As Canada’s rate of new job growth continues to slow, a report released Wednesday suggests the quality of employment in the country’s higher-paying sectors is rising quickly.
CIBC World Markets’ (TSX: CM) Employment Quality Index assesses the employment quality of more than 100 sectors. It does so by measuring factors such as pay rate and job stability — how likely a person is to keep a job for more than six months in a particular industry.
It found that job growth was up by 6% from a year ago in high-paying sectors such as mining, farm product distribution, Internet services and the manufacturing of beverages, tobacco and electronic and printing products.
In contrast, growth in low-paying sectors, such as repair and maintenance, clothing and clothing accessories, has risen by only 1% during the same period.
The rosy figures in the higher-paying sectors runs contrary to employment numbers from Statistics Canada that measure the entire economy’s job creation rate. StatsCan recently reported that 5,000 fewer jobs had been created in June than in May.
The difference can be attributed to the fact that losses in such sectors as manufacturing are being replaced by positions in industries with equivalent or higher employment quality, according to the report.
The StatsCan numbers reflect the net result of what’s going on in the labour market, said Benjamin Tal, senior economist at CIBC World Markets, but do not take into account that “all jobs are not created equal.”
For instance, he said, “If you move from one job to another, this new job could be much better than your current one, which means the quality is improving. But you don’t see it in the statistics.”
This trend can help to explain why the CIBC report found that the average weekly wage is rising by 4.3% on a year-over-year basis, nearly double the inflation rate.
The findings are also indicative of a widening divide between have and have-not Canadians, Tal said.
“Many of the low-skill jobs are in China and India and not in Canada, and if you don’t have the skills (to work in the higher-paying sectors) you basically suffer, and you see it in the Employment Quality Index.”
The Index, with a benchmark score of 100 for 1994, currently sits at 100.17. It has been rising since December 2006, when it was at 95.05.
Despite a number of gloomy factors besetting the Canadian economy, Tal expects the Index to remain relatively high.
“It might slow down a little … but it will remain relatively elevated to keep wage pressures up and spending up, and that’s a good thing.”
This in turn, Tal added, will offer another reason for the Bank of Canada to consider raising interest rates in 2009 — after the economy stabilizes and the housing market in the U.S. “basically reaches bottom.”