- Canada achieves a “B” grade for employment growth and third place overall in the comparator group.
- Norway and the U.S. are the only two countries to outperform Canada in this report card, receiving “A”s.
- Canada’s third-place ranking was a slight improvement over its fourth-place ranking in 2011, mainly because its peers had poor job creation in 2012.
Putting employment growth in context
Longer lifespans and falling fertility rates are “aging” the population of many countries at an accelerating rate. By 2050, an estimated one-quarter of the population in industrialized countries will be over the age of 65. Canada is also experiencing a rise in the relative size of its older cohort. By 2030, 22 per cent of Canada’s population will be aged 65 and over. This will place significant pressure on its labour market.
Employment growth has been relatively steady in Canada in recent decades. Because employment growth is directly linked to a country’s economic prosperity, Canadian governments must continue to encourage strong levels of immigration and, along with businesses, continue to invest heavily today in human capital to ensure an adequate future supply of skilled labour.
Why did Canada’s relative ranking rise in 2012?
Although Canada’s employment growth performance in 2012 placed it third overall, actual employment growth in Canada was a tepid 1.2 per cent, slower than in both 2010 and 2011. However, in most of Canada’s peer countries, employment in 2012 either grew more slowly or contracted. Many countries in the European Union in particular experienced very slow economic growth or recession, and employment levels suffered accordingly. Finland, Belgium, France, the Netherlands, and Denmark all received “C” grades in 2012 (along with Japan) and Ireland received a “D.” Therefore, Canada’s move up to third place on employment growth was very much a relative improvement.
Who’s at the head of the class?
Norway and the U.S. were the top 2012 performers in employment growth. Norway weathered the 2008–09 financial crisis and recession better than most of its peers, and an upturn in energy demand and commodity prices helped to sustain the recovery in output and jobs for energy-exporter Norway. Norway is also not a member of the European Union, shielding it to some degree from the ripple effects of the continuing financial crisis in Greece and other heavily indebted EU countries.
In the U.S., employment was hit hard by the financial crisis and recession, as many American businesses reacted quickly to the deteriorating financial conditions by laying off staff. U.S. employment growth finally began to pick up in 2011, and month-over-month job creation was sustained through 2012, allowing the U.S. to earn an “A” grade and second-place ranking. Nevertheless, U.S. employment has still not returned to its pre-recession levels.
Has Canada ever been a leader in employment growth?
In the 1970s, Canada was at the top of the class. Despite the mid-decade recession, Canada’s employment growth averaged 3.4 per cent annually.
Canada maintained its “A” grade on this indicator in the 1980s, when it came in second to Australia, and ahead of Norway and the United States.
What knocked Canada out of the lead in the 1990s?
Canada’s grade fell to a “C” in the 1990s, reflective of the Canadian labour market’s poor performance. A severe recession in the early 1990s constrained employment growth to an average annual growth rate of just above 1 per cent. Despite growth in gross domestic product (GDP) from 1992 onward, employment was slow to rebound. Canada saw modest improvements at the turn of the century, with employment growth averaging 1.6 per cent annually in the 2000s.
Why did Canada’s strong employment growth in the 1970s and 1980s not boost its ranking on the unemployment report card?
In the 1970s and 1980s, Canada earned an “A” for employment growth, yet simultaneously received a “D” and a “C” for unemployment. The paradox of high employment growth and poor unemployment performance can be explained by the rapid increase in Canada’s labour force participation rate in those decades. This was driven by a shift in the demographic as baby boomers entered the labour force, increased participation by women, and higher levels of immigration.
What should Canada do to ensure future employment growth?
The Conference Board of Canada has made several recommendations to ensure strong employment growth for the future, most of which revolve around investments in people:
- Keep older workers in the labour force by reducing incentives for early retirement, ending any remaining structural barriers for those who choose to work beyond age 65, adopting more flexible working arrangements, and modernizing attitudes toward older workers.
- Reinforce education funding as a much higher national priority and ensure that universities and colleges have the financial resources they need to meet their respective mandates.
- Focus on lifelong education and training.
- Increase annual immigration levels, improve the process for immigrant selection and processing, reform credentials recognition, and strengthen intergovernmental and public–private sector coordination to create a single integrated immigration system.