State of the Labour Market

February Labour Force Survey Preview: Will the Tighter Labour Market Boost Permanent Employment?

Younger employees less likely to have permanent roles, patterns more stable for prime-age workers

With the unemployment rate near decade-lows, the Canadian labour market conversation has shifted its focus to precarious work and other measures of job quality. In this regard, a key metric to track is the share of employees working in non-permanent roles. When the Labour Force Survey (LFS) started asking Canadians about job permanency in 1997, 88.7% of employees (not including the self-employed) indicated they had a permanent role. By 2018, despite a strong labor market, the share was down to 86.7%.

Interpreting recent trends in permanent employment in the LFS is impacted by demographic changes. Zooming in on individual age groups, the drop in the share of employees with permanent status has been most pronounced among youth. From 2000 to 2009, the share of Canadian employees age 15 to 24 with a permanent job averaged 71%, after dropping during the late 1990s. The share has slid further in recent years and now stands just above 68%. Some of this decline could reflect shifting trends surrounding school enrollment.

The trend for prime-age Canadians (age 25-54) is less striking. Unlike the gradual decline over the past few years among youth, the share of prime-age employees with permanent roles has largely held steady following a dip from 91% to 90% in the aftermath of the Great Recession. In 2018, the permanent share of prime-age employees ticked up, reversing a decline in 2017.

Can the rise in permanent job openings help increase permanent jobs?

For prime-age employees, permanent roles remain the norm. However, a concern going forward is the possibility that temporary work trends among today’s youth persist as they enter middle-age. In this regard, the recent tightening of the Canadian labour market might offer some relief: job openings for permanent roles have been the main driver of the strong overall increase in vacancies over the past few years.

Total job openings in the third quarter of 2018 were up 35% from the same period in 2015, according to Statistics Canada’s Job Vacancy and Wage Survey, with growth decidedly tilted towards permanent roles. Vacancies for permanent jobs were up 44% over this period, compared to just an 8% increase for temporary roles. As a result, the share of openings for permanent roles hit 81% in the third quarter of 2018, up from 76% three years earlier. This shift in openings toward permanent roles was particularly noticeable in Ontario, B.C., and Atlantic Canada.

Changes in the monthly LFS numbers can be a bit volatile to assess trends in job permanency among Canadian employees. However, as more data for 2019 rolls in, it will be interesting to see if a tighter labour market and the growth in job openings for permanent work helps cut the share of Canadian employees in temporary positions, particularly among youth who have experienced the greatest shift.

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