Tories and job creation

In the nearly 10 years Stephen Harper has been PM, Canada added more than 1.7 million net new jobs. James Bagnall looks at the winning and losing sectors as well as broad trends.

Winning sectors: health services, construction The big loser: manufacturing When Canada’s economy contracted in the early 1980s and early 1990s, the governing federal parties had been in power for many years. When elections were finally called in 1984 and 1993, the country was recovering economically but fatigue with incumbents was still strong.

That in part is why the Liberals (in 1984) and Conservatives (in 1993) suffered such blowout losses.

The governing Conservatives must today deal with the same issue of voter fatigue. But as Friday’s national employment numbers suggest, the economic backdrop is much different. Prime Minister Stephen Harper faced the 200809 recession in just his third year in office (though a coalition of opposition parties very nearly cut his term short). And much of the damage was caused by a financial crisis whose origins lay outside Canada’s borders.

More recently, Canada’s economy contracted during five of the first six months of this year, but it continued to add jobs.

Indeed, employment grew by nearly 115,000 from December to August, according to a report published Friday by Statistics Canada. The number of jobs was up 12,000 compared to July. None of this suggests an economy that is shrinking.

As with the 2009 recession, outside forces are still at play — most notably in the form of collapsed oil prices. But more of the blame for weak economic growth this time rests inside Canada’s borders — and that’s a potential vulnerability for Harper in this campaign. Nevertheless, the job market on Harper’s watch has evolved in ways capable of supporting multiple political narratives — depending on which sector or time frame suits your audience.

From January 2006, the month before Harper was sworn in as prime minister, and August 2015, the country added more than 1.7 million net new jobs. Several broad trends were at work:

HEALTH SERVICES

The sector with the most new jobs was health services, reflecting the aging of the baby boomers among other things. On Harper’s watch, employment here jumped 573,500 — representing roughly one in every three net new jobs. The health sector now accounts for 12.8 per cent of all jobs compared to 10.6 per cent just before the Conservatives assumed power.

CONSTRUCTION AND PROFESSIONAL SERVICES

The other big gainers were construction and professional services — each sector added about 300,000 new jobs representing gains of 29 per cent and 27 per cent respectively. The building trades have been on steroids thanks to low interest rates. The latter have been a catalyst for real estate booms in many of the country’s major cities, but particularly Toronto. The growth of professional services — which includes medicine, law, accounting, architects among others — is a natural outcome of outsourcing by governments, along with the development of a complicated services economy. Construction and professional services jobs now each account for 7.6 per cent of total employment, up roughly one percentage point each over the Conservative decade.

MANUFACTURING

A point of glaring weakness for the Conservatives is manufacturing, which has suffered a net loss of nearly 400,000 jobs or about one in five positions. Employment levels in August were the same as they were during the worst of the 2009 recession. A chief culprit has been a richly valued Canadian dollar, which has prompted many parts manufacturers to decamp to countries with cheaper currency. The sector today makes up just 9.5 per cent of Canada’s workforce compared to 12.9 per cent at the beginning of 2006.

PUBLIC SERVICE

The Conservative government’s relationship with its own employees has been remarkably unbalanced. During its first four years in power, the federal government boosted employment by 63,000 (up 20 per cent) only to spend the last five years taking 50,500 jobs back. In August, the government payroll included 329,100 workers compared to 316,600 when the Conservatives first took over.

In short, the Conservative record on job creation is neither a disaster nor a compelling success story. Overall, job growth has lagged population increases — but not by much. Manufacturing is a deep concern but it’s too early to tell whether a cheaper Canadian currency will be a strong catalyst for more exports, especially with the U.S. economy continuing to strengthen.

This much is clear, however. For the past three years, Canada’s jobless rate has been stuck in a narrow range — between 6.6 per cent and 7.4 per cent, while U.S. unemployment, which just two years ago was above 7 per cent, has tumbled to 5.1 per cent.

This divergence has to concern Harper. But it’s probably not enough on its own to push him out of power next month.