New CIBC report finds Canada's job market increasingly stable with
workers staying employed longer than ever before
TORONTO, June 18, 2014 /CNW/ - Job stability in Canada, which was
projected to be a thing of the past, is stronger than it ever has been
with those holding a job with the same employer for five years or
longer sitting at a record high, finds a new report from CIBC World
The CIBC report found that there is a near-record high 60 per cent
chance that Canadians with stay with an employer after completing their
first year on the job with the retention rate hitting nearly 95 per
cent for those having five or more years at a company.
"This stable and boring job market is the complete opposite of what was
envisioned not too long ago," says CIBC Deputy Chief Economist Benjamin
Tal, who coauthored the report with CIBC economist, Nick