Canada's job growth not best in G7, OECD finds

A new OECD report suggests Canada's labour market has yet to fully recover from the recession and is not the strongest in the G7, as often claimed by the Harper government.

The numbers from Paris-based Organization for Economic Co-operation and Development suggests Canada places fifth in terms of job creation.

The OECD data measures what economists call the employment rate, which is the percentage of the working age population that actually has a job.

In a nutshell, all we've done is keep up with population growth. Just looking at jobs created is going to put Canada in a better light just by dint that we have much stronger population growth, so that's probably not the fairest way to compare ourselves to others- Doug Porter, BMO economist

By that measure, only two countries in the G7 — Germany and Japan — have a higher percentage of employed today than when the recession began in the fall of 2008. Meanwhile, the United Kingdom and France are close to returning to pre-slump levels.

Canada's employment rate at the end of 2013 stood at 72.4 per cent among 15 to 64 year olds which, while high, is still 1.3 percentage points lower than before the recession.

Finance Minister Joe Oliver and his predecessor have been fond of trumpeting Canada's economic and job creation performance since the recession, claiming it is unequalled among the Group of Seven large industrialized nations.

Economists view the employment rate as a good barometer of overall strength in labour markets because it reflects the portion of people in any given population that has jobs. The more commonly quoted unemployment rate is based on individuals actively looking for work. It can mask weakness in the market if there are large numbers of discouraged workers, as in the U.S. which now has a lower jobless rate than Canada despite a poor job creation record.

Canada is doing far better than the United States, which went from 71.2 per cent of the working age population having jobs in the spring of 2008 to 67.4 per cent at the end of last year, a negative differential of 3.8 percentage points.

Overall, the majority of OECD nations have yet to return to pre-slump employment levels.

Strong record of job creation

Bank of Montreal chief economist Doug Porter says Canada has had a relatively strong record of job creation since the recession, and the roughly one million net new jobs added during the recovery does top the G7 once population differences are factored.

But Porter cautions that just looking at the raw numbers is misleading. That's because the number of jobs created doesn't take into consideration the number of Canadians available to work, if there were jobs for them.

"Looking at total jobs created tends to flatter Canada," he said. "In a nutshell, all we've done is keep up with population growth. Just looking at jobs created is going to put Canada in a better light just by dint that we have much stronger population growth, so that's probably not the fairest way to compare ourselves to others."

Porter said Canada would fare better if the measurement is the more well-known unemployment rate — but not much better. Canada, with an unemployment rate of seven per cent in the fourth quarter of 2013, would still trail Germany, Japan, the U.S. and would be virtually tied with the U.K.

Economist Erin Weir of the United Steelworkers union says the OECD numbers show what most people in Canada suspect, that there are more people willing to work than there are jobs for them.

Issues with temporary foreign workers

"The problem is that employers have not created nearly enough jobs in Canada to keep pace with population growth," he said. "Comparing Canada with other G7 countries raises more questions about the massive expansion of our temporary foreign worker program."

The OECD data finds other industrialized countries, not members of the G7, have come out of the slump a shade better than Canada, including Austria, Israel, Sweden and Switzerland, all of whom have higher employment rates today than prior to the recession.

At the bottom end of the scale are the known "sick sisters' of Europe, including Greece with a negative 12.9 percentage point differential, Spain at minus 10.3 percentage points, Ireland at minus 7.0 percentage points and Portugal at negative 6.2 points.