Perspectives on the Youth Labour Market in Canada

Perspectives on the Youth Labour Market in Canada Presentation to the Financial Management Institute of Canada November 16 René Morissette Research Manager Analytical Studies Branch

While unemployment is similar to what it was in the mid- 197s, the overall full-time employment rate has risen 14 12 1 8 6 4 % UNEMPLOYMENT RATE, 1976 TO 16 PERCENTAGE OF POPULATION EMPLOYED FULL-TIME IN THEIR MAIN JOB, 1976 TO 16 7 % 68 66 64 62 6 58 56 54 2 1976 198 199 1 12 14 16 52 5 1976 198 199 17-64 not full-time students 15-64 1 12 14 16 Note: Individuals aged 15 and over. First 3 quarters for 16. Note: First 3 quarters for 16. 2

Unemployment has been historically higher for youth than for older workers 18 16 14 12 1 8 6 4 2 Unemployment rate of youth and older workers, 1953 to 15 percentage 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 1 3 5 7 9 11 13 15 Individuals under 25 Individuals 25 and over Note: Prior to 1976, individuals under 25 included those aged 14 to 24. Since 1976, they include those aged 15 to 24. Sources: Labour Force Information, 71-1-X, December 1975; CANSIM table 282-2. 3

Individuals under 25 had similar unemployment rates in 1976 and 14, but lower full-time employment rates in 14 Unemployment rate (U) and full-time employment-to-population ratio (FTE), 1976 and 14, men and women aged 17 to 24 (full-time students excluded) 8 75 7 65 6 55 5 45 4 35 3 25 15 1 5 percentage 76.8 59.1 58.7 48. U: Men 17 to 24 FTE: Men 17 to 24 U: Women 17 to 24 FTE: Women 17 to 24 1976 14 Sources: Economic Insights, 11-626-X, no. 49, July 15; Labour Force Survey. 4

The drop in full-time employment rates was observed among men of all ages and among women under 25 PERCENTAGE OF THE POPULATION EMPLOYED FULL TIME IN THEIR MAIN JOB, 1976 TO 14 (FULL-TIME STUDENTS EXCLUDED) MEN WOMEN 1 percentage 1 percentage 9 9 8 8 7 7 6 6 5 5 4 4 3 3 1976 198 199 1 12 14 14 12 1 199 198 1976 17 to 24 years 25 to 29 years 3 to 54 years 17 to 24 years 25 to 29 years 3 to 54 years Sources: Economic Insights, 11-626-X, no. 49, July 15; Labour Force Survey. 5

The increased incidence of part-time employment drove most of the decline in the full-time employment rate of individuals under 25 Sources of decline in full-time employment rates, 1976 to 14 (full-time students excluded) Men Women Men Men 17 to 24 17 to 24 25 to 29 3 to 54 Changes in full-time employment rates, 1976 to 14-17.7-1.7-1.2-7.5 (percentage points) Sources of decline (%): Participation 23.8-58.1 35.7 39.5 Unemployment 3.7-3.3 21.7 19.7 Part-time employment 72.5 161.3 42.5 4.8 Total 1. 1. 1. 1. Sources: Economic Insights, 11-626-X, no. 49, July 15; Labour Force Survey. 6

When they have full-time jobs, youth are now more likely to be in temporary jobs than in the past Percentage of full-time employees working in temporary jobs, 1989 to 14 (students excluded) Men Women 3 3 percentage percentage 25 25 15 15 1 1 5 5 15 to 24 years 25 to 34 years 35 to 54 years 15 to 24 years 25 to 34 years 35 to 54 years 1989 1997 14 1989 1997 14 Sources: Updated from Insights on Canadian Society, 75-6-X, July 13; 1989 General Social Survey; Labour Force Survey. 7

The employment rates of young Aboriginal people display substantial variation PERCENTAGE OF INDIVIDUALS AGED 25 TO 34 WHO ARE EMPLOYED, MAY 11 MEN WOMEN 9 percentage 8 7 6 5 4 3 1 9 percentage 8 7 6 5 4 3 1 Note: Non-immigrant individuals aged 25 to 34. R refers to individuals living on reserves. Data are show n for groups w ith 1 observations or more in the National Household Survey. Source: National Household Survey 8

