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
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
LABOUR FORCE AND EMPLOYMENT IN SELECTED COUNTRIES, 1997-2010 2.5 2.0 1.5 Percent change at annual rates 1.0 0.5 0.0-0.5-1.0-1.5 Labour Force 1997-2007 Employment 1997-2007 Labour Force 2007-2010 Employment 2007-2010 -2.0 Australia France Germany Italy Japan UK USA Europe (27) Canada Source: Calculated from data in OECD MEI
EMPLOYMENT-TO-POPULATION RATIOS, SELECTED COUNTRIES: 1997-2010 90 80 1997 2007 2010 70 60 Percent 50 40 30 20 10 0 Australia France Germany Italy Japan UK USA Euro (15) Canada Source: Calculated from data in OECD Economic Outlook Database (June 2011)
CANADIAN LABOUR FORCE AND EMPLOYMENT: 1997:M1 TO 2011:M5 19,000 18,000 Labour Force Employment 17,000 000s 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 282-0087
LABOUR PRODUCTIVITY, 1997Q1-2011Q1 150 140 GDP Jobs Hours GDP/Hour 130 Index: 1997Q1=100 120 110 100 90 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Statistics Canada, CANSIM Table 383-0008
LABOUR PRODUCTIVITY, 2007Q1-2011Q1 104 103 102 101 Index: 2007Q1=100 100 99 98 97 96 95 GDP Jobs Hours GDP/Hour 94 2007 2008 2009 2010 2011 Source: Statistics Canada, CANSIM Table 383-0008
ANNUALIZED CHANGES IN REAL WAGES AND EMPLOYMENT BY SECTOR: 1997-2007 2.0% 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
ANNUALIZED CHANGES IN REAL WAGES AND EMPLOYMENT BY SECTOR: 2007-2010 5% 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
UNEMPLOYED MORE THAN 6 MONTHS AS SHARE OF LABOUR FORCE, 1997-2009 (%) 12 1997 2007 2009 10 8 6 4 2 0 Australia France Germany Italy Japan UK USA Europe (19) Canada Source: OECD.Stat
CANADIAN AND US UNEMPLOYMENT: ACTUAL & WITH 1976 AGE AND EDUCATION 14 12 10 8 Percent 6 4 2 US Actual US 1976 Age & Education Canada Actual Canada 1976 Age & Education 0 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Source: Calculated from data from US Bureau of Labor Statistics and Statistics Canada
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 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Employment Protection Index Source: Calculations from Online OECD Employment Database
UNEMPLOYMENT RATES: NATIONAL AVERAGE AND REGIONAL DISPERSION, 1997-2011 10.0 3.5 9.5 Unemployment Rate (left axis) Dispersion (right axis) 3.3 9.0 3.1 8.5 2.9 Percent 8.0 7.5 7.0 2.7 2.5 2.3 Percentage Points 6.5 2.1 6.0 1.9 5.5 1.7 5.0 1.5 1997-01 1998-01 1999-01 2000-01 2001-01 2002-01 2003-01 2004-01 2005-01 2006-01 2007-01 2008-01 2009-01 2010-01 2011-01 Source: Statistics Canada, Labour Force Survey
UNEMPLOYMENT BY REGION, 1997 AND 2010 25 Other Regions High UR Regions 20 2010 Unemployment Rate 15 10 5 0 0 5 10 15 20 25 1997 Unemployment Rate Source: Statistics Canada, Labour Force Survey
PROBABILITY OF EXIT FROM LABOUR FORCE BY AGE: MEN,1980-2010 50% 45% 1980 1995 2010 40% 35% 30% 25% 20% 15% 10% 5% 0% 50-54 55-59 60-64 65-69 70-74 75+ Age Source: Calculated from differences in participation rates by age in annual Statistics Canada Labour Force Survey
PROBABILITY OF EXIT FROM LABOUR FORCE BY AGE: WOMEN,1980-2010 50% 45% 40% 1980 1995 2010 35% 30% 25% 20% 15% 10% 5% 0% 50-54 55-59 60-64 65-69 70-74 75+ Age Source: Calculated from differences in participation rates by age in annual Statistics Canada Labour Force Survey
AVERAGE AGE OF WITHDRAWAL FROM THE LABOUR FORCE: 1978-2010 65 64 63 62 61 60 59 58 Men Women Source: Calculated from differences in participation rates by age in annual Statistics Canada Labour Force Survey
NET FEDERAL EMPLOYEE PENSION LIABILITY, 2000/01 TO 2010/11: AS REPORTED VS. FAIR-VALUE ESTIMATE 250 225 Reported Fair Value 200 175 150 $ Billions 125 100 75 50 25 0 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11E Fiscal Years Source: Calculated from Public Accounts and actuarial reports, various years; data for 2010/11 are estimated
FEDERAL BUDGET BALANCE, 2001/02 TO 2010/11: REPORTED VS ADJUSTMENT FOR FAIR-VALUE COST OF EMPLOYEE PENSIONS 20 10 0-10 -20 $ Billions -30-40 -50-60 -70 Reported Adjusted 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11E Fiscal Years Source: Calculated from Public Accounts and actuarial reports, various years; data for 2010/11 are estimated
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
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