It's shaping up to be a jobless recovery, as Canada's public sector starts to reduce employment while companies remain hesitant to hire.
The economy may have revved back to life at the end of last year, but cautious employers are more likely to boost the hours of existing workers, or hire people on a temporary basis, before they take on new full-time staff.
In the meantime, belt-tightening in the public sector - the key source of job creation last year - is now triggering hiring freezes and layoffs. Treasury Board President Stockwell Day said yesterday he is eliminating 245 federal positions from government boards and agencies. B.C. said last week it plans to eliminate 3,500 full-time equivalent positions in the coming years. Cities such as Toronto are in a hiring freeze.
That suggests little job growth this year even if the economic recovery solidifies, economists said. It will take at least another year, and maybe two, to recover all of the 280,000 lost jobs in the recession, said Sébastien Lavoie, assistant chief economist at Laurentian Bank Securities.
"It looks like we'll have to wait until 2011 to see as many Canadians working as before the recession," he said, adding that he expects job creation of just 125,000 positions this year.
Indeed, three-quarters of businesses don't plan to change their head count in the coming months, Manpower Canada said in a survey to be released today showing the employment outlook actually deteriorated for the second quarter from the first. Seventeen per cent of employers plan to hire in the coming quarter, 6 per cent see layoffs and 75 per cent anticipate no change.
Hiring intentions in public administration have declined from both the previous quarter and last year, the Manpower survey shows.The results "reinforce the sense that this is a jobless recovery," said Byrne Luft, the firm's vice-president of marketing. "We're moving out of this quite slowly."
Employment tends to lag economic recoveries by six months, so he doesn't see much job growth until the third quarter of this year. His own staffing firm is seeing demand grow for temporary workers in areas such as information technology.
The cities with the country's brightest hiring outlook are Regina, Niagara Falls and Fredericton, N.B. The bleakest is in Red Deer, Alta., along with Northumberland county and Hamilton in Ontario.
With so much uncertainty about the sustainability of the recovery - given that governments will be withdrawing stimulus spending and shifting into deficit-cutting mode, interest rates will start to climb and global demand is still uneven "there's a lot to think about before you commit yourself to a new hire," said Benjamin Tal, senior economist at CIBC World Markets. "I really don't see a V-shaped recovery for the labour market."
For now, companies such as Cargojet Income Fund, Canada's largest cargo airline, remain in a hiring freeze amid an uncertain outlook. Company president Ajay Virmani said he doesn't expect a recovery for another two or three years.
A quarterly small-business survey to be released today, meanwhile, shows 38 per cent of firms plan to hire in the next year - indicating 62 per cent don't expect to add to payrolls.
The small-business survey, by American Express, showed that, of those who do plan to add staff, about half are looking for full-time, permanent employees.
SHIFTING LANDSCAPE FOR LABOUR MARKET
In coming years, Canada's labour market will see one of the biggest shifts in its history as baby boomers retire and temporary work increases - both of which have ramifications for employees and employers alike.
"Very significant" challenges will need to be addressed if the country is to maintain its standard of living, Toronto-Dominion Bank economists Don Drummond and Francis Fong said in a paper published yesterday about Canada's changing workplace. They highlight five key issues:
More than a third of the work force plans to retire in the next two decades. That, coupled with low fertility rates, will cause the labour market to slow and may force employers to increase wages to attract workers.
Under-represented segments of the population, such as immigrants, aboriginals, women and older workers, must be utilized more efficiently. Better inclusion of each group poses its own set of challenges: Women still face a big gender wage gap; immigrants are at a higher risk of falling into low-income status; and only half of aboriginal people on reserves have a high-school diploma.
Higher education is becoming ever more important.
In the next five years, about two-thirds of new jobs will need postsecondary education. Yet only about half of Canadians have such education. Access will need to be improved, particularly among low-income students.
Well-paid, full-time jobs with good benefits and pensions have been replaced by temporary or contract jobs without benefits. As well, private employer-sponsored pensions are disappearing, suggesting more Canadians will have to finance their own retirements.
Literacy remains inadequate. Almost four in 10 young Canadians lack reading skills and more than two in 10 university grads don't have appropriate English or French literacy skills. The problem is particularly dire among new immigrants. "For the most part, the consequences of these trends are negative: slowing labour force and productivity growth pose significant downside risk to overall economic growth and the standards of living of Canadians," the report said. "Overcoming these challenges merits the immediate attention of employers as the solutions must come from a complete overhaul of how we consider the labour force."
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