Part-time, self-employed: a rising tide in Canada’s job market

WATCH: CIBC said our economy may be producing jobs but many aren’t paying high enough, while many employers are relying on part-timers, rather than hiring full-time staff. Mike Drolet reports on what that means to the Canadian workforce.

The jobless rate, at 6.6 per cent, is actually pretty good, economy experts say. But that rosy figure belies the new reality of Canada’s job market – one defined by lower pay and instability for many.

Part-time and self-employed work has become the new normal for millions of Canadians, a normal where hours fluctuate, benefits are virtually non-existent and pay is generally lower. That was underscored Thursday by a new report from CIBC that shows the bank’s employment quality index – a measure of the job mix in Canada – dropping to its lowest reading since the bank first began taking the pulse of job quality in 1988.

CIBC adds up the number of full- and part-time jobs as well as self-employed workers and then takes stock of the sectors all those jobs reside in (i.e., whether they’re in higher or lower paying fields). The bank’s conclusion: “Our measure of employment quality is now at a record low,” Benjamin Tal, CIBC’s deputy chief economist, said.

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Structural trend

Make no mistake, the trend toward lower-paying, less stable work has been on the rise in Canada for the past quarter century, the bank said, with growth in part-time jobs rising “much faster” than growth in full-time positions since the 1990s (thank globalization among other factors). Each recession has eliminated more full-time jobs than have been replaced during subsequent recoveries, Tal said.

“The damage caused to full-time employment during each recession was, in many ways, permanent,” he said.

As full-time work has grown scarcer, many have turned to self-employment – especially during the current recovery following the latest recession. In the year between January 2014 and January 2015, the number of self-employed workers rose four times faster than the number of paid employees, the CIBC report said.

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That entrepreneurial drive is commendable, and there are benefits to working for yourself beyond the paycheque. But CIBC’s employment quality index ranks self-employed jobs below salaried positions “simply due to the fact that, on average, it pays less.”

Not all full-time jobs are created equal, of course. And Tal said growth in lower-paying full-time positions has meaningfully outpaced middle-income positions, which too are being created in more numbers than higher paying jobs – a structural trend that’s the chief source behind what’s driving down overall job quality in Canada, CIBC said.

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Low-paying full-time jobs rose twice has fast has the number of higher paying positions in the past year, according to Tal.

Weaker wages

What does this all mean? Wages for the middle and bottom occupants of the income ladder aren’t growing much as a rising tide of lower paying work dilutes compensation bargaining power for a widening swath of Canadian workers.

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The report also highlights some of the forces behind growing inequality in Canada. In stark contrast to stagnant wages for many, those in higher-paying fields have seen sharp increases over the past decade.

“And recent observations suggest that the trend continued over the past year, with wages in high-paying sectors rising much faster than low-paying sectors in 2014.”

Have you had to settle for part-time work, or have elected for self-employment? Let us know your story. 

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