Monday, December 7, 2009

Is There An Employment Boom?

Recently released statistics by Statistics Canada indicated positive employment figures for November 2009. But, is the picture truly as rosy as it appears?

According to the figures, Canada's unemployment rate dropped by one-tenth of a percent from October, reducing the rate to 8.5 per cent. Full time jobs increased by 39,000, while part time employment increased by 40,000. While these 79,000 new jobs indicate a strong pick-up in the labour force and, subsequently reflect on a steady recovery of the nation's economy, there are a few factors to consider that may curb the euphoria.

First, it should be pointed out that economists agree that this pace of job growth is entirely inconsistent with the current pace of economic recovery.

Next, economists are concerned that the total hours worked declined by 0.3 per cent. In other words, more Canadians are working but less work hours are being paid. Simply put, Canadians are bringing home less money.

Another point noted is that almost all the new jobs – 73,000 positions – were in the service sector, primarily in educational services. It is quite possible that this gain may be an abnormal seasonal adjustment. December, therefore, may be far less positive in terms of actual job gains.

Economists are also concerned about weak job productivity as a result of various factors compounded to negatively impact workers' motivation.

Finally, self-employment fell by 32,000 jobs in November. In theory, this drop can be viewed positively. In a weak economy, self-employment gains are generally discounted. They are viewed as a fallback for unemployed Canadians who have no choice but to start their own businesses in lieu of regular work.

Is the Canadian job market truly on the mend? Only time will tell.

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