Job quality hits record low: Report

Are employers increasingly taking advantage of desperate workers?
By Liz Bernier
|Canadian HR Reporter|Last Updated: 04/02/2015

The quality of Canadian jobs has reached a new low — and there’s little hope of a turnaround anytime soon, according to a CIBC report. 


The CIBC Canadian Employment Quality Index was down 1.8 per cent compared with one year ago, which represents a record low. But that bottoming out of job quality is not a surprise — rather, it’s the continuation of a long-term trend in the labour market, said Benjamin Tal, deputy chief economist at CIBC World Markets in Toronto, and the report’s author. 


“The record low is not the most significant story. The story is that it has been very low for awhile. We have seen a significant softening in the 90s, and we haven’t recovered since then,” he said. 


“It’s more structural as opposed to cyclical, and I think that’s what the main message is.”


The index measures the quality of jobs by taking a look at three objective measures that focus on compensation, said Tal. 


“The three measures are part-time versus full-time, assuming that part-time is of lower quality; self-employment versus paid employment, again assuming that self-employment is of lower quality because on average they make less…; and third is looking at the sectoral distribution… and seeing how many jobs are created in high-paying sectors versus low-paying sectors.”


The index’s measure of job quality is objective in that it doesn’t account for things such as job satisfaction — it’s purely a measure of job quality based on compensation, which assumes full-time, high-paying employment is preferable. 


“It’s not a measure that is supposed to really look at how you feel about your job, how safe your job is. This is a very objective measure, in many ways a very compensation-based measure, so the many other dimensions to quality like satisfaction or (job security) are not part of this measure,” said Tal. 


Structural changes

The job quality index is reflecting structural changes — and those changes include the decline of the full-time job, said Jim Stanford, an economist at  the union Unifor in Toronto. 


“We’ve known for years that the nature of work was changing because employers were finding it possible to find labour without offering any of the normal benefits or security that traditionally come with having a job, in terms of security, permanence, regular hours benefits, pension,” he said.


“So we have seen in the last generation a bit of a transformation in the quality of work. And employers are, I think, taking advantage of the weak labour market in order to extract more work for lower compensation costs — and also to shift to risks of fluctuations in labour demands onto to workers.”


There’s also been a greater shift towards self-employment, said Angella MacEwen, senior economist at the Canadian Labour Congress in Ottawa.


“There’s been recently a bigger increase in self-employment as well and it’s been the more precarious kind of self-employment — so unincorporated, no paid help. So that’s disconcerting as well,” she said. 


The CIBC index backs up the labour market trends that have been seen with quantitative data, said Stanford. 


“And the interesting thing their data shows is the deterioration in the quality and stability of work — and now it’s at the worst levels ever. And we’re six years into an economic recovery, and yet job quality continues to deteriorate. And that tells me there’s something fundamentally askew in the balance of power in our labour market.” 


Involuntary part-time

An important distinction to make is the fact that some workers actively seek out part-time jobs, said David Gray, an economics professor at the University of Ottawa.

  

“There are actually certain workers who prefer, at least at the present time, a part-time job, so not every part-time job is bad, by any means,” he said. “What we have to worry about is the involuntary part-time employment rate — those people who do aspire to full-time work but can only find part-time work.”


There are about one million Canadians who are working part-time jobs but want full-time work, said MacEwen. 


“And that’s been elevated throughout the recession — that hasn’t gone down to what it was before the recession.” 

We’ll likely continue to see more part-time, temporary and contract-type work as the labour market continues to change, said Gray. 


“The labour market has been transformed quite a bit by what we call skill-biased technological change,” he said. “Perhaps in the future there will be further transformation coming from organizations like Uber — so what they’re doing to the taxi market could be used for other professions and other occupations. You could rent a taxi or rent a handyman or rent a housekeeping service on a very, very temporary basis.


“A smaller and smaller proportion of the total work that’s being done in the labour market will be within the framework of full-time, really secure jobs.”


Power imbalance

For some, alternative arrangements to traditional full-time, permanent employment might be highly desirable. But, for others, precarious work arrangements can create a deep power imbalance, said Stanford.  


“In that situation, employers have a pool of willing and often desperate workers to choose from, so they can get away with offering these sub-par conditions. But then that becomes kind of a self-reinforcing situation — the more employers are able to do that, then the fewer permanent, secure jobs are around, which means the workers are all the more desperate,” he said. 


“So, in a way, it puts us onto a path of precarious work that is hard to break out of, unless something shocks the confidence of employers that they can hire workers without offering any sort of security.” 


It’s definitely an employer’s market, said MacEwen — and workers often don’t have much control. 


“We’re transitioning more and more to a just-in-time kind of workforce where people maybe only have four hours of work this week, and maybe 10 next week,” she said. “People are really worried about losing their jobs, so they’ll accept worse conditions than they would in a healthier job market.”


And the power imbalance isn’t the only factor at play — there’s also a direct impact on the income gap, said Tal. 

“Given that you have more people being employed in relatively low-quality jobs, the bargaining power is not as high as with high-paying jobs so what we see is that the income gap is widening.” 


Policy changes?

Since these changes to the labour force are structural — not cyclical — the drop in job quality probably cannot be reversed by changes to monetary policy, said Tal. 


“Namely, you cannot just cut interest rates and everything would be fine. I think it’s much more than that. I think that there is a mismatch in the markets where we have people without jobs and jobs without people. We have a skill set in the economy that is inconsistent with what the job market needs,” he said. 


“Many young people are highly educated but they’re educated in fields that are not exactly what the market needs and, therefore, we have lots of educated people without the ability to find employment. So we cannot translate those degrees into high-paying jobs — and I think that’s part of the quality aspect.”


Immigration policy has also been a factor in this disconnect, he said. 


“We have seen a significant mismatch in immigration, with the stories of PhDs driving taxis. That’s part of the story where there is a disconnect between the quality or what the immigrants bring to the table and how they are being utilized. So (there are) many aspects of this problem.”


And as long as employers find this business model of relying on just-in-time, precarious labour works for them, they have no incentive to change it, said Stanford. 


“It would take either a significant tightening of the labour market, so employers increasingly found they couldn’t find someone to work on short notice for lousy pay with no security, and/or and improvement in labour regulations which compelled employers to provide a higher standard of security and predictability in their jobs.” 

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