A study by the Canadian Imperial Bank of Commerce (CIBC) suggests that Canadian job quality has fallen to its lowest level in 25 years, which may be indicative of a severe systemic problem that might be difficult to reverse anytime soon.
The report reveals that the bank’s employment quality index fell by 1.8% last year, amounting to a 15% overall decline since the 1990s.
The study also showed that there was a faster growth of part-time jobs in the country compared to high-quality full-time employment over the same time period. Even though last year saw full-time positions increasing at double the rate of part-time jobs, the overall negative impact on full-time employment during each recession was mostly permanent, the study noted.
In addition, the study also highlighted several “ongoing labor market challenges” like low participation of prime-aged Canadians.
Figures for 2014 show that the Canadian economy is about 270,000 jobs short of its full capacity, with more than one in four part-time workers looking for full-time work.
Experts have warned that these trends have far-reaching consequences for the Canadian economy. In particular, the increasing number of people in part-time positions and self-employment is going to lead to lower levels of savings and consumer spending. Debt, which is already growing consistently, is also likely to increase further.
“After every recession, job quality goes down, but it doesn’t fully catch up. So there is almost a permanent loss every time that there is a shock,” says Benjamin Tal of CIBC, who also believes that the long-term trends pointing to deterioration in job quality “is more of a structural issue than a cyclical one”.
The trends also point to a shift in the balance of bargaining power in the labor market. The fewer highly paid workers now enjoy higher bargaining power than the larger section of people holding low-paying jobs. “This is the main reason why the income gap is rising, which I believe is the number one economic, social issue facing the country in this decade,” says Tal.
However, some experts have cautioned that all part-time work must not be assumed to be of low quality.
The CIBC report’s findings come as talks are taking place between Ottawa and the provinces about training policies and employment insurance. The negotiations are focused on whether or not to renew Labor Market Development Agreements worth $2-billion a year to fund job training programs.
Source: National Post