Employment quality rising despite slowing labour market: CIBC World Markets
TORONTO, July 16 /CNW/ - CIBC (CM: TSX; NYSE) - The number of full-time employees in high paying sectors is rising steadily across the country despite a sharp drop in the overall number of new jobs, according to CIBC World Markets. Job growth in sectors such as mining, farm product distribution, internet services and the manufacturing of beverages, tobacco, and electronic and printing products, is up six percent since last year. That's contributing to an overall upward trend in job quality and personal incomes despite weakening conditions elsewhere in the labour market, notes Benjamin Tal Senior Economist at CIBC World Markets in his latest Employment Quality Index (EQI) report. Meanwhile, the number of jobs in low paying sectors such as repair and maintenance, clothing and clothing accessories has also risen, notes Mr. Tal, but by less than one per cent during the past year with none of that increase has occurred over the last six months. The index, which assesses employment quality through factors such as the number of part time and full time jobs, as well as compensation and self-employment levels across 100 industry groups, finished June at an 18-month high and increased 2.4 per cent since the beginning of the year. Mr. Tal points out that rising employment quality has occurred despite part-time employment rising faster than the number of full-time opportunities, as well as the labour market's rapid slowdown over the last three months. On average, the economy is generating just 7,500 new jobs a month compared to about 40,000 a year ago. Yet, Mr. Tal says that "against this bleak background, the average weekly wage is still rising by a dazzling 4.3 per cent on a year-over-year basis. That's almost double the inflation rate." The increase, he says, reflects the bargaining position of those who hold full-time, highly-skilled positions. The report also notes that Saskatchewan has surpassed Alberta as leader in the level of employment quality among Canadian provinces. "This improvement was fuelled by strong gains in agriculture, energy extraction and mining exploration and developments, where earnings can run anywhere from 50 per cent to 125 per cent above the industrial average," says Mr. Tal. And after losing some ground in the second half of 2007, "employment quality in Ontario has improved by 4.7% since the beginning of the year," says Mr. Tal. "This appears to be inconsistent with the difficulties facing the manufacturing sector in the province. But a closer look suggests that many of the jobs lost in the sector over the past year were in low-paying industries such as wood, clothing and textile. In other words, not all manufacturing industries are created equal, and the fact that job losses in the sector were dominated by low-paying industries is, in fact, a positive for our quality index." The index is currently at its highest level since December 2006, and Mr. Tal expects the level of employment quality in Canada to remain elevated. Wage pressures will continue as a result, he says, despite a weakening labour market. He adds that this trend will be another reason for the Bank of Canada to consider raising rates next year. The complete CIBC World Markets report is available at: http://research.cibcwm.com/economic_public/download/eqi-cda-20080716.pdf CIBC World Markets is the wholesale and corporate banking arm of CIBC, providing a range of integrated credit and capital markets products, investment banking, and merchant banking to clients in key financial markets in North America and around the world. We provide innovative capital solutions and advisory expertise across a wide range of industries as well as top-ranked research for our corporate, government and institutional clients.