Source: Jobs Report – The State of the Canadian Labour Market (PDF), Budget 2014, Department of Finance.
The Budget 2014 companion Jobs Report: The gift that keeps on giving (thanks for forwarding, Tavia). To continue a long-standing (What, it’s been like eight months?) tradition of ignoring the monthly Labour Force Survey (LFS) release in favour of broader issues/trends, this month’s topic is why relative employment change is rendering the unemployment rate less meaningful than the job vacancy rate (possibly explaining the recent effort to ‘fudge it a little’).
Opinion of the author aside (it takes a certain je ne sais quoi to refer to “young people and immigrants” – a sixth and a quarter of the population respectively, 37% collectively – as “outlier groups”), Mr. Brian Lee Crowley’s assessment of the labour market indicator Canadians should be scrutinising more carefully is worth noting, if only for being concise
Today the statistic whose entrails we should be earnestly scrutinizing each month is the job vacancy rate.
The referenced chart, on p.36 of the Budget 2014 companion ‘Jobs Report’, (deceptively – seriously, use the same scale on both axes there) plots the trends in employment participation and growth since 1976, along with Finance’s forecast going forward.
What’s interesting to note is the accelerated drop starting in 2011. That’s the year, at least according to StatsCan’s demarcation, when the baby boomers started in earnest to turn 65 – what was not-so-long-ago the age of retirement.
Effectively, the unemployment rate is being – or at least is forecast to be – moderated by baby-boomers’ decline in labour market participation at the same time job growth plummets to nearly 0.
The fly in the ointment: After decades of various Canadian governments wooing baby-boomer votes with promises of lower taxes without consequences to social security sustainability, the CPP/QPP funds took a big hit during the Great Recession. Given their market exposure and predictions of another market collapse (if/when the US Federal Reserve stanches corporate welfare, aka Quantitative Easing), another may be in store.
It should come as no surprise that federal and provincial governments are now scrambling to ‘encourage’ seniors to remain in the labour market. They’ve recently repealed mandatory retirement legislation and changed CPP, OAS/GIS and other social security benefits to ‘incentivise’ less financially secure seniors to hold off on retiring before age 70.
Such policies are promoted as ‘human rights victory’ and ’empowerment’ for seniors when they’re fairly transparent efforts to claw back social security entitlements that may not be so affordable after all. They’ve also had devastating consequences to young workers’ employment prospects and anticipated lifetime earnings.
After decades of fed/prov governments cutting corners in their perpetual pander for boomer votes, many of those voters have either lost or failed to adequately fund their private retirement savings/investments in the wake of the Great Recession. As recently reported (Retiring once not a reality for 30% of Canadians 55+, ING Canada January 14, 2014), there are a lot of Canadians at or approaching retirement age that can’t afford to go even if they wanted to.
How this all shakes out will be interesting. Either way, the demographic time bomb will render employment and unemployment rates less meaningful economic indicators for job-creation going forward.
The telling rate will be job vacancy – and that rate’s been lousy, having gotten slightly worse since StatsCan (re)introduced Job Vacancy Statistics (JVS) in 2011. Finance’s novel Job Vacancy Rate (the subject of yesterday’s Economy Lab post), significantly downplayed Canada’s weak labour market. An upcoming change in StatsCan’s JVS may see its job vacancy rate boosted, once who-knows-how-many of the nearly half million ‘unclassified’ jobs from its Business Payroll Survey (BPS) are reclassified in March. Stay tuned…
Yesterday, apparently a report on alternative measures of unemployment by the Canadian Labour Congress received significant media coverage. You’re welcome, CLC.