Job creation has been led by low-paying positions

TORONTO, Nov. 2 /CNW/ - The quality of employment in Canada has dropped significantly in the last six months, with all measures declining, finds a new report from CIBC World Markets Inc.

The report notes that while the Canadian labour market was in a free fall between October 2008 and March 2009, shedding some 356,600 jobs, remarkably, over this six-month stretch, the quality of employment managed to remain relatively stable, falling by only 0.2 per cent.

In the last six months, when employment showed a modest gain, employment quality actually dropped 3.8 per cent. "While the level of employment has not changed very much over the past six months, employment quality has nose dived," says Benjamin Tal, senior economist and author of CIBC's Canadian Employment Quality Index (EQI).

"All the components that compose our quality index have worsened since March of this year. Part-time employment rose by over 0.2 per cent while full-time employment fell. As well, self-employment has surged by three per cent over the past six months vs. a 0.5 per cent decline in paid employment. But the most important factor that has contributed to the recent decline in our quality index is that any gain in employment over the past six months was among low-paying jobs while the number of high-paying jobs has, in fact, declined by no less than three per cent."

Mr. Tal notes that the quality of employment in Canada had acted as a perfect counter-cyclical force during the recession. In the dark days of the economic cycle, when Canadian jobs were disappearing at the fastest pace of any recessionary period in the postwar era, the quality of employment managed to hold stable. This helped to limit the damage of falling employment on income growth and thus consumer spending.

"This was reflected in real wage and salary growth which, in fact, actually showed a small gain during this period of unprecedented job loss," he adds. "So in many ways, the relative stability of employment quality during the job market correction between late 2008 to early 2009 worked to offset some of the negatives associated with rapidly falling employment levels."

He finds that while the economy is recovering, the counter-cyclical behavior of employment quality is now working in the opposite direction. Over the past six months, with the level of employment finally stabilizing, the quality of employment has lost its endurance and now it is working to offset some of the income benefits of a stabilizing job market.

"This is clearly reflected in real wage and salary growth which has fallen by 0.7 per cent in the second quarter despite a material improvement in the job situation," says Mr. Tal. "Granted, a low-quality job is better than no job, but the headline employment numbers overstate the real health of the Canadian labour market."

The report notes that most of the decline in employment quality was concentrated in western Canada, with British Columbia seeing the largest drop at eight per cent. Ontario was the only province in the country to see a gain with its EQI jumping 1.5 per cent. Saskatchewan and Manitoba hold the highest EQI rating in the country having overtaken Alberta which has fallen to second.

Percentage Change in EQI by Province

    (Q1-2009 vs. Q3-2009)

    Province          % Change
    ----------------------------
    BC                    (8.0)
    ----------------------------
    Atlantic Canada       (4.5)
    ----------------------------
    Alberta               (4.5)
    ----------------------------
    Quebec                (3.9)
    ----------------------------
    Saskatchewan          (2.2)
    ----------------------------
    Manitoba                 -
    ----------------------------
    Ontario                1.5
    ----------------------------

    The CIBC Canadian Employment Quality Index (EQI), combines information on:
    -   the distribution of part-time vs. full-time jobs;
    -   self-employment vs. paid employment;
    -   and the compensation ranking of full-time paid employment jobs in
        more than 100 industry groups

    The complete CIBC World Markets report is available at:
    http://research.cibcwm.com/economic_public/download/eqi-cda-20091102.pdf.

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