Many Canadians are shifting to self-employment and part-time work as the recession kills off full-time jobs.
Still, the alarming erosion of jobs is easing.
Canada's unemployment rate climbed to 8.6 per cent in June as the economy shed a fewer-than-expected 7,400 jobs. That brought net second-quarter job losses to 13,000, below the 273,000 wiped out in the first three months of the year, Statistics Canada said Friday. Behind the headline numbers, though, a marked shuffle is taking place that is typical of recessions, when more people are forced into part-time work or to create their own jobs through self-employment.
While the pace of job losses is easing, economists caution that more people will be living on smaller incomes, holding back consumer spending crucial to a recovery.
“Businesses are cutting jobs at a much more moderate pace than last winter, but the negatives still outweigh the positives,” said Sébastien Lavoie, an economist at Laurentian Bank of Canada. He's concerned about both the quality of jobs and the length of time it's taking for people to find work. In December, it took 13 weeks to land a job, on average. It now takes more than 16 weeks.
“If you're unemployed for many months, that's where problems pop up – delays in credit payments which could lead to personal bankruptcies” and buckling consumer demand, he said.
Since October's labour market peak, the economy has shed almost half a million full-time jobs, while adding 84,000 part-time positions. In that same period, self-employment swelled by 1.5 per cent in contrast to a 3.3-per-cent slide in private sector employment. Overwhelmingly, it's people in their fifties and older turning to self-employment in this recession, said Statistics Canada analyst Yves Decady.
Lucie Shaw, 48, and her husband David, 52, started their own Mississauga-based health care service in June. Ms. Shaw made the move following a layoff, after decades working at a major airline and as a manager at a call centre.
“A year or two ago, I never would have thought I'd become an entrepreneur. I come from the corporate world,” she said. “But this is more aligned to who I am as a person, for this time in my life.”
Forced self-employment isn't necessarily a bad thing: It can spark innovation and successful new companies once the economy recovers, said Benjamin Tal, senior economist at CIBC World Markets.
“Regardless of motivation, the likelihood of success in terms of profits and durability is the same. The fact that you are forced into it doesn't mean you're less likely to succeed,” he said, adding that the self-employment trend is more pronounced in this recession because the Internet makes it easier to start businesses.
The recession has hit young people hardest. June unemployment in the 15-to-24 age range rose a full percentage point to an 11-year high of 15.9 per cent. The summer job market for students has also soured, with an unemployment rate of 18.1 per cent.
“For families with multiple kids or inadequately funded RESPs to begin with, this now puts even more pressure on the university- or college-bound student to make up the shortfall. Problem is, you can't do that without a job,” said Andrew Pyle, a wealth adviser for ScotiaMcLeod. “We know many parents will want to help out any way they can, even if this means taking resources away from their own budgets.”
© The Globe and Mail
