CANADA S LABOUR MARKET PRE- AND POST-CRISIS

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1 CANADA S LABOUR MARKET PRE- AND POST-CRISIS WILLIAM ROBSON PRESIDENT AND CEO, C.D. HOWE INSTITUTE PRESENTATION TO THE NERO MEETING AT THE OECD 20 JUNE 2011

2 CANADA S LABOUR MARKET HIGHLIGHTS Decent Top-Level Numbers Weak Productivity Growth Low Long-term Unemployment Rising Human Capital Shrinking Regional Variation in Unemployment Rising Retirement Age Rising Hidden Public-Sector Pension Premium

3 LABOUR FORCE AND EMPLOYMENT IN SELECTED COUNTRIES, Percent change at annual rates Labour Force Employment Labour Force Employment Australia France Germany Italy Japan UK USA Europe (27) Canada Source: Calculated from data in OECD MEI

4 EMPLOYMENT-TO-POPULATION RATIOS, SELECTED COUNTRIES: Percent Australia France Germany Italy Japan UK USA Euro (15) Canada Source: Calculated from data in OECD Economic Outlook Database (June 2011)

5 CANADIAN LABOUR FORCE AND EMPLOYMENT: 1997:M1 TO 2011:M5 19,000 18,000 Labour Force Employment 17, s 16,000 15,000 14,000 13,000 Jan/97 Jan/98 Jan/99 Jan/00 Jan/01 Jan/02 Jan/03 Jan/04 Jan/05 Jan/06 Jan/07 Jan/08 Jan/09 Jan/10 Jan/11 Source: Statistics Canada, CANSIM Table

6 LABOUR PRODUCTIVITY, 1997Q1-2011Q GDP Jobs Hours GDP/Hour 130 Index: 1997Q1= Source: Statistics Canada, CANSIM Table

7 LABOUR PRODUCTIVITY, 2007Q1-2011Q Index: 2007Q1= GDP Jobs Hours GDP/Hour Source: Statistics Canada, CANSIM Table

8 ANNUALIZED CHANGES IN REAL WAGES AND EMPLOYMENT BY SECTOR: % 1.5% Utilities 1.0% Other Services Public Admin Mining, Oil &Gas Real Wages 0.5% 0.0% -0.5% Manufacturing Real Estate Info. & Cultural Health Education Transport & Warehouse Finance & Insurance Accom & Food Svcs. Arts & Rec. Trade Management Prof. Services Construction Admin. & Misc. -1.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% Employment Source: Statistics Canada Payroll Survey Note: Areas of bubbles are proportional to employment in 2007

9 ANNUALIZED CHANGES IN REAL WAGES AND EMPLOYMENT BY SECTOR: % 4% Mining, Oil &Gas Arts & Rec. 3% Real Wages 2% 1% Education Utilities Accom Prof. & Food Services Svcs. Construction Admin. & Misc. Management Real Estate Trade Other Services Health Public Admin 0% Info. & Cultural Finance & Insurance -1% Manufacturing Transport & Warehouse -2% -7% -6% -5% -4% -3% -2% -1% 0% 1% 2% 3% 4% Employment Source: Statistics Canada Payroll Survey Note: Areas of bubbles are proportional to employment in 2010

10 UNEMPLOYED MORE THAN 6 MONTHS AS SHARE OF LABOUR FORCE, (%) Australia France Germany Italy Japan UK USA Europe (19) Canada Source: OECD.Stat

11 CANADIAN AND US UNEMPLOYMENT: ACTUAL & WITH 1976 AGE AND EDUCATION Percent US Actual US 1976 Age & Education Canada Actual Canada 1976 Age & Education Source: Calculated from data from US Bureau of Labor Statistics and Statistics Canada

12 LONG-TERM UNEMPLOYMENT AND LABOUR MARKET FLEXIBILITY IN OECD COUNTRIES 10 9 Poland Spain 8 Long-term Unemployment Rate (%) 7 Italy Greece 6 Germany Belgium Hungary 5 France Ireland Finland Turkey 4 Czech Rep Portugal 3 UK Australia Sweden NL 2 Denmark Japan Canada Switz NZ Austria 1 USA Norway Korea 0 Mexico Employment Protection Index Source: Calculations from Online OECD Employment Database

13 UNEMPLOYMENT RATES: NATIONAL AVERAGE AND REGIONAL DISPERSION, Unemployment Rate (left axis) Dispersion (right axis) Percent Percentage Points Source: Statistics Canada, Labour Force Survey

14 UNEMPLOYMENT BY REGION, 1997 AND Other Regions High UR Regions Unemployment Rate Unemployment Rate Source: Statistics Canada, Labour Force Survey

15 PROBABILITY OF EXIT FROM LABOUR FORCE BY AGE: MEN, % 45% % 35% 30% 25% 20% 15% 10% 5% 0% Age Source: Calculated from differences in participation rates by age in annual Statistics Canada Labour Force Survey

16 PROBABILITY OF EXIT FROM LABOUR FORCE BY AGE: WOMEN, % 45% 40% % 30% 25% 20% 15% 10% 5% 0% Age Source: Calculated from differences in participation rates by age in annual Statistics Canada Labour Force Survey

17 AVERAGE AGE OF WITHDRAWAL FROM THE LABOUR FORCE: Men Women Source: Calculated from differences in participation rates by age in annual Statistics Canada Labour Force Survey

18 NET FEDERAL EMPLOYEE PENSION LIABILITY, 2000/01 TO 2010/11: AS REPORTED VS. FAIR-VALUE ESTIMATE Reported Fair Value $ Billions / / / / / / / / / / /11E Fiscal Years Source: Calculated from Public Accounts and actuarial reports, various years; data for 2010/11 are estimated

19 FEDERAL BUDGET BALANCE, 2001/02 TO 2010/11: REPORTED VS ADJUSTMENT FOR FAIR-VALUE COST OF EMPLOYEE PENSIONS $ Billions Reported Adjusted 2001/ / / / / / / / / /11E Fiscal Years Source: Calculated from Public Accounts and actuarial reports, various years; data for 2010/11 are estimated

20 BACK OF THE ENVELOPE CALCULATION OF UNRECORDED COMPENSATION PREMIUM FOR FEDERAL GOVERNMENT EMPLOYEES Recorded pension accruals: about 11% of recorded compensation Fair-value pension accruals: about 33% of recorded compensation Unrecorded pension accruals: about 22% of compensation

21 CANADA S LABOUR MARKET PRE- AND POST-CRISIS WILLIAM ROBSON PRESIDENT AND CEO, C.D. HOWE INSTITUTE PRESENTATION TO THE NERO MEETING AT THE OECD 20 JUNE 2011

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