Despite rising education levels, real wages grew little during the 198s and 199s Percentage of full-time employees aged Median real wages of full-time employees 17 to 64 with a university degree, 1976 to 14 aged 17 to 64, 198 to 14 (1981=1) 35 % 1 3 115 25 11 15 15 1 1 5 95 9 14 12 1 199 198 14 12 1 199 198 1976 weekly wages hourly wages Sources: Updated from Analytical Studies Branch Research Paper Series, 11F19M, No. 347, March 13; Census of Population; Labour Force Survey; 1981 Survey of Work History; Survey of Union Membership; Labour Market Activity Survey, to 199. 9

The wages of young full-time employees, especially employees under 25, have fallen since the early 198s, compared with those of older employees Median real hourly wages of men and women in full-time jobs, 1981 to 14 (1981=1) Men Women 14 14 13 13 1 1 11 11 1 1 9 9 8 8 7 7 6 1981 199 1989 1987 14 13 12 11 1 9 7 5 3 1 1999 1997 6 1981 199 1989 1987 14 13 12 11 1 9 7 5 3 1 1999 1997 17-24 25-34 35-44 45-54 17-24 25-34 35-44 45-54 Sources: Updated from Analytical Studies Branch Research Paper Series, 11F19M, No. 347, March 13; Labour Force Survey; 1981 Survey of Work History; Survey of Union Membership; Labour Market Activity Survey, to 199. 1

Real wages for youth showed more variability in oilproducing provinces than in other provinces 14 13 1 11 1 9 8 7 Median real hourly wages of men and women in full-time jobs, 1981 to 14 (1981=1) Men Women 14 13 1 11 1 9 8 7 6 1981 199 1989 1987 14 13 12 11 1 9 7 5 3 1 1999 1997 6 1981 1987 1989 199 1997 1999 1 3 5 7 9 1 11 12 13 14 17-24 other 25-34 other 17-24 oil 25-34 oil 17-24 other 25-34 other 17-24 oil 25-34 oil Sources: Updated from Insights on Canadian Society, 75-6-X, July 13; Labour Force Survey; 1981 Survey of Work History; Survey of Union Membership; Labour Market Activity Survey, to 199. 11

The strong wage growth observed in oil-producing provinces from the early s to reduced university enrollment in these provinces but brought into the labour market some young men who were neither enrolled in school nor employed Percentage of men aged 17 to 24 enrolled in Percentage of men aged 17 to 24 neither enrolled university, to in school nor employed, to 18 18 16 16 14 14 12 12 1 1 8 8 6 6 7 5 3 1 1999 7 5 3 1 1999 Oil-producing provinces Other provinces Oil-producing provinces Other provinces Sources: Analytical Studies Branch Research Paper Series, 11F19M, no. 353, January 14; Labour Force Survey. 12

Higher education generally remains associated with higher earnings and registered pension plan coverage 7, 6, 5, 4, 3,, Median annual wages and salaries, 12 Percentage of employees with a (12 dollars) registered pension plan, 12 45 4 35 3 25 15 percentage 1, 1 Men 25 to 34 years High school graduates Women 25 to 34 years College graduates 5 Men 25 to 34 years Women 25 to 34 years Bachelor s degree holders High school or less College graduates Bachelor s degree holders Sources: Economic Insights, 11-626-X, no. 5, September 15; Insights on Canadian Society, 75-6-X, December 14; Census; 11 National Household Survey; T1 Personal Master File; 12 Longitudinal and International Study of Adults. 13

However, young men are no longer the most highly educated individuals Percentage of individuals with a university degree, by age group, 1976 and 14 4 35 3 25 15 Men 25 to 34 years Women 25 to 34 years Men 35 to 54 years Women 35 to 54 years 1 5 1976 14 Sources: Labour Force Survey (March and September), 1976 and 14. 14

In some fields of study, young female bachelor s degree holders now exceed their male counterparts Number of female bachelor's degree holders per male bachelor's degree holder, by field of study 1, Canadian-born individuals aged to 34 2.2 2. 1.8 1.6 1.4 1.2 1..8.6.4.2. Fine Arts Humanities Social Sciences Business Life Sciences Engineering Math, Computer Sciences 1. Excluding health and education Sources: Censuses of Population and 15

SUMMARY Youth unemployment today is similar to that of the mid-197s. However, job quality appears to have deteriorated for many young people. A) Full-time employment rates and the percentage of full-time jobs that are permanent have fallen for men under 35, for older men, and for women under 25. B) Wages have fallen for men and women under 25. C) Pension coverage has fallen for men aged 25 to 34, as well as for older men. The degree to which globalization, technological changes, de-unionization and labour supply shifts underlie these changes is difficult to quantify. A substantial gender difference in university attendance has emerged. Trends have varied by region, and new patterns are emerging for young immigrants. 16

