’s productive capacity, with real GDP growth “not remotely close to where it should be.”

“Simply put, all other things being equal, lower employment quality means that the labour market must run faster to stay in the same place since we need relatively more workers to generate the same increase in income,” it concluded.

Read the full report.

Staff

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