Job creation held up just fine, thank you, in Canada’s lousy economy
By all accounts, the year just ended was a lousy one for Canada’s economy. Consumers began to feel tapped out, chilling the formerly hot housing market. Global financial uncertainty tanked export demand. Strangely enough, though, job creation held up very well.
As I’ve mentioned before, the odds are high that this happy circumstance will fade in the coming year, leaving unemployment close to where it is today. But even so, Canada’s job market is already in much better shape than those of most countries. We have a jobless rate that’s dropped to 7.1 per cent, the lowest i n four years, along with the distinction of being one of only two big industrial countries (along with Germany) where employment is above the prerecession peak.
Jonathan Bendiner, an economist with the TD Bank, has sifted through the numbers to find what drove this surprisingly good performance.
One take-away will quickly jump out for any observer of the self-destructive auster- ity programs in Europe or among state governments in the U.S. Having healthy governments can be very important to sustaining a healthy economy. While other jurisdictions have gutted public services, education and health care were two areas that strongly supported job growth in Canada last year.
Another big job creator was Canada’s financial industry, a rare part of our service sector that is globally competitive. Even as the related real estate industry was cooling off, total employment in finance, insurance and real estate firms grew by 67,200 jobs last year.
A surprisingly upbeat finding is the resilience of manufacturing, a sector that you might expect to be gasping at a time when many big buyers in the U.S. and Europe are reluctant to loosen their purse strings.
But as Bendiner notes, the factory sector was one of the big job creators of the past year. Statistics Canada reports that, as of December, manufacturing employment had jumped by 53,600 from a year earlier, the secondstrongest showing (after finance) of any private-sector industry.
We need to put this into context, of course. The gain comes after years of shrink- age in factory jobs, as relentless global competition forced factories to do more with fewer workers.
But even so, there’s a turnaround that seems to be strengthening. The latest numbers on Canadian manufacturers’ performance, for November, shows that sales rose to a six-month high, while unfilled orders — which are a good indicator of where sales will be headed in coming months — soared to the highest level in more than three years.
This is great news, even if you’re too smart to subscribe to the widespread, and silly, worship of factory jobs as the very epitome of desir- able employment. The fact is that some manufacturing jobs are great, but some are lousy, just as in other sectors of the economy.
Still, our more advanced manufacturers are indeed a source of great jobs and significant economic benefits. And happily, it’s here that the bounce in factory orders seems to be concentrated. The Ontario-based auto industry showed a strong November sales gain, while those for aerospace products, produced mostly in Quebec, did even better.
This isn’t an entirely new phenomenon.
A new study by Philip Cross, research director at the Macdonald-Laurier Institute, suggests that the job loss seen by Canada’s factory sector over the past decade was concentrated in a minority of the manufacturing sector that included less-productive plants. The rest of the sector is growing rapidly.
Until recently, shrinking industries mostly represented two factors. The first was a drop in demand for autos, lumber and paper products, partly linked to the U.S. economic collapse and partly to the rise of Internet communication.
The second: an inevitable weeding-out of low-wage in- dustries like garment and textile makers.
Some of the better jobs in these areas will come back, or at least stabilize, now that Americans are building homes and buying cars again. Indeed, we’re already seeing the revival of automotive employment. And other areas that kept right on growing — from aerospace to food products to petroleum — are continuing to expand.
But the low-wage, lowproductivity jobs, along with those made obsolete by technology, are gone for good. It has been painful, but it might not be such a bad thing for the future of Canada’s living standards.