Employees hold the upper hand

Stats show the balance of power has officially shifted, but wages aren’t being pushed higher
By Uyen Vu
|Canadian HR Reporter|Last Updated: 11/22/2006

The debate rages on over just how well the Canadian labour market is doing, especially with the release of a few research reports disputing how well workers have fared in recent years.

Among the rosy portraits is a Statistics Canada article noting the job gains in 2005 have been primarily in full-time employment, including high-paying jobs such as management, natural and applied sciences and social science, education, government services and religion.

Philip Cross, director of current analysis at Statistics Canada and author of

Emerging Patterns in the Labour Market: A Reversal from the 1990s,

didn’t hedge when asked about an anticipated shift in the balance of power towards workers and jobseekers.

“It’s happening,” said Cross, pointing to continued full-time job creation since 2003, a decline in part-time employment and the escalating strike activity last year, a level not seen since 1997.

Full-time employment rose by 287,000 jobs in 2005, while part-time employment fell by 32,300.

Cross also noted a number of trends in the 1990s that are now being reversed. While white-collar jobs grew much faster than blue-collar jobs in the 1990s, the latter has rebounded since 2000. Although recent job losses in manufacturing have dampened momentum, labour demands in construction and resources remain strong.

Small firms may have dominated job creation in the 1990s but, since 2000, large establishments have been driving the job gains, with payroll increases of six per cent last year, compared to 1.1 per cent at medium-sized firms.

And although rural areas lagged behind cities in the 1990s, small towns saw a 4.1-per-cent job increase last year, driven by growth in the resource sector and a rebound in agriculture. Cities, in contrast, were hit by a weakening in manufacturing, with Montreal clocking a one-per-cent increase, Toronto and Vancouver two per cent, and Hamilton and Windsor, Ont., experiencing negative growth.

Cross’ labour market outlook stands in contrast with that of Benjamin Tal’s, a senior economist at CIBC World Markets in Toronto. He said positive headlines about full-time job creation don’t tell the full story about the strength of the labour market. It’s not enough to look at how many full-time jobs are created; one also has to consider the quality of the jobs being created.

And, according to Tal’s calculations, job quality is still on a steady decline since 2000. What’s more, job quality in 2005 was more than eight per cent lower than its level before the 1991 recession, Tal noted in a research paper,

Quantity: Yes. Quality: Not Yet

.

Tal’s measure of quality takes into consideration a number of factors including wage, job stability, full-time versus part-time work and self-employment versus salaried employment. It covers about 130 occupations in 90 industries.

“I’m not saying that the labour market is sick and we don’t produce high quality jobs. It’s possible that we’re victims of our success. The labour market is booming. And it’s possible that the people now being employed in low-quality jobs wouldn’t have worked in previous cycles,” said Tal. “The point I’m making is when you tell me that the economy is generating 250,000 new jobs, this is not as impressive as if you had told me the economy was generating 250,000 new jobs five years ago, when the employment quality was higher.”

Although noting that he set out only to quantify the decline in job quality, not to explain it, Tal said part of the reason is the decline of the manufacturing sector, including a shedding of 112,000 manufacturing jobs last year. Another factor behind low-quality jobs may be the lack of qualified people.

“It’s not that companies don’t want to hire. Maybe the right people aren’t around,” he said.

Looking ahead, Tal said employment quality will likely remain low, due to a softening of the housing market and the ripple effects of job losses in manufacturing last year.

“Part of the reason why wages have not been rising to the extent that would be justifiable by the low unemployment rate is the fact that bargaining power is not as strong as it used to be,” he said.

Tal’s findings are further bolstered by the release of a study showing Canadians’ real hourly earnings have risen by a dime since the early 1990s. According to

The Current State of Family Finances

, workers paid by the hour earned an average of $17.50 an hour, barely up from $17.40 in 1991, in 2003 dollars.

The study was commissioned by the Vanier Institute of the Family, an Ottawa-based think-tank, and conducted by Roger Sauvé of People Patterns Consulting, a demographic and social trends research company based in Sooke, B.C.

Along with the flat earnings, time worked per week has declined by about an hour and a half in the same period. The result is stagnant household incomes, which grew from $55,000 in 1990 to $55,500 in 2003 dollars. The paltry increase has also resulted in a rise in dual-income families, the study noted. In 1990, four in five couples with children were dual-earners; in 2005, that share has risen to 85 per cent.

“We’ve lost a decade and a half in income growth. People don’t have bargaining power. A lot of it is globalization, but the effect of globalization isn’t in losing jobs, it’s in losing bargaining power.” said Tal, in response to the Vanier study. “Wages are starting to rise now, which is a good thing. But my point is wages could be higher, given the fact that unemployment is so low.”

Add Comment

  • *
  • *
  • *
  • *