Labour Market Dynamics in Canada – Each month, 6.2% of the working-age population, on average, changed their labour force status

Each month, data from the Labour Force Survey (LFS) are highly anticipated because they offer a first glimpse of the general state of the labour market. The number of employed people and the unemployment rate are two indicators that attest to the popularity—and usefulness—of the survey data.

However, it is less well known that behind the net change in employment or unemployment published each month, there are major transitions between the different labour market statuses called “gross flows.” In fact, the Canadian labour market is very dynamic.

From January 2007 to September 2018, an average of 6.2% of individuals aged 15 years or older changed their labour force status each month. This represents more than 1.5 million people. An average of 289,000 people, or 1.0% of the working-age population, went from looking for work to finding a job each month.

The article “Labour market dynamics since the 2008/2009 recession,” released today in the Labour Statistics: Research Papers series, uses data on gross flows created from the LFS to analyze labour market dynamics in Canada.

These data have excellent analytical value because they add depth to the usual measures, providing insight into how changes in employment, unemployment or labour force participation occurred.

During the 2008/2009 recession, gross flows out of employment totalled, on average, 691,000 per month, a significant increase over the 12-month period preceding the recession (629,000 on average). This was due in large part to an increase in the number of people who lost or left their job between two consecutive months (either they were looking for work, or they left the labour force).

Delving further into the data, it can be seen that the probability of going from employed to unemployed rose during this economic shock and remained high for several years thereafter.

Highlights

• Although the majority of people have the same labour force status from one month to the next, the Canadian labour market is very dynamic. Each month, 6.2% of the working-age population, on average, changed their labour force status between January 2007 and September 2018. This proportion, however, has decreased over the study period.
• Gross flows help to obtain more detailed information on what is causing the movements in labour market indicators.
• The notable decrease in employment observed during the 2008/2009 recession was primarily due to the increase in flows out of employment, while inflows remained relatively stable.
• This increase in flows out of employment occurred mainly as a result of the increase in flows from employment to unemployment, possibly caused by layoffs over the period.
• The transition rate from employed to unemployed increased notably during the 2008/2009 recession, and remained higher for several years after the economic shock.
• The notable increase in the number of unemployed observed during this recession was caused by the rise in both components of the inflows to unemployment (that is, employed to unemployed, and inactive to unemployed).
• The proportion of unemployed who stayed unemployed saw a notable increase during the recession, and remained higher than the proportion that was observed over the 12 months before this period.

Chosen excerpts by Job Market Monitor. Read the whole story at The Daily — Labour market dynamics since the 2008/2009 recession