OTTAWA — The quality of jobs in Canada has dipped to its lowest level in a quarter century, revealing a structural issue that could prove difficult to reverse, says a new study by CIBC.
The big bank (TSX:CM) said Thursday its employment quality index, which slipped 1.8 per cent last year, was down 15 per cent since the early 1990s.
The index examines the distribution of full- and part-time positions, the gap between self-employment and the higher-quality jobs for paid employees, and whether full-time jobs were created in low-, medium- or high-paying sectors.
The study found that since the late 1980s the number of part-time positions climbed much faster compared with the higher-quality full-time gigs. On the bright side, it said the number of full-time jobs increased at twice the speed of part-time jobs over the past year.
However, the damage to full-time work during each recession was largely permanent, the study added.
Over roughly the same period, the number of self-employed jobs, generally considered lower quality because they usually pay less, also rose more quickly than salaried positions. For 2014, CIBC found the number of self-employed positions increased four times faster than paid employment.
By sector, the bank said the number of low-paying positions had increased faster than higher-paid jobs since the early 1990s.
Taken together, the long-term trends suggest the deterioration in job quality is more of a structural issue than a cyclical one, wrote Benjamin Tal, CIBC’s deputy chief economist.
“Our measure of employment quality has been on a clear downward trajectory over the past 25 years,” wrote Tal, the report’s author.
He argued it’s unlikely the Bank of Canada would be able to address these issues by moving the dial on its primary monetary-policy tool.
“The Bank of Canada’s prescribed remedy of low and lower interest rates might not cure what ails the labour market,” Tal wrote.
The Bank of Canada has made repeated warnings in recent months about the state of the job market.
Last month, deputy governor Carolyn Wilkins said in a speech that the economy was about 270,000 jobs short of its full capacity at the end of 2014.
Wilkins pointed to several areas of concern, including how more than one in four part-time workers would prefer full-time jobs.
She also said the participation rate of the country’s prime-age workers — between 25 and 54 years old — fell substantially in 2014 and that the average length of unemployment was 21 weeks, near its height from the recession in 2008-09.
In its January monetary policy report, the Bank of Canada highlighted stubborn problems in the job market, arguing long-term unemployment continued to hover close to its “post-crisis peak.”
The central bank also found the average number of hours worked remained low.