Skip to main content

Construction work being done on a condominium project in downtown Toronto.Deborah Baic/The Globe and Mail

Canada's labour market withstood the shock of the oil slump last year, but troubling trends showed a decline in the quality of jobs.

More than half of the 158,000 new positions created last year were in the self-employed category, according to Statistics Canada's monthly labour report. The private sector did very little hiring and employment among prime-age workers shrank.

That does not bode well for this year's labour market as businesses across the country come to grips with the steep drop in oil prices.

"This is just the beginning of the fallout from the drop in oil prices," said David Madani, senior economist with Capital Economics.

The country added 91,500 new self-employed jobs last year, most of which were in finance, real estate, insurance and leasing. Because the government's labour force survey does not rely on income tax filings and does not ask self-employed workers to reveal their wages, it is unknown how much they earned.

"Self-employment is not a great sign," said David Watt, chief economist with HSBC Bank Canada.

"In this environment, it is a sign of weakness," he said.

The public sector created 40,000 new jobs, mostly in health care and education, though both areas fall under the purview of the provinces, and growth is considered unsustainable given the provinces' heavy debt loads.

The private sector created 26,000 new jobs last year, reflecting the country's slow economic growth.

Employment fell among Canadians in their prime working years, or those between the age of 25 and 54, another troubling trend in Canada's labour market. The jobless rate for this group rose to 6 per cent in December from 5.2 per cent a year ago. Over the same period, their participation rate increased, suggesting it has become harder to find employment.

The rout in oil prices led to a 6.8-per-cent decrease in employment in the natural resources sector, or a loss of 25,600 positions, with oil-rich Alberta feeling most of the pain. Gains in public sector jobs in the Western province helped offset losses in the private sector.

More job declines are expected, with the energy patch predicting further spending cuts and layoffs if oil prices do not recover. Crude is trading close to $30 (U.S.) a barrel, a decline of 70 per cent since mid-2014. The Bank of Canada warned on Thursday that it could take three to five years for Canada to adjust to lower commodity prices.

Weakness in other commodities such as iron ore, metallurgical coal and potash also led to job losses in resource-rich regions such as Newfoundland and Labrador as well as Saskatchewan.

Meanwhile, British Columbia's employment rose 2.3 per cent and Ontario's grew 1.2 per cent. Economists suggested that no province was immune from the effects of weak oil prices.

"The oil and gas industry doesn't operate independently of other industries. They are all correlated," Mr. Madani said. "There is going to be some kind of spillover or ripple effect from the collapse in oil prices," he said.

For the year, the construction industry shed 19,000 jobs and accommodation and food services lost 28,000.

On the positive side, the services industry continued to create new jobs, growing 5.2 per cent last year. The manufacturing sector created 36,000 positions and the finance industry added 14,600 jobs.

The jobless rate remained at 7.1 per cent in December. For most of last year, the rate hovered around 7 per cent after briefly dipping as low as 6.6 per cent in January.

In December, Canada added 23,000 jobs, surpassing analysts' expectations of 8,000.

In the United States, 292,000 jobs were added in December and the unemployment rate remained at 5 per cent.

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe