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Amid bleak job scene, pockets of dynamism

LABOUR INSIGHTS: Q&A

Amid bleak job scene, pockets of dynamism

Manufacturing and auto sectors will take a hit, experts say, but health care, education and entrepreneurship should ride out the storm

By Tavia Grant

Jobs, jobs, jobs. As recession ravages global economies, employment is a prime concern in the minds of Canadians heading into 2009. The country's labour market is already softening, with the jobless rate hitting 6.3 per cent as employers shed 71,000 jobs last month, the worst showing in a quarter century.

Many Canadians are fretting about job security, but are there any rays of light on the employment front for the coming year?

Two labour-force experts here offer their views about what's in store. Patrick Sullivan, president of Workopolis, runs Canada's largest job website, and Benjamin Tal, senior economist at CIBC World Markets, tracks the health of the labour market in his monthly employment quality index.

Tavia Grant: Welcome, and thanks to both of you. We are bombarded with bleak news these days. Layoffs seems to be percolating through everything from the auto sector to banks and telecoms. And employers that aren't firing aren't doing much hiring. How will the labour market fare next year?

Benjamin Tal: Being too optimistic would be misleading. You don't have to be an economist to predict that the unemployment rate will rise. Employment growth might be negative. But within that, we have pockets where a lot of things are happening in the labour market. It's a very dynamic place. And during recessions, it's even more dynamic.

Patrick Sullivan: I don't see it quite as badly as the majority of people. In Canada we are still sitting at 6.3-per-cent unemployment rates. And we're not seeing the huge layoffs from the Citibanks of the world.

Having said that, we are in a position where decreased spending will impact us in Canada. In the last month, we have certainly seen people putting their hiring plans on hold. But we do see it more pronounced in some areas than in others.

Grant: Okay. So can we expect any job creation, in any sector, next year? Or should job seekers crawl under their bedcovers?

Sullivan: I see information technology as a continuing strong area. Education might bounce back - there may be hiring for colleges or private institutions as people require some retraining or as new entrants to the work force are laid off. And health care. Crown corporations generally don't seem to be slowing down.

Tal: Health care, definitely. In previous recessions, such as in 1991, health-care jobs rose 25 per cent. Also insurance [job] growth goes up because you see more claims with, unfortunately, rising crime.

But there is no doubt in my mind that the fastest-growing segment of the labour market in the next year or two will be self-employment. If you go back to the 2001 recession, such employment was rising faster than any other segment.

Grant: What about infrastructure? Governments the world over are accelerating plans to build roads and bridges, which they hope will create jobs and boost economic growth. Are construction jobs set to rocket?

Tal: Job creation [in construction] from infrastructure projects will not be as quick as some people expect because it takes time to build and approve these projects. Instead, you need the jobs to support the first stage - the engineers, architects and heavy-machinery production.

Grant: What about regions or cities in Canada? Which corners of the country will see the best and worst job growth?

Sullivan: If looking at the least [job growth], the obvious targets are the communities with a high degree of employment around the auto sector, the Oshawas, Windsors, and London, Ont., and some areas of Quebec which have auto manufacturing. Whether the auto companies get the aid they request, I suspect there's more of an air of caution among consumers and that they may be postponing those purchases.

On growth, Alberta has been so strong for so long, Saskatchewan and Manitoba - all of those are still great areas, though granted they've been impacted. British Columbia, with the Winter Olympics coming in 2010, means there will be demand for hospitality workers in that area.

And in Toronto and the Greater Toronto Area, there are still positions; they may not be the great full-time positions that people desire, but we're still seeing many temporary and part-time positions.

Tal: You will see job creation in the West in 2009 go down significantly. The level of activity will be high, but since there was so much hiring and now there is a significant slowdown in momentum - and so many people migrated there - you will see disappointing numbers there in terms of job creation, and actual job losses.

I see some areas in Ontario still struggling, but not in the Greater Toronto Area. I think Quebec will be better than other areas because of the public-sector contribution and the impact of the U.S. is not as bad there as in Ontario.

In the East, I think you'll see notable rising unemployment because they don't have any drivers that really fight this recession. Among cities, we see Vancouver losing momentum in a very dramatic way - the housing market is slowing ... and China is slowing and China is a major force for Vancouver. Toronto and even Montreal will be better [by comparison].

Grant: We all know the auto sector is in for a rough ride. What other sectors will see the worst hemorrhaging?

Sullivan: Manufacturing. I don't know if I can pick too many bright spots there, to be honest.

Tal: We will definitely see bad news in mining, because this is a global recession. Also in performing arts and air transportation - things that are like luxuries. Air transportation will be down significantly, probably by around 15 per cent.

Grant: Salaries - up until recently, wages were rising at the fastest clip in at least 10 years. Now as a recession erodes the clout of unions, are hefty pay hikes a thing of the past?

Tal: We're going to see wages levelling off - and in fact real wages potentially even declining over the next year or two. The bargaining power of labour is going to diminish on a daily basis.

When you have this kind of situation and companies are struggling to cut costs, we will be lucky if we keep up with inflation for the next year or two.

Grant: A rather sobering assessment. Any hope of a recovery next year?

Sullivan: We may see layoffs now and over a few months but as we head into the summer and fall of next year ... our expectation is that we'll start to see a recovery then.

What I'd leave you with, though, and this is my perspective, is we're not back in the days of early 1990s, of 10- to 12-per-cent employment rate and high inflation. We've got low interest rates, an unemployment rate which is almost a generational low in Canada, so I don't see this unravelling quite as dramatically as the papers seem to be saying it is.

Grant: Thanks to both of you. Let's do this again next year - when hopefully the worst of this storm is over.

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