Record public sector layoffs slam Canada’s job market in July
NationalPost.com – FP/news/economy
13/08/09. Gordon Isfeld
Quick read: Unemployment rate: 7.2% (Previous month: 7.1)
Number unemployed: 1,380,300 (1,355,100)
Number working: 17,709,600 (17,749,000)
Youth (15-24 years) unemployment: 13.9% (13.8)
Men (25 plus) unemployment: 6.2% (6.2)
Women (25 plus) unemployment: 5.9% (5.6)
OTTAWA — Government policy penchants for reducing the size of the public sector have cut a major swath through Canada’s employment rolls.
In July alone, 74,000 fewer people received government pay cheques — most of them were working in the healthcare sector and social assistance programs.
When all the cuts and gains are tallied, the country lost a net total of 39,400 jobs last month— many of them belonging to chronically under-employed youths, but the vast majority were public servants,Statistics Canada said Friday.
The Harper government promised to save $5.2-billion in federal public administration costs over three years in an effort to balance the federal budget by 2015. Part of that plan included eliminating 19,200 jobs from the sector, or about 4.8% of the workforce.
And other levels of government have been cutting staff.
“Fiscal restraint, at both the federal and provincial level, has focused its eye on the civil service itself,” said Avery Shenfeld, chief economist at CIBC World Markets.
“But we often don’t get, especially at the federal level, a lot of detail on where exactly the numbers are going to come from in terms of savings.”
Last month’s surprisingly big drop in employment added to June’s downward trend, although far more significantly, and pointed to weaker overall economic growth than anticipated in the second quarter of this year.
The net loss of jobs in July — almost equally divided between full- and part-time positions — followed a decline of about 400 jobs in June, which came in stark contrast to a massive gain of 95,000 workers in May.
The unemployment rate rose to 7.2% in July from 7.1% the previous month, Statistics Canada.
“With the decrease, employment gains have averaged 11,000 per month over the six months, slower than the average of 27,000 observed during the preceding six-month period,” Statistics Canada said .
Economists had expected employment to rebound last month — by as much as 10,000 to 17,000 — and the jobless rate to remain steady.
“Volatile job numbers are another reminder that global economic challenges in Europe and elsewhere will continue to impact Canada,” Finance Minister Jim Flaherty said Friday.
Jimmy Jean, an economic strategist at Desjardins Capital Markets, said while most provinces showed declines, “Quebec stood out with a drop of 0.8% (down 30,400), the most important decline since May 2005, largely in health care (down 38,000).”
The widely unpredictable monthly reading of Canada’s labour force has added to uncertainty over the country’s growth prospects this year.
Gross domestic product grew at an annualized 2.5% in the first quarter of 2013, but that pace is expect to have slowed to between 1.4% and 1.7% during the April-to-June period, according economists’ estimates.
The Bank of Canada, in its quarterly Monetary Policy Report released in July, forecast growth of 1.8% this year. For both 2014 and 2015, it expects GDP to increase by 2.7%. The central bank is relying on a stronger US. economy to help underpin that growth through improved exports and investments.
Still, the current weak growth environment will likely keep the central bank handcuffed on interest-rate policy. Its trendsetting overnight lending rate has been at 1% since September 2010 and few analysts expect a hike in borrowing costs until at least late 2014.
In Friday’s report, Statistics Canada said youth employment fell by 45,600. “Employment declines were concentrated among youths aged 15 to 24, as a result of less hiring this July compared with previous Julys,” it said.
The loss of 74,000 public sector employees in July was the biggest decline since modern data collection began in 1976.
However, Statistics Canada analyst Vincent Ferrao said “it’s only one month of data” and too early to see a decline trend in the sector — which includes health care, social assistance and public administration.
The public health sector, in particular, “has been a pillar of strength, even during the recession.”
Meanwhile, private-sector jobs rose by 31,000 and the number of self-employed Canadian remained about the same.
Full-time jobs were down by 18,300 and part-time positions declined by 21,200.
The manufacturing sector gained 13,500 workers in July, while construction lost 6,100 positions.
“There were two big areas of decline. One was in actual public administration and there was also a decline in healthcare and social services — which tend to be public sector workers,” said CIBC’s Mr. Shenfeld.
“That second big drop is statistically suspect.” he said. ”We’re not suddenly emptying out the hospitals and the nursing homes of staff. It’s quite likely that just statistical noise.”
By the provinces
Canada’s national unemployment rate was 7.2% in July. Here’s what happened provincially (previous month in brackets):
— Newfoundland 11.4 (10.9)
— Prince Edward Island 11.8 (10.9)
— Nova Scotia 9.0 (9.0)
— New Brunswick 10.2 (11.2)
— Quebec 8.2 (7.9)
— Ontario 7.6 (7.5)
— Manitoba 5.5 (5.0)
— Saskatchewan 4.0 (3.7)
— Alberta 4.5 (5.0)
— British Columbia 6.7 (6.3)
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