The growth of low-paying and part-time work is taking the shine off a 30-year low in Canada's unemployment rate, according to a CIBC World Markets report.
"The Canadian economy is generating jobs at a very rapid pace, but the quality of these jobs is on the decline," Benjamin Tal, senior economist at the investment bank, said in a release.
"The 255,000 new jobs created in 2005 coincided with a 1.4-per-cent decline in the CIBC World Markets Employment Quality Index."
The index combines information on three factors: Part-time vs. full-time employment; paid employment vs. self-employment; and the relative level of compensation associated with a full-time job.
"Even though all the jobs created in Canada in 2005 were full-time jobs, we need to look beyond the part-time vs. full-time distribution because not all full-time jobs are created equal - some of them are low-paying and low-stability jobs," Tal said.
The unemployment rate in December was 6.4 per cent, according to Statistics Canada.
But since 2003, the number of full-time jobs in low-paying sectors, such as many in the service industry, retail and wholesale trade, has risen by 7.9 per cent, compared to only 4.8 per cent in high-paying sectors, which include manufacturing, primary industries such as logging and mining, as well as transportation and electronics.
"Granted, a low-quality job is better than no job, but the headline employment figures exaggerate the real strength of the Canadian labour market," Tal said.
The report also notes that a direct consequence of the declining job quality is slow growth in labour income, which averaged only 0.5 per cent annual real growth per worker since 2002.
"Looking ahead to 2006, we expect employment quality to remain low," Tal said.
"With the real estate market poised for a soft landing, the growth in high-quality construction jobs will likely lose momentum. At the same time, with the Canadian dollar remaining strong, the number of manufacturing jobs is projected to continue to decline."
