Recession watch: May's job losses

In the past few weeks there has been lots of talk that the worst of of Canada's recession is over; that some "green shoot" indicators hint recovery may be on the way.

It's hard to tell what the future will bring but it is easy to compare Canada's experiences with those of the past.

So far, the worst recessions since the Great Depression happened in 1981-82 and 1990-91.

In 1981-82, Canada's GDP dropped by 0.7% in the first quarter of the recession and 0.5% in the second quarter. The recession went on for four quarters, and the economy shrank by 4.9% from peak to trough.

In 1990-91, Canada's GDP dropped by 0.4% and 0.6% in the opening two quarters of a recession that went on for eight quarters, with GDP contracting by 3.4% from peak to trough.

This time around, Canada's GDP dropped by 0.8% in the first quarter of downturn and the rate of decline accelerated to a stunning 1.4% in the second quarter of this recession.

The number of job losses so far has been the most dramatic of any recession, though as a proportion of the overall job market it is unfolding on roughly the same scale as the 1981-82 recession.

Without doubt there is much more job loss to come, given the dramatic decline in the economic last quarter and the ongoing retrenchment of demand.

In every recession, the highest toll is on full-time jobs. (There are always some part-time jobs created, offsetting the decline in total employment.)

So far in this recession, there are 406,000 fewer full-time jobs to be had, a 2.9% shrinkage in the full-time job market.

Over the opening seven months of the last two recessions, there was a loss of 271,000 full-time jobs in the 1980s recession (2.8%), and 214,000 fewer full-time jobs in the 1990s recession (2.0%).

This time round, there have been proportionately fewer part-time jobs created to offset these declines (about 43,600 new part-time jobs in the past seven months, compared to 46,700 in the 1980s).

The job losses in the opening seven months of the recession accounted for 38% (1980s recession) and 35% (1990s recession) of the total loss of paid work, peak to trough. Despite the stimulus packages that were announced, there will likely be many tens of thousands more jobs lost in the coming months.

This month's Labour Force Statistics also brought news of a further 9.4% decline in the number of manufacturing jobs since October. This dramatically deepens the decline that started in the summer of 2002.

Since then Canada has lost over three quarters of a million manufacturing jobs, or 30% of all manufacturing jobs. Now at 1,788,400 jobs, manufacturing employment in Canada is lower than at any time since the data started being collected in 1976.

The struggling American economy is pushing up the relative value of the Canadian loonie, adding to the difficulties faced by Canadian manufacturers and exporters and squeezing household budgets further.

Together, these trends raise the question: will the kind of jobs that remain when we get through this mess sustain a middle class?

-- Armine Yalnizyan

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