Job quality in Canada is now at a record low and showing little sign it will turn around in the near future, finds CIBC’s latest Canadian Employment Quality Index.
The index, which measures the quality of employment from a compensation perspective, shows declines in all measures and indicates the drop in Canadian job quality is more structural than cyclical in nature and likely can’t be reversed by monetary policy.
“The Bank of Canada continues to warn us that the headline unemployment rate is not as rosy as perceived and, in fact, according to the Bank’s new and improved measure of labour market activity, labour slack is still significant,” says Benjamin Tal, deputy chief economist and author of CIBC’s Employment Quality Index.
“In many ways, the Bank has a point. Our measure of employment quality is now at a record low—suggesting that the composition of employment is sub-optimal. But a closer examination of the trajectories of our index’s sub-components suggests that the Bank’s prescribed remedy of low and lower interest rates might not cure what ails the labour market.”
The CIBC Canadian Employment Quality Index (EQI), measure three key areas:
- the distribution of part-time vs. full-time jobs;
- self-employment vs. paid employment;
- and the compensation ranking of full-time paid employment jobs in more than 100 industry groups
Chart 1 tells the tale—our measure of employment quality has been on a clear downward trajectory over the past 25 years. While the pace of the declaration has slowed in recent years, the level of quality, as measured by our index, is currently at a record low—15% below the rate seen in the early 1990s and 10% below the level seen in the early 2000s. On a year-over-year basis, the index is down by 1.8%.
Chosen excerpts by Job Market Monitor. Read the whole story at CIBC World Markets | Canadian job quality sinks to record low – low-paying jobs becoming the norm: CIBC.