Study: Recent changes in the labour market

Labour demand since 2000 has been in many ways the reverse of the 1990s, shifting from high-tech to housing and resources, according to a new assessment of changes in Canada's labour market.

This new pattern of industrial growth has profound implications for the urban-rural distribution of jobs as well as the education required of workers, their occupation and even the size distribution of employers, according to a report in Canadian Economic Observer.

Changes in labour demand have been met by important shifts in the supply of labour. In particular, workers aged 55 and over have contributed one-third of all labour force growth in the last decade, reversing several decades of decline.

Still, the recovery in mining and construction jobs has allowed these industries to rejuvenate their labour force. As well, job prospects for youths in rural areas are now better than for their urban counterparts.

The economy has been subjected to a number of shocks since 2000. The collapse of demand for information and communications technology goods, notably telecom equipment and fiber optics, punctured the stock market bubble in 2000.

The ensuing downward trend in interest rates accelerated after the September 11, 2001 attacks, sparking a surge in household spending, especially for housing.

Meanwhile, the restoration of government surpluses allowed a re-investment in public services, notably hospitals. Finally, the increasing integration of China into the world economy sparked a surge in commodity prices, which helped send the loonie soaring.

Employment growth in 2004 was spearheaded by mining, construction and real estate, all with gains of about 5%. So far this decade, these three industries have driven job growth. Employment rose 17% in mining, 18% in construction and 10% in real estate.

The job increases in these three industries follow a decade in which they all cut jobs. The turnaround reflects booming commodity and housing markets.

Conversely, some of the fastest-growing industries in the 1990s have lagged so far this decade. The biggest turnarounds have been in manufacturing. Computers and electronic products led this reversal, giving back all of the 45,000 jobs added in the 1990s. The auto industry (including parts) has stalled after growing by 69,000 in the previous decade. The rapid growth of computer services, the fastest growing industry in the 1990s, has slowed to a crawl.

The new patterns of employment were reflected in unemployment. Mining posted its lowest-ever unemployment rate of just 4.5%. Similarly, the boom in housing sent unemployment in construction to a 30-year low of 8.6%.

The aging of the post-war boomers continued to be the dominant demographic force in the labour market. The fastest-growing group was those aged 55 to 59, whose numbers rose 4.7% last year.

Since 1998, the number of people aged 55 and over has increased 19%, driven by a huge gain in the group aged 55 to 64 resulting from the leading edge of the baby boomer generation.

Conversely, the number of people in the prime working group aged 25 to 44 edged down in absolute terms for a seventh straight year.

The increased participation rates for aging boomers is part of a marked trend toward older people aged 55 to 69 remaining in the labour force.

Declining industries like resources and construction used to push older men out of the labour force, but the return of growth in these industries encouraged a higher participation rate since 2000.

Definitions, data sources and methods: survey number 3701.

The article "Recent changes in the labour market" is now available free online. It is also available in the March 2005 issue of Canadian Economic Observer, Vol. 18, no. 3 (11-010-XIB, $19/$182). The monthly paper version of Canadian Economic Observer, Volume 18, no. 3 (11-010-XPB, $25/$243) will soon be available.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Philip Cross (613-951-9162; ceo@statcan.ca), Current Economic Analysis.