Youth Unemployment Canada: The Recession Is Still On For The Young And The Jobless

Youth Unemployment Canada

First Posted: 03/ 8/2012 3:25 pm Updated: 03/ 8/2012 6:11 pm

OTTAWA - Regardless how many jobs were created last month, one group of Canadians is almost certain to have fared badly — youth.

The consensus ahead of Statistics Canada's jobs report Friday morning was that 15,000 jobs were created countrywide in February, an indication of positive if modest economic growth.

But if employment surveys of the past few years are any guide, Canadians aged between 15 and 24 will be at a disadvantage.

The recession may be over for most Canadians, but workers or want-to-be workers in the youngest age group tracked by Statistics Canada continue to experience the economy as if the recovery had never happened, or as if it was still 2008. And the younger you are in the age group, the bleaker the picture.

The finding was thrown into dramatic light Thursday in a paper from TD Bank economist Francis Fong, who points out that employment in the age grouping is still 250,000 below pre-recession levels.

By contrast, all other age groups have more than recovered from the overall 430,000 job loses of the 2008-09 slump. Workers 25 and above are more than 400,000 jobs to the good.

"Canadian youth are not facing the terrible prospects of their counterparts in Europe and the U.S.," says Fong, "nevertheless, it is clearly evident that Canadian youth are facing an uphill battle, which will persist for some time."

Historically, younger workers are hit hardest by recessions and Fong points out the age group actually took greater losses during the 1990-92 and 1981-82 slumps. The most recent recession also hit adult males hard because the slump was concentrated in manufacturing, particularly the auto sector.

Nevertheless, Fong believes today's youth are facing some challenges unique to the times.

Unlike in the 1990s, many older Canadians are un-retiring because either they need to, or they simply want to work given that they are in better health and likely to live longer. And many baby boomers are deciding Freedom 55 is not for them and just plan to stay working longer.

A recent analysis of the job market, also from the TD Bank, found that Canadians over 55 were increasingly joining the labour force, and taking jobs in traditionally youth-oriented industries, such as retail. Since the recession, one-third of all jobs created have come in this age category.

The report also showed that even during the recession, the over-60 crowd actually gained 100,000 jobs while all other cohorts took on losses.

"If you are a business and have a job opening, are you going to hire a young person with no experience or someone who had been in the work force for 40 years, knows what it's like to work and who is eager to work? And it's at the same wage," Fong points out.

Almost as difficult for youth, said Fong, is that the legacy of the recession can last for years.

Two separate studies, one in Canada and one from the United States, show that a one percentage point decline in the unemployment rate can result in six-to-seven per cent average decline in the initial wage for a youthful worker, and that it can take anywhere from 10 to 15 years to close the gap.

"When jobs are not abundant, graduating students wind up taking lesser jobs," Fong said. "It might take several years to find a job in the industry of choice and a lot longer to claw back what was lost in terms of wages."

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  • 5 Signs Canada's Workers Are In For A Rough 2012

    Photo: CP/Andrew Vaughan

  • Good Jobs Few And Far Between

    When it comes to evaluating Canadian job growth, the employment numbers are just part of what worries Benjamin Tal, deputy chief economist at CIBC World Markets. "It's not only the quantity, but also the quality of employment that's falling in Canada," says Tal. "A lot of the jobs that are being created are low-quality, especially part-time jobs and low-paying jobs." Though -- unlike the U.S. -- Canada has regained all the jobs lost in the recession, he says that an absence of good-paying jobs is the "main reason" why wages have stagnated. Adjusted for inflation, personal after-tax income is now rising at the slowest rate since 1995. Meanwhile, the skills mismatch in many jurisdictions has left employers short on skilled labour despite still-high unemployment levels in other regions. "If you lose a job, you don't have the skill set to go an find a job elsewhere that companies want and need," says Tal. (Alamy photo)

