In terms of the employment rate, Canada far from first in G7 during the recovery
OTTAWA — Finance Minister Joe Oliver and his predecessor have been fond of trumpeting Canada’s economic and job creation performance since the recession, claiming it is unequalled among the Group of Seven large industrialized nations.
The minister made the boast again this week in a speech to employers in Halifax, noting that “our government has created over one million net new jobs ... the strongest job growth over the recovery among G7 countries.”
But a recent report from the Paris-based OECD suggests that Canada’s employment record is not near the best.
According to 34-nation Organization for Economic Co-operation and Development, Canada would place fifth during the recovery period according to the percentage of the working age population that held a job at the end of 2013, compared to the situation prior to the 2008-09 recession.
Economists view the employment rate as a good barometer of overall strength in labour markets because it reflects the portion of people in any given population that has jobs. The more commonly quoted unemployment rate is based on individuals actively looking for work. It can mask weakness in the market if there are large numbers of discouraged workers, as in the U.S. which now has a lower jobless rate than Canada despite a poor job creation record.
The OECD data shows that 72.4 per cent of Canadians aged 15-64, what is normally considered the working age, were employed in the fourth quarter of 2013, compared to 73.7 per cent who had a job in the second quarter of 2008, for a differential of minus 1.3 percentage points.
That’s far better than the United States, which went from 71.2 per cent of the working age population having jobs in the spring of 2008 to 67.4 per cent at the end of last year, a negative differential of 3.8 percentage points.
But it’s a distance from German with a plus 3.7 percentage point differential and a 73.5 per cent employment rate, or Japan at plus 1.3 points, and even France and the United Kingdom, which are also close to returning to their pre-recession employment rate.
Overall, the majority of OECD nations have yet to return to pre-slump employment levels.
Bank of Montreal chief economist Doug Porter says Canada has had a relatively strong record of job creation since the recession, and the roughly one million net new jobs added during the recovery does top the G7 once population differences are factored.
But Porter cautions that just looking at the raw numbers is misleading. That’s because the number of jobs created doesn’t take into consideration the number of Canadians available to work, if there were jobs for them.
“Looking at total jobs created tends to flatter Canada,” he said. “In a nutshell, all we’ve done is keep up with population growth. Just looking at jobs created is going to put Canada in a better light just by dint that we have much stronger population growth, so that’s probably not the fairest way to compare ourselves to others.”
Porter said Canada would fare better if the measurement is the more well-known unemployment rate — but not much better. Canada, with an unemployment rate of seven per cent in the fourth quarter of 2013, would still trail Germany, Japan, the U.S. and would be virtually tied with the U.K.
Economist Erin Weir of the United Steelworkers union says the OECD numbers show what most people in Canada suspect, that there are more people willing to work than there are jobs for them.
“The problem is that employers have not created nearly enough jobs in Canada to keep pace with population growth,” he said. “Comparing Canada with other G7 countries raises more questions about the massive expansion of our temporary foreign worker program.”
The OECD data finds other industrialized countries, not members of the G7, have come out of the slump a shade better than Canada, including Austria, Israel, Sweden and Switzerland, all of whom have higher employment rates today than prior to the recession.
At the bottom end of the scale are the known “sick sisters’ of Europe, including Greece with a negative 12.9 percentage point differential, Spain at minus 10.3 percentage points, Ireland at minus 7.0 percentage points and Portugal at negative 6.2 points.