It’s not what most of us would expect in the wake of a global recession and sluggish economic recovery, but here’s the news: Job stability in Canada is stronger than ever.
That was the central finding of a CIBC World Markets report, which found there is a 60 per cent chance Canadian workers will stay with an employer after completing their first year on the job. That retention rate hit 95 per cent for employees with tenure of five years or longer with the same company — a record high, according to Nick Exarhos, co-author of the study and an economist at CIBC in Toronto.
“Though it does appear that people are sometimes struggling to get jobs, once they enter through those narrower gates, they enter a career that features more stability,” he said.
“We’re finding that the current shifts in the labour market are making the likelihood of maintaining employment after getting a job a higher probability.”
The CIBC report also took a look at wage data, which showed significant discrepancies between high- and low-paid sectors, said Exarhos.
“In past recoveries, high-paying industries and low-paying industries — their wages would move in tandem. So there wouldn’t be one particular segment of salaries that would accrue all the gains,” he said.
“In this recovery, however, we’re seeing high-paying industries have their wages increase much faster than low-paying industries.”
Those in high-paying industries, or highly skilled and qualified
individuals, are being compensated well — so they have no incentive to leave, said Exarhos.
“Employers aren’t able to find the labour they need so… they’re incentivized to keep the workers they have. And the most effective way of doing that is through compensation,” he said. “That also spills over into tenure, so if you’re being paid well, you’re likely to stay in your current role, on the upper end of the spectrum.”
On the lower end of the skills spectrum, we are seeing a large overhang of unemployed and foreign competition in certain industries that didn’t exist 30 years ago, said Exarhos.
“On the lower end of the spectrum, if there’s a lot of people with similar skill sets (who are) unemployed, and foreign competition, you probably won’t be able to find a job quickly if you quit the current one.”
Although those on the lower end of the skills spectrum aren’t seeing their wages pick up much, they still have an incentive to hold on to their jobs, said Exarhos — once they hit the unemployment line, chances are they might stay there for a long time.
“If we just look at the share of people who are unemployed for over 27 weeks, that’s been hard to drive down. People are staying unemployed for longer,” he said.
The looming threat of unemployment is made even more dire by the fear there just aren’t many good jobs out there, said Jim Stanford, an economist at Unifor in Toronto.
“The authors interpret the increasing inertia of those with work as a sign of a boring, stable labour market. I interpret the same data in another, less benign way — the high retention rates for those who are lucky enough to have a permanent job is a sign of continued fear and insecurity, not stability,” he said.
“If you have a job and you look around at the labour market and see an absence of good alternatives (not to mention hundreds of thousands of desperate people who can’t find work at all), then you are all the more likely to hang onto your job.”
This insecurity and polarization in the labour market inhibits flexibility and mobility, said Stanford, adding it is an economic outcome of a labour market marked by chronic weak demand.
“The problem is not a mismatch between the unemployed and unfilled vacancies. The problem is a shortage of jobs that is getting worse, not better,” said Stanford. “In a truly tight labour market, employers will snatch up available workers and offer them both training and job stability. There is no sign of that happening.”
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