Canadian employers are reluctant to hire, and it’s not just because of low oil prices.
Year-over-year employment growth in Canada has been below 1 per cent for 15 months in a row, the longest stretch below that mark for annual job gains, outside of recessions, in almost 40 years of record-keeping.
This slow growth reflects caution among employers who are reluctant to add staff in an uncertain economic climate, now compounded by currency and commodity price volatility. Without clarity that business conditions will improve, many employers are aiming to keep costs down by avoiding adding to permanent payrolls.
Companies “want to take advantage of better business activity by improving productivity,” said Rowan O’Grady, president of recruiting firm Hays Canada. “But there’s still a lack of confidence … to be in a position where they’re doing a lot of hiring.”
Rather than risk adding to head counts, he said, many are instead asking one person to take on two roles, hiring only on a temporary or contract basis and holding off on big decisions to expand.
Employers shed 1,000 positions last month, according to Statistics Canada, and the jobless rate rose two notches to a five-month high of 6.8 per cent as more people looked for work. Annual employment growth has hovered at about 0.6 per cent in the 15 months since December, 2013.
The last period of least 15 months of growth below 1 per cent was during the 2008-2009 recession, when often it slumped into negative territory, according to Statistics Canada.
Another weak point was between 1990 and 1993, when there were 37 straight months of job growth below that pace. Demographics are playing a role. Population growth has also slowed among prime-aged 25-54 workers, which influences employment trends.
That said, “we are seeing very little upward movement in participation and employment rates among the core-aged population,” noted Statscan labour analyst Andrew Fields.
In the past year, temporary employment has climbed 2.3 per cent while permanent positions are up 0.1 per cent.
Temp employment – which includes seasonal, contract and casual jobs, accounts for 12 per cent of the total. Self-employment has jumped 2.2 per cent in that time, public-sector employment by 1.2 per cent and that in the private sector by by 0.2 per cent.
Among the provinces, Newfoundland and Labrador has seen an outright drop in employment from a year earlier. It’s also below year-earlier levels in Nova Scotia and New Brunswick.
Employers are cautious in Saint John, N.B., where the jobless rate is the second-highest in Canada at 9.1 per cent. And if they do hire, it’s more likely to be on a temporary basis, said Mindy Soltz, Manpower branch manager for New Brunswick and Newfoundland.
“Our economy is a little bit slower,” she said, adding that uncertainty is the main reason for the hesitation. We have had some bigger call centres close, we’re talking 50 or 100 people, so those people are actively looking for work ... On the other end, employers are moving very cautiously.”
Many Atlantic Canada workers are now searching for jobs closer to home after stints in Alberta’s oil sands. Ms. Soltz said about half of these job-seekers didn’t get a call back to return to work, amid lower oil prices, while the other half now prefer to find something closer to their families, even if that means taking a pay cut.
When his firm asked employers about the downside to these lean-staffing strategies in a recent survey, they reported “increased levels of stress and reduced morale,” Mr. O’Grady of Hays Canada said.
“It takes a toll on people. Employers can push employees and increase productivity, but for how long? If staff knows the business is increasing but the company is not investing in more resources, they can burn out.”
He believes hiring will pick up as demand grows more consistent, and said wage growth in some areas is already accelerating. The hot spots for pay hikes, he added, are in technology, specifically among those who develop mobile apps, and for managers in the construction sector.
Wage gains remain muted. Average increases for permanent workers rose 1.7 per cent from a year earlier, decelerating from 2.1 per cent in the prior month and just below the average annual inflation rate over the past six months.
Oil companies Nexen Inc. and Talisman Energy Inc. were the latest to announce job cuts last week, joining others in the energy sector.
In retailing, Target is laying off thousands of workers in Canada, while in the public sector, Saskatchewan and Alberta have hiring freezes for non-essential workers or those not on the front lines.
Alberta’s jobless rate climbed in February to 5.3 per cent from January’s 4.5 per cent. Saskatchewan’s rose to 5 per cent from 4.5 per cent.
There are signs that Alberta’s hiring binge “is over,” said a report this month by the Human Resources Institute of Alberta. “Many are anticipating a pause in hiring along with a review of total compensation and organizations for savings to ensure the continued health of their organizations.”
In theory, Central Canada should pick up, as exporters are buoyed by a weak currency and firmer U.S. demand. But for Ontario, there’s little sign that’s happening yet.
“Companies have had to manage costs very tightly until recently,” said Mr. O’Grady. “That doesn’t change overnight.”Report Typo/Error