Appendix 17

The drop in full-time employment rates was also observed among young individuals with a university degree (except women aged 25 to 29) Change in the percentage of the population employed full time in their main job, 1976 to 14, by education level (full-time students excluded) 15 1 percentage points 5-5 -1-15 - Men 17 to 24 Men 25 to 29 Women 17 to 24 Women 25 to 29 No university degree University degree Sources: Economic Insights, 11-626-X, no. 49, July 15; Labour Force Survey. 18

In terms of employment, youth in oil-producing provinces generally fared better than those in non-oil-producing provinces 1 9 Percentage of men employed full-time in their main job, 1976 to 14 (full-time students excluded) Oil-producing provinces Other provinces percentage 1 9 percentage 8 8 7 7 6 6 5 5 4 4 3 3 1976 198 199 1 12 14 14 12 1 199 198 1976 17 to 24 years 25 to 29 years 3 to 54 years 17 to 24 years 25 to 29 years 3 to 54 years Sources: Economic Insights, 11-626-X, no. 49, July 15; Labour Force Survey. 19

After rising from the late 194s to the late 197s, the overall percentage of employees with an RPP has dropped subsequently PERCENTAGE OF EMPLOYEES WITH A REGISTERED PENSION PLAN, 1947-11 55 5 percent 45 4 35 3 25 1947 1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 1 3 5 7 9 11 Men Women Both sexes Source: Pension Plans in Canada (PPIC) Database, 1977 to 11, and previous Statistics Canada publications on RPPs.

In any given year, hires and layoffs involve far more workers than net employment changes suggest thousands of employees Hires, layoffs, and net employment change, Canada, averages of 3 to 13 3, 2,5 2, 1,5 1, 5 Employees aged 18 to 64 Employees aged 25 to 54 Age group Net employment change Hires Layoffs Note: Net employment change refers to the net change in the number of employees from January of year t to January of year t+1. Hires and layoffs are measured in year t. Sources: Economic Insights, 11-626-X, no. 6, June 16; Canadian Employer-Employee Dynamics Database; Labour Force Survey. 21

Hiring rates are pro-cyclical and are currently low relative to their levels in the mid-197s Hiring rates, Canada, 1976 to 15 3 percentage 25 15 1 5 1976 1977 1979 198 1981 1983 1985 1987 1989 199 1991 1993 1995 1997 1999 1 3 5 7 9 1 11 12 13 14 15 employees aged 15 to 64 employees aged 25 to 54 Sources: Labour Force Survey (January files). 22

Despite numerous changes in the economic environment, permanent layoff rates did not trend upwards since the late 197s 9 8 7 6 5 4 3 2 1 percent PERMANENT LAYOFF RATES, TO 11 1979 198 1981 1983 1985 1987 1989 199 1991 1993 1995 1997 1999 1 3 5 7 9 1 11 Workers aged 15-64 Workers aged 25-54 Sources: Statistics Canada, Longitudinal Worker File 23

This is true for men and women of different ages percent 18 16 14 12 1 8 6 4 2 198 PERMANENT LAYOFF RATES, BY AGE AND SEX, TO 11 MEN WOMEN 199 1 percent 18 16 14 12 1 8 6 4 2 198 199 1 25-29 3-34 35-54 25-29 3-34 35-54 Sources: Longitudinal Worker File and Labour Force Survey 24

Overall, worker turnover (separation rates) did not trend upwards over the last 3 decades Percentage of employees aged 15 to 64 leaving firms due to quits, layoffs or other reasons, 1976 to 11 % 3. 25.. 15. 1. 5.. 1976 198 199 1 LFS LWF Source: Morissette, Lu, and Qiu (13), Statistics Canada 25

In other words, overall job stability did not drop [Source: Brochu (13), CJE] 26

Yet worker turnover among youth was generally higher prior to the - 9 recession than it was in the late 197s percent 45 4 35 3 25 15 1 5 PERCENTAGE OF INDIVIDUALS SEPARATING FROM EMPLOYERS DUE TO QUITS, LAYOFFS, OR OTHER REASONS, TO 11 MEN WOMEN percent 45 4 35 3 25 15 1 5 198 199 1 25-29 3-34 35-54 198 199 1 25-29 3-34 35-54 Source: Longitudinal Worker File 27