Several people pay a lot of attention to the data published in the monthly Labour Force Survey, focusing on the headline numbers for employment and unemployment rates.

The employment and unemployment rates for the past few years shows that the monthly changes in employment are positive – rising by just under 20,000 jobs each month. Unemployment has fallen too – however, at a much slower pace. The average monthly decline in unemployment is about 2,000 per month.

However, bear in mind that these crests and troughs represent net changes in employment and unemployment. The gross changes merge into the figures for employment and out of the employment figures via recruitments and layoffs respectively. These gross changes have a greater magnitude than the net changes that invariably capture the attention of most people.

Over the past three years, the unemployment figures have remained above the one million people mark. However, that does not mean that the people who are jobless today are the same individuals who did not have jobs in 2011 too. For the most part, the unemployed people today are not the same individuals who did not have jobs in 2011 because employment spells seldom last for more than three to four months.

Culling information from the Public Use Microdata Files (PUMF) of the Labour Force Survey, the series of New EI Claims (claims received) and Full-time Private-Sector layoffs seem identical. The vertical axis shows that over 100,000 people lose a full-time, private-sector job each month and nearly 200,000 people submit an initial EI claim during normal times.

Variations in voluntary job separations and hires might not have a considerable impact on the gross labour market flows, but it would indicate the strength of the job market because workers would not quit their jobs unless they were able to find another one easily.

Both categories reverted to pre-recession levels by mid-2012. However, both categories dropped by about 10,000 a month because of a weakening of the labour market. This resulted in no effect on the net changes in employment and unemployment because both categories cancelled each other out in the headline numbers. As workers and firms regained confidence in the second half of 2013, both the categories rebounded once again.

Thus, while the monthly Labour Force Survey releases capture all the attention, they denote only the tip of the iceberg, leaving discerning readers to catch a glimpse of what lies beneath those explicit numbers.

Source: Maclean’s