State of the Labour Market

February Labour Force Survey Preview: Involuntary Part-Time Employment at Multi-Decade Lows

Fewer part-time workers say they can’t get full-time hours.

While the unemployment rate is the most common measure to gauge labour market health, it’s far from a complete assessment. One thing it fails to capture is the presence of part-time workers who can’t find full-time employment. If the jobless rate is down because those out of work are increasingly securing part-time jobs when they’d prefer full-time work, it calls into question how much the labour market has really improved. 

The good news though, is that involuntary part-time employment in Canada has actually been tracking unemployment quite closely, and also currently stands near multi-decade lows.

Statistics Canada’s Labour Force Survey asks those working part-time (i.e. less than 30 hours per week) why they aren’t working full-time instead. The most common reasons for working part-time in 2019 were “going to school” and “personal preference”, but some cite economic factors for their short work-weeks. While not technically “unemployed,” these involuntary part-time workers also represent an underutilization of the labour force that’s important to monitor.      

Overall, the involuntary part-time rate has declined in recent years, from 4.6% of the Canadian labour force in 2015 to 3.5% in 2019. The share is now below the lows in 2007-2008, similar to the overall unemployment rate, which stood at 5.5% in January.

Not only have unemployment and involuntary part-time employment been tracking each other at the national level, but they’ve also been moving together at the provincial level too. Provinces experiencing falling unemployment in recent years — Quebec in particular — have also seen substantial declines in part-time work for economic reasons. On the flip-side, both joblessness and the ranks of involuntary part-timers have increased in Alberta and Saskatchewan. 

It would be a bad signal for the reliability of the unemployment rate if involuntary part-time employment was increasing while joblessness fell. However, they’ve actually been moving in the same direction, telling a similar story about the strength of the labour market: that conditions for Canadian job seekers are in good shape overall, but regional divides persist. 

The question for the year ahead is whether we’ll see further improvement. The pace of job growth has cooled in recent months, while concerns about COVID-19, already disrupting global financial markets, could spread to other areas of the economy. The effects might not yet be apparent in the February employment numbers released this Friday, but I’ll be keeping a close eye for warning signs in potentially vulnerable sectors like accommodation and food services.

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