  • Globalization

    When Caterpillar decided to stop assembling locomotives in its Electro-Motive facility in London, Ont., it was a poignant reminder of how globalization is giving deep-pocketed, transnational corporations the ultimate trump card in bargaining with workers: a cheaper alternative. According to Mike Moffatt, a labour expert at the University of Western Ontario's Ivey School of Business, because of automation and an increase in imports from lower wage jurisdictions like China and Mexico, Canadian workers are competing for fewer manufacturing jobs. "That's given firms real power to negotiate down wages," says Moffatt, who points to the <a href="http://www.reuters.com/article/2012/02/06/riotintoalcan-alma-idUSL2E8D699U20120206" target="_hplink">Rio Tinto lockout in Quebec</a> as another illustration of the might afforded to companies with global reach. Since locking out workers at its aluminum smelter in Saguenay-Lac-Saint-Jean on December 31, the Anglo-Australian mining giant has used non-union workers to operate the facility at one-third capacity. With no plans to return to the bargaining table, the company recently announced it is restarting two suspended lines, and is expecting to return to full capacity in May. As Tal maintains, "In this environment, the bargaining power of labour is diminishing."

  • Austerity Agenda

    Just as the power has shifted toward private-sector employers, Michael Lynk, a labour law expert at the University of Western Ontario, says there is a sense that governments are becoming emboldened amid the post-recession climate of austerity that has swept from Toronto's City Hall to Parliament Hill. "There's increasingly an attitude of take-it-or-or leave-it by [private sector] employers, but we may begin to see that with public sector bargaining as well, where they basically say, 'You have to meet our bargaining objectives this round, and we're going to be prepared to endure a short or lengthy lockout to prove our point," he says. Though global economic instability recently prompted federal Finance Minister Jim Flaherty to pull back on his earlier commitment to deep cost-cutting in the upcoming budget, government departments are expecting spending to be slashed by between five and 10 per cent, a goal that will be met at least in part at the expense of public service jobs and benefits. The Canadian Centre for Policy Alternatives recently estimated that the <a href="http://www.behindthenumbers.ca/2012/02/02/federal-cuts-could-push-unemployment-to-8/" target="_hplink">federal government's budget cuts could push unemployment up half a percentage point, to 8 per cent</a>. (CP photo)

  • Pension Problems

    From <a href="http://dalgazette.com/featured/faculty-strike-rumours-explained/" target="_hplink">Dalhousie University</a> to <a href="http://www.thestar.com/article/1120516--labour-strife-ahead-in-air-canada-pilot-talks" target="_hplink">Air Canada</a>, employers no longer able -- or willing -- to fund costly pension plans are mounting attempts to roll back retirement benefits, stoking labour unrest and a growing sense of financial insecurity among workers. As Dalhouse University labour economist Lars Osberg explains, the financial crisis took a huge bite out of the value of corporate pension portfolios and the interest rate required to generate the stream of returns to make these programs sustainable. All of which explains why experts anticipate a deepening of the trend away from inflation-protected, gold-plated defined-benefit pension plans, shifting responsibility for retirement savings from employers to workers.

  • Decline Of Unions

    The power in numbers that enabled Big Labour to negotiate better wages and benefits in the aftermath of the Second World War is a distant memory today, as the <a href="http://www.huffingtonpost.ca/2011/12/12/canada-income-inequality-decline-unions-middle-class-jobs_n_1139136.html" target="_hplink">erosion of unions continues to whittle away the strength of collective bargaining</a>. This is particularly true in the private sector, where unionization sits at 16 per cent of employees, less than a quarter of public sector unionization. "I think you will see more disputes with unions having to compromise more than in the past," says Tal. "I really don't see that they have the upper hand at this point." Given the yawning gap between private and public sector unionization, Lynk warns that pressure on public sector unions could mount as it has in the U.S. in recent months. "The argument they've been floating is, 'Why should public sector workers have jobs for life, good pensions, and decent wages? They're eating up your taxes,'" he says. "I wouldn't be surprised if we're not [starting] to see the beginnings of that kind of argument here in Canada."

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Filed by Daniel Tencer  |