Report claims quality of new jobs declining

Bank takes a page from labour’s book on job evolution

There is an apocryphal story told about the residents of an island who eked out a precarious existence taking in each other’s laundry. It has become a favourite among critics of the theory that the new, service economy will create better jobs, and not just equivalent ones, to those being lost as manufacturing is transferred to developing economies such as China’s. For several years, unions have been warning of the loss of high-quality jobs, while their opponents have claimed there is no evidence for this (as a net effect, at least), effectively branding the critics modern-day Luddites.

On April 16, 2008, the TD Bank Financial Group released a report entitled “Is Canada’s Job Machine Unstoppable?” It begins by pointing out the paradox that, while the economy has been growing more slowly since the beginning of 2007, the labour force has been booming. And the paradox doesn’t end there. The labour market is tightening and salaries are increasing much faster than inflation at a time when productivity is plummeting.

The loss of jobs over the recent past has come in manufacturing industries and in agriculture: a drop of 129,600 or 6.1 per cent in the former and 15,200 or 4.4 per cent in the latter between December 2006 and December 2007. The largest gains have been in construction (73,900 or 6.8 per cent), public administration (78,300 or 9.5 per cent), information, recreation and culture (65,200 or 8.9 per cent), and professional, scientific and technical services (57,200 or 5.2 per cent). The report points out that construction is the only bright spot among the goods-producing industries, and it is growing at an unsustainable pace in the residential sector and will also moderate in the industrial, commercial and institutional (ICI) sector. And, despite a forecast drop in monthly job creation from 32,000 down to 3,000 to 5,000, the report expects that the service sector will hold its own.

So, the machine is at least “slowable.”

But the point that media reports picked up on is the “quality” of the jobs replacing those lost in manufacturing. Despite the smugness that has greeted the fact that 55 per cent of the manufacturing jobs that have been lost since 2002 are union ones, the point must also be taken that they were the most productive jobs as well as the best paid. The report shows a rapid decline in GDP per employee beginning in 2002 and in productivity beginning in 2003.

Further, employees laid off from manufacturing jobs are finding new employment at roughly 75 per cent of their previous salaries. This averages $10,000 per year less. And it does not take into consideration lost benefits and new working conditions.

We aren’t taking in each other’s laundry yet, but the glowing promise we have been made of clean, green, well-paid, productive service-sector employment remains just that.

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