Employment quality in Canada is at an all-time low, according to economists at CIBC World Markets who say low-paying full-time jobs and self-employment are growing far more rapidly than well-paying full-time work.
In a report issued Thursday, the economists say that employment quality “has been on a clear downward trajectory over the past 25 years” and now sits at a record low, with no sign of turning around.
To evaluate employment quality, the economists look at three factors: distribution of full- and part-time jobs; the split between paid employment and self-employment; and compensation among full-time paid employees across more than 100 sectors.
When looking at part-time versus full-time jobs, the report says, “the trend is clear.” Since the late 1980s, the number of part-time jobs has risen faster than the number of full-time jobs.
Since the 1980s, the “damage caused to full-time employment during each recession was, in many ways, permanent,” the report says.
While the number of full-time jobs rose twice as fast as the number of part-time jobs over the past year, full-time job creation was unable to ramp up quickly enough to make up for previous losses.
Meanwhile, when looking at paid employment versus self-employment, the number of self-employed workers has risen faster over the last 25 years, the report said. During a one-year period that ended in January, the number of self-employed workers rose four times faster than the number of paid employees.
The economists rank self-employment below paid employment because it typically pays less.
While full-time paid employment is considered of higher quality than part-time or self-employment, it seems that it’s no longer a guarantee of a good salary. According to the report, the number of low-paying full-time jobs has risen faster than the number of mid-paying jobs, which in turn has risen faster than the number of high-paying jobs.
Over the year ending in January, the job-creation gap between low- and high-paying jobs has widened, with the number of low-paying full-time jobs rising twice as fast as high-paying jobs.
While the Bank of Canada has kept interest rates low in part, it says, to spur business investment and job creation, this will “do little” to fix what the report calls “a growing labour market mismatch” caused by the slow growth in high-paying jobs.
To make matters worse, there is also a widening gap between the growth of wages in high-paying sectors versus wage growth in low-paying sectors, the report says.
Over the past decade, the economists write, wages in high-paying sectors rose nearly twice as fast as wages in low-paying sectors.
“In other words, the fastest growing segment of the labour market is also the one with the weakest bargaining power. That works to weaken the link between labour market performance and aggregate wage gains,” the report says.
“Low or lower interest rates will do little to close that gap.”
