Canada / The job recovery isn’t producing enough to adequately absorb the natural expansion in labour force

U.S. Federal Reserve chairman Ben Bernanke often emphasizes that it is not good enough to have a growing economy; what is needed is sufficient growth to absorb the expanding labour force that naturally accompanies a growing population.

Canada’s labour market is in better shape than America’s, but Mr. Bernanke’s point applies equally here, especially since Canada’s population and labour force continue to grow at healthy rates. A better indication of the economy’s job creation performance is the path of the employment-to-population ratio – and by this measure, our economic recovery is only mediocre.

Just before the crisis, total employment was 63.7 per cent of the population. It fell sharply during the recession, by more than two percentage points in less than 18 months, and then struggled to recover even to 62 per cent, where it has flat-lined for more than two years.

So, while Canada’s economy is indeed producing more jobs every year, it isn’t producing enough to adequately absorb the natural expansion in Canada’s labour force. The result is that a growing number of Canadians who want jobs must search longer to get them, and many are unable to find them at all.

This brings us to the unemployment statistics. The official unemployment rate is now 7.1 per cent, well below its peak of 8.7 per cent in mid-2009. On the surface, this looks pretty good. But one reason the unemployment rate falls is that some people become so discouraged by their inability to find a job that they stop searching and drop out of the labour force; when this happens, the resulting decline in the unemployment rate is not good news.

Statistics Canada publishes an expanded measure of the unemployment rate that includes discouraged workers as well as workers who are working at part-time jobs even though they continue searching for full-time ones. This alternative unemployment rate is still above 10 per cent. Even worse is the prospect for Canadians between the ages of 15 and 24; their current unemployment rate is over 14 per cent, and has shown no sign of declining in almost two years.

Chosen excerpts by Job Market Monitor. Read the whole story at 

via Canada’s job recovery may not be the envy of the world after all – The Globe and Mail.