In recent months, news coverage has fuelled errors of fact concerning the employment and unemployment figures published by Statistics Canada's Labour Force Survey. I would like to set the record straight.
I can assure all Canadians that the Labour Force Survey remains as healthy and accurate as it has always been. From month to month, real employment is subject to random changes. Statistics Canada monitors these changes and provides data users with the most accurate information available.
What is the Labour Force Survey and what is it designed to do?
The Labour Force Survey provides key estimates of employment and unemployment in Canada. It also presents a comprehensive reading of the state of Canada's labour market at the national, provincial, and subprovincial levels. It is specifically designed to provide the best possible measure of month-to-month changes in key variables within approximately three weeks of data collection.
To manage costs and ensure timely data, Indian reserves and some remote areas are currently excluded from the survey. The size of the labour force in these areas makes it highly unlikely that any local change could significantly affect the estimates of employment and unemployment for Canada and provinces. Nonetheless, smaller geographic areas are important and Statistics Canada uses the National Household Survey to measure labour conditions in remote areas.
Myth #1: Statistics Canada made a large correction to employment estimates in January, 2015
Not true. To maintain the accuracy of the employment and unemployment data, Statistics Canada revises its numbers after every census. This is standard international statistical practice. In January, 2015, the revised estimates were published and resulted in a decrease in the total national employment from 17,953,600 published in December, 2014, to 17,851,500, a downward revision of 0.6 per cent. An adjustment of this magnitude over a period of five years is, in the world of sample surveys, very small.
As a result of the revisions, measured growth in employment between December, 2013, and December, 2014, went from 186,000 to 121,000 (-65,000). Some analysts argued that this was a large revision. In fact, this revision was similar in magnitude to most previous revisions.
Myth #2: The Labour Force Survey has been adversely affected by the quality of the 2011 census data
Not true. The employment and unemployment data from the Labour Force Survey are entirely as robust as in the past.
Labour Force Survey results depend on the demographic data generated from the mandatory census of population. Response rates and data quality of the 2011 Census of Population were equivalent to previous censuses.
Myth #3: Employment estimates are more 'volatile' than in the past
Not true. Statistics Canada responded to claims of increased volatility by producing a study, available on our website, that examines the history of month-to-month changes. It clearly indicates no increased volatility in month-to-month movements. The study also presents techniques for reducing the random noise, should analysts wish to do so.
As businesses open, close and retool and Canadians enter or leave the labour force, the size of the labour force fluctuates. On average, about 600,000 people enter employment and a similar number leave each month. There is no reason to expect that movements will go smoothly up or down from month to month.
In addition to these labour market changes, the Labour Force Survey is a sample survey and subject to sampling error. With a total employed labour force in Canada of 17.9 million, a month-to-month change of 40,000 is around 0.25 per cent, or less than 1 per cent of the total employment.
Myth #4: Statistics Canada has reduced funding for the Labour Force Survey
Not true. Statistics Canada has not reduced resources nor funding to the Labour Force Survey program (or any other program producing key macroeconomic statistics). In fact, as it does after every decennial census cycle, the agency is undertaking a major investment in the survey and its infrastructure to ensure its relevance and quality.
Conclusion
The Labour Force Survey is the most reliable source of employment and unemployment information for our country. Its accuracy, robustness and timeliness remain exemplary.
Wayne R. Smith is Chief Statistician of Canada.