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A 'now hiring' sign in Kitchener, Ont.Van Paassen/The Globe and Mail

In the shifting sands of Canada's labour market, a clear trend is emerging: the rise of contract work.

Contract jobs have surged since 1997 and increased between 2005 and 2009 despite the downturn, a Statistics Canada paper released Friday shows. Last year, nearly 1 million Canadian workers held this type of job.

Most people in these fixed-term jobs are professionals with an educated workforce, it found. They tend to work in cities, and earn on average about 12-to-14 per cent less than permanent employees - $19.61 an hour last year, on average, as opposed to $22.71 an hour among permanent workers.

As of last year, half of all temporary jobs were contract positions, and since 1997 "contract employment has been the main source of growth in temporary work," said the report's author, Diane Galarneau.

The reason for the growth may partly be that the sectors contract workers were in were less affected by the downturn - health, education and public administration, she said.

Statscan divides temporary labour into three categories: contract, casual and seasonal work. In total, one in eight paid workers or 1.8 million Canadians held some sort of temporary job last year, the study said.

Contrary to the common perception and to global trends, the study found the total share of temporary work has actually declined in recent years as seasonal and casual jobs diminished.

Contracts, however, are on the rise. They account for the majority of temp jobs and their share grew to 52 per cent of temporary work last year from 47 per cent in 1997. The growth amounts to more than 5 per cent a year in that time, even through the downturn.

Temp jobs are generally seen as poorer in quality. On average, they don't pay as much as permanent positions and have fewer benefits. They are less likely to be unionized, and more likely to be part time. Intermittent income also makes it tougher to build up savings for retirement.

But they also have positive aspects. Students, older workers or stay-at-home parents may prefer them for their work-life balance. They can be a foot in the door for immigrants. For young people, they can be a stepping stone to a permanent position. For employers, they allow more flexibility in adjusting to the waxes and wanes of demand.

Both temporary and permanent jobs have grown in the past year. Separate stats from the labour force survey show permanent positions have risen 3.4 per cent in the last 12 months and temp work has risen 3 per cent.

Friday's study also examined temp agencies, which help place workers with employers. These types of companies have been rapidly expanding since the 1990s, it said, generating $9.2-billion in 2008 from $1-billion in 1993.

"Although the number of agency-hired employees in Canada is probably also increasing, there is no reliable information on numbers to date," it said.

All told, the portion of paid jobs that were temporary rose to 13.2 per cent in 2005 from 11.3 per cent in 1997. That share eased to 12.2 per cent in 2008 before ticking up to 12.5 per cent last year. Statscan attributes the overall increase to a rise in globalization, the expansion of international trade and growing competitive pressures.