OTTAWA — The Canadian economy is not only creating more jobs, it’s creating better jobs according to one of the country’s major banks.
CIBC’s latest employment quality index shows that 60 per cent of new jobs created over the past year would qualify as high-paying, quality jobs.
The bank says there’s been an increase in full-time and paid employment, as opposed to self-employment, over the past 12 months — helping push the employment quality index up 2.7 per cent.
The sharp improvement has come about because many of the 283,000 jobs created in the past year have been in relatively high-paying sectors, including manufacturing, finance, construction and the public service.
Previously, the new jobs created since the end of the recession in the summer of 2009 have tended to be part-time and in lower-paying service industries.
“This (quality) measure is roughly back to the pre-recession levels,” said economist Benjamin Tal. “This is a much better performance than a similar measure in the U.S., where the quality of employment index continues to soften despite some improvement in the pace of job creation.”
Canada’s employment record since the end of the recession has been among the strongest in the industrialized world with over 500,000 new jobs added since July 2009. That’s about 80,000 more than was lost during the 2008-2009 recession.
By contrast, the United States remains about six million jobs shy of its pre-crisis levels.
But despite the full rebound in the jobs market, the complaint had been that many of those new jobs were not of the same quality as the jobs that vanished. Some economists derided them as service industry McJobs, or part-time, or “forced self-employment” by those who create their own form of employment — usually lower paying — because they can’t find regular work.
Over the past 12 months, that trend has started to reverse. Almost all the new jobs have been in paid employment, not self-employment.
As well, growth in full-time jobs has outnumbered part-time by more than two-to-one, and well-paying jobs in manufacturing, construction, the financial sector and government have outnumbered low-paying jobs three-to-one.
The question is whether the new and better composition of job creation will continue. There is some evidence it might not, says Tal, noting of the 58,000 new jobs added last month, two-thirds were part-time.
“It’s clear that governments will not be hiring in the future and the housing market will not be as strong,” undercutting two of the sectors that have been producing high quality jobs, Tal explained.
However, the export sector, which tends to generate higher-paying jobs, is expected to be a leading engine of growth going forward and may be sufficiently robust to take up the slack.
The improvement in the quality of jobs has been good for the economy, the report states, since higher pay puts more money in the pockets of homeowners to spend on consumer goods.
“The impact of job creation on income growth and thus spending is currently more notable than it was in early 2010,” Tal said, which will put pressure on the Bank of Canada to hike interest rates in the second half of the year.
Canada’s economy also got a thumbs up Monday from the Organization for Economic Co-operation and Development, which forecast Canada would continue to be at the forefront of the global economic recovery.
In its May report on composite leading indicators, the OECD put Canada alongside China as countries with a “regained momentum in economic activity.”
Economies in the U.S., Germany and Russia are improving. Overall, the international think-tank says most European countries will experience a slower or stable expansion. Some, like Italy, Brazil and India are pointing to slower growth relative to their trends.