Employment rebounded more quickly from the recent economic downturn than it did in the recessions of the early 1980s and early 1990s, according to Statistics Canada.
In October 2008, employment peaked in Canada and then declined by more than 400,000 jobs during the following 12 months. But that slide ended in 27 months, with employment bouncing back to October 2008 levels. In contrast, employment took 39 months to return to pre-recession level in the early 1980s and 52 months in the early 1990s.
Between October 2008 and October 2010, the number of unemployed people rose by 341,000 (31 per cent). During the first two years of the 1990s downturn (April 1990 to April 1992), unemployment increased by 453,000 (42 per cent). In the first two years of the 1980s recession (June 1981 to June 1983), unemployment grew by 669,000 (75 per cent).
One reason for the slower increase in unemployment in the recent downturn was permanent layoffs increased more slowly — by about 86,000 (30 per cent). This was below the increases of 57 per cent from April 1990 to April 1992 and 116 per cent from June 1981 to June 1983, said Statistics Canada.
Other categories of unemployed workers also increased at a slower rate. For example, the number of "new entrants" (those with no previous work experience) and "re-entrants" (those who returned to the labour force after a period of non-participation) rose 33 per cent during the most recent downturn, compared to 35 per cent in the 1990s recession and 50 per cent in the 1980s recession.
In all, permanent layoffs accounted for less than 30 per cent of the increase in the unemployed population during the most recent downturn, compared with more than 50 per cent in the first two years of the two previous recessions, said the article “Inside the labour market downturn” from
Perspectives on Labour and Income.
However, more people remain out of work than before the downturn. Between October 2008 and October 2010, the number of people without a job increased by 800,000. These include unemployed people as well as those who were not looking for a job and, consequently, were not considered participants in the labour force.
This increase was smaller than during the two previous downturns, especially because the unemployed population grew at a slower pace during the recent downturn. Nevertheless, several indicators of slack labour market demand (for example, the number of unemployed, long-term unemployment and involuntary part-time work) were still above their pre-downturn levels, said Statistics Canada.
Just before the recent downturn, more than 80 per cent of unemployed people had been without a job for 25 weeks or less, while less than eight per cent had been unemployed for at least one year. Between October 2008 and October 2010, the number of unemployed people without a job for at least one year almost doubled. Together with those who had been without a job for 26 to 51 weeks, these workers represented 23 per cent of unemployed people in October 2010 compared with 15 per cent in October 2008.
Still, long-term unemployment increased at a faster pace during the first two years of the two previous downturns. The number of people who had been unemployed for at least 52 weeks more than doubled in the 1990s recession and almost quadrupled during the 1980s recession, said Statistics Canada.
Non-participants in the labour force
Between October 2008 and October 2010, the number of individuals aged 15 and over who were neither employed nor actively looking for work (the non-participants) increased by 458,000 (five per cent). In comparison, the number of non-participants increased by eight per cent from April 1990 to April 1992 and by three per cent from June 1981 to June 1983.
Although employment levels recovered faster than in previous downturns, there were still 113,000 fewer full-time jobs in October 2010 than in October 2008. In contrast, the number of part-time workers rose by more than 50,000, but that increase was not uniform across all categories of part timers, found the study.
Individuals who worked part time but would have liked to work full time (also called involuntary part timers) increased by 140,000 (20 per cent) over the period. Meanwhile, the number of individuals working part time on a voluntary basis declined by about 87,000.
United States: Comparable unemployment rate
Unemployment rates in Canada and the United States in early 2008 were almost at parity, said Statistics Canada. However, by the summer of 2008, a gap had grown between them and by the end of 2010, the unemployment rate in the U.S. was still more than nine per cent while the adjusted rate in Canada was just under seven per cent.