Service jobs at record high as labour market sees shift

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The composition of the country's labour market is shifting, with the share of Canadians working in the services sector reaching a record high, while the portion of those employed in factories has ebbed to a record low.

The share of people working on the services side of the economy climbed to 78.4 per cent in March, Statistics Canada data showed Friday, the highest on record after several decades of increases. That means more than three quarters of working Canadians are now holding jobs in sectors such as retail, food services, education, professional services and health care.

At the same time, on the goods-producing side, manufacturing as a share of total employment has dwindled to a record low. It fell to 9.4 per cent last month, down from 15 per cent in the 1990s and 19 per cent in the 1970s and early 1980s. Back in the seventies, factories were the largest sector by employment in Canada.

Manufacturing has long been a key source of jobs, particularly for men and for those without postsecondary education, a source that allowed them to support families and stay in the middle class. Meantime, growth in services has often been grouped into two types of work – those demanding higher skills that pay above-average wages (like engineers and architects), and those that require fewer skills and pay below-average wages (such as hotel and fast-food workers).

"There's been a long-term trend in the economy, with jobs slowly but surely moving out of manufacturing and into other sectors," said Brian DePratto, economist at Toronto-Dominion Bank. He was surprised to see manufacturing jobs post a small decline last month, but says hiring should resume as exporters, particularly in Central Canada, benefit from a weaker currency.

Canadian employment growth

Canadian employers added 28,700 jobs last month, all of them part time, and the unemployment rate stayed at 6.8 per cent, Statscan said. Employment has grown by an average of 16,300 jobs a month over the past half year, despite headwinds from lower oil prices and a slowing economy.

Details of the report were mixed. On the bright side, the job gains were much better than expected. The country's labour force participation rate, which had fallen last year as people stopped looking for work, rose one notch to 65.9 per cent. And the pace of annual wage growth picked up to 2 per cent, above the rate of inflation.

In services, SAS Canada is an example of a company that's hiring. The software company is planning to hire more than 30 people this year, many of them recent grads, for full-time sales and consulting services positions in Toronto, Ottawa and Calgary.

"We are forecasting strong revenue growth in Canada as organizations continue to accelerate investment in analytics to take advantage of a growing 'big data' economy," said Cameron Dow, vice-president of marketing.

Employment tends to be a lagging indicator, however, and many economists see softness ahead, especially in oil-reliant provinces such as Alberta and Newfoundland. Jobless rates in both provinces ticked higher last month, to 5.5 per cent and 13.3 per cent, respectively.

The Bank of Canada's business outlook survey, released this week, showed hiring intentions are the weakest since 2009.

All of last month's job growth was in part-time work. Part-time positions rose by 56,800 in March while full-time work fell by 28,200. Many workers would prefer full-time hours. As of March, more than a third – or 35.6 per cent – of core-aged women working in part-time positions were doing so involuntarily, meaning they were unable to find full-time work due to business conditions, noted Andrew Fields, Statscan labour market analyst, a rate that is higher than 2007 levels.

At the same time, nearly half of men ages 25 to 54 are involuntary part-timers, though that's down from the recession. All told, there are more than half a million core-aged workers who would prefer full-time jobs, a sign of lingering slack in the labour market.