Fear keeping Canadians in low-paying jobs

Workers believe they will easily be replaced: study

TORONTO • Canadians are actually staying in their jobs longer, in fact even among younger cohorts, says a leading economist in a report that debunks talk of jobs being short-term.

Benjamin Tal, deputy chief economist with Canadian Imperial Bank of Commerce, said fear may be driving some people to stop looking for a job because they worry they’ll be easily replaced in their current position.

“For a while now, keynote speakers at university and college graduation ceremonies have been reminding young graduates that the labour market awaiting them is the most dynamic one ever,” said Tal, in the paper he wrote with Sahika Kaya. “The era of jobs-forlife is over, loyalty to one employer is dead and young Canadians should be prepared to hop from one job to the next during their working careers. Our Finance Minister offers similar advice, suggesting that young Canadians should get used to this new reality.”

Bill Morneau, the federal finance minister, said last month Canadians should get used to so-called “job churn” as they face short-term employment and multiple career changes. “We also need to think about, ‘How do we train and retrain people as they move from job to job to job?’ Because it’s going to happen. We have to accept that,” Morneau said.

Tal said it’s actually the opposite — the tenure of employment is increasing in Canada and not just because of an aging population.

“The average tenure of of an upward trend, suggesting an increased probability of staying with the same employer for longer,” said Tal. “Some of the increase in job tenure can be explained by the increased proportion of the aging population in the workforce. Furthermore, as younger Canadians are the first ones to feel the pain of any economic slowdown (last in, first out), the average job tenure will rise as the share of older workers in the labour force rises.”

However, during the economic recovery, job tenure continued to remain elevated even among the 25-44 age group. Part of the increase can be attributed to increasing women in the workforce — their average tenure is increasing four times faster than men.

“An increased job tenure can be interpreted as an increased job stability. That stability, we believe, is a sign of weakness, not strength,” said Tal, adding tenure among lower wage occupations rose faster than that among highpaying occupations.

He said there is a fear out there that is justifiable based on the reality that the duration of unemployment rose during the recession and remains high. The share of those unemployed for more than 27 weeks is currently at a level seen during the recession.

On the opposite end of the wage spectrum, high earners are also staying in jobs longer, but Tal says that’s because employers are worried about losing specific talent and will do “whatever it takes” to keep those employees.

“The relative stability of the Canadian labour market as reflected by the high and rising job tenure is really a story of a market paralyzed by fear, both by the fear of losing a job, and the fear of losing an employee,” the paper concludes. “Regardless of the source of that fear, the end result is a labour market that is less dynamic than it should be.”