TORONTO - Sluggish economic growth in the United States and uncertainty in Europe are largely to blame for Ontario's stagnating job numbers, Economic Development Minister Brad Duguid said Friday.

Ontario's unemployment rate fell 0.5 percentage points to 7.6 per cent in February, but that's largely because many people stopped looking for work, according to Statistics Canada.

It reported Friday that 37,900 Canadians stopped looking for jobs last month, almost all in Ontario.

The province lost 3,900 jobs last month — a sign that European debt problems and America's slow growth are still affecting investment in Ontario, Duguid said.

"I think it's really important that we keep that in perspective because the fundamentals here are good for growth," he said, adding that the province created 121,300 net jobs last year.

"I'd like to see us off to a quicker start this year, but we'll keep investing in those fundamentals."

One of those investments is renewing a $90-million program to employ students aged 15 to 30 this summer, he said.

The program, which helped employ more than 130,000 young people last year, gives employers $2 per hour to provide summer jobs for up to 16 weeks, according to government officials. It also provides up to $3,000 for students who want to start their own summer business.

Labour force participation for 15- to 24-year-olds is now the lowest it's been since August 1999, according to Statistics Canada.

With the American economy "starting to come back" with two straight months of growth, things are looking up for Ontario considering that 77 per cent of its exports go south of the border, Duguid said.

That growth should open up new markets for Ontario products and create jobs, he predicted.

But some economists believe the job contraction is likely to continue.

"With the provincial government embarking on a period of austerity and with civil service cuts rumoured to be on the table, this trend is likely to persist," TD economist Sonya Gulati wrote in a note on the job numbers.

The governing Liberals, who are facing a $16-billion deficit this year, are promising to deliver a "big" budget before the end of March that will outline their plan to re-balance the books by 2017-18.

But the February numbers show that Liberal policies to create jobs by cutting corporate taxes and harmonizing sales taxes have failed, said NDP Leader Andrea Horwath.

"The government has been on the wrong track in terms of job creation," she said.

"They've done a lot of things to make the corporate sector more financially secure in terms of their cash reserves, meanwhile, everyday families are the ones feeling the brunt. It's their wages that are going down, their jobs that are being lost."

The Progressive Conservatives are blaming rising energy rates for the job decline, saying the Liberals' expensive foray into green energy is killing business.

Tory critic Monte McNaughton said one retail store in his riding of Lambton-Kent-Middlesex saw its hydro bill jump $8,000 in one year.

Ontario's businesses can thrive again if the government lowers the taxes they pay, reduces regulation and lowers energy costs, he said.

The Tories would scrap the expensive contracts to buy wind and solar power, he said. But McNaughton couldn't provide a guarantee that energy costs would go down under a Conservative government.

"Hydro will be affordable under a PC government," he said.

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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."