Sticking to a cash flow plan, let alone planning for future emergencies, is a challenge for a growing number of Canadians.
That’s because Canada has seen a steady decline in job quality over the last 20 years, finds a new report by CIBC Capital Markets. The report looks at job quality in terms of compensation; it looks solely at wages, using unpublished data from Statistics Canada.
The percentage of Canadians who make less than the average wage (about $25 per hour) is nearly 61%, up from about 58% 20 years ago, says the report.
More part-time jobs
The rise in part-time jobs is part of the problem.
The share of Canadians working in part-time employment made an “unmistakable jump” to 20% during the 2009 recession, from its more consistent 18% level in the previous decade, says Benjamin Tal, deputy chief economist at CIBC Capital Markets, who authored the report.
And the share of part-time workers has yet to return to pre-recession levels, sitting currently at 19.5%. That’s partly because part-time jobs account for 90% of all jobs created in the year ending October 2016.
The rise in part-time employment likely reflects demographic forces, says the report, as the majority of this increase was among workers above the age of 55. Says Tal, “However, the fact that half of the increase in part-timers among that age group accrued during the recession suggests that, beyond pure demographics, there is an element of fragility here.”
Compensation for full-time work has also worsened over the past decade, with the number of jobs in lower-paying industries rising faster than those in higher-paying industries.
Meanwhile, self-employment has remained steady, which means there’s been no surge in technology-driven entrepreneurial activity. But since self-employed workers usually make less than paid employees, that steady state might be better than an increase in self-employment.
Anyway you cut it, more Canadians are making less. Tal’s analysis accounts for demographics and inflationary biases due to workers changing job brackets.
“Lower-quality employment might help to explain the sluggish growth in personal income in the past two decades and might provide some insights on the ability of workers, in aggregate, to absorb future economic shocks,” says Tal.
Read the full report here.
Also read: Financial services lead employment and GDP