Canada’s labour market has largely healed from the recession, but long-term unemployment remains a blight.
The number of workers out of a job for six months or longer remains stubbornly high, according to Statistics Canada data compiled for The Globe and Mail.
More than one-quarter of a million Canadians were unemployed for 27 weeks or longer last year, almost double the levels of five years ago. The average duration of unemployment was 20.2 weeks in 2012, its second-highest in 13 years.
The longer someone is without a job, the tougher it can be to re-enter the work force, which carries broad economic and social consequences. Long-term joblessness can lead to atrophied skills, reduced consumption, lost productivity and, in some cases, higher social costs.
The Bank of Canada, which looks at a range of indicators to gauge the health of the labour market, recently noted the average spell of joblessness “remains at elevated levels” as some aspects of the jobs market are still soft. And several economists have cautioned that mismatches in the labour market means long-term unemployment will only grow in the coming months.
There’s no quick fix, and much of the challenge may lie with displaced manufacturing workers, said Emanuella Enenajor, economist at CIBC World Markets.
“If you have a worker that’s been working in a factory for 10, 15, 20 years, it’s not necessarily that easy to find a job in the new economy,” she said, adding that easing long-term unemployment is essential “to underpin consumer spending, household health indicators and support a broader economic recovery.”
Still-high spells of joblessness and a growing labour market mismatch may explain why the federal government has said it aims to tackle skills and training in its next budget.
The pace of job creation, meantime, is faltering, with numbers last week showing the first employment drop in half a year. As of last month, average duration of unemployment was still 19.5 weeks.
The proportion of long-term unemployed is particularly stark, climbing last year to 19.2 per cent of the ranks of the jobless from 13.2 per cent in 2007.
Marinus Zyta, a technology strategist, has been without work for the past 10 months. He’s been actively looking for an executive-level position since September, and says if something doesn’t materialize soon he’ll consider shorter-term contract work. Interrupted periods of employment – he’s been through two rounds of corporate downsizing in the last five years – and a prolonged job search mean he has trimmed discretionary spending on vacations and restaurants.
“I’m very optimistic, but I have to admit sometimes it’s a bit of a roller coaster,” said the Grimsby, Ont., resident, who has more than two decades of experience as an international business consultant and director of IT.
Like many in his demographic group, family ties and a mortgage in southern Ontario mean he’d prefer not to move, opting instead to focus his job search in the Greater Toronto Area.
Part of the problem may be still-weak demand for labour in some sectors or provinces. But job seekers haven’t necessarily shifted focus to new search techniques, said Jim Geraghty, president of Happen, a network for job-searching managers and executives. Simply sending out résumés is passé, and job seekers should instead be polishing their Linked In profiles, and getting out of the house to network.
The longer a person is out of work, the trickier it is to re-enter the work force, a new working paper shows. Its authors sent about 12,000 fictitious résumés in response to job postings in 100 large U.S. cities, and tracked callback rates for each submission. Each résumé had variations on employment status and the length of current jobless spell, from one to 36 months.
Its findings show the chance of getting a callback for a job interview “sharply” drops with unemployment duration, especially in the first eight months. Thus, employers are discriminating by steering clear of people with longer bouts of unemployment, said Kory Kroft, assistant professor of economics at the University of Toronto and one of the study’s authors.
“For workers, it’s bad. At the individual level they get trapped in this state of joblessness where they’re unemployed, and then just being unemployed makes them more likely to be unemployed. At the broader level ... if workers remain unemployed for a long time, it could lead to structural problems in the labour market and that could have adverse effects on economic growth.”
Fault lines in what looks like an otherwise solid labour market are on the central bank’s radar.
“The average duration of unemployment and the proportion of involuntary part-time workers have remained at elevated levels, while average hours worked remain relatively low,” the Bank of Canada said in its January monetary policy report.
Wage growth has also cooled, “consistent with the persistence of slack in the labour market.”
Long-term joblessness has been worse – in the early 1990s, for example, more people were out of work for half a year or longer. Those numbers eventually subsided with a broader recovery in the economy, Ms. Enenajor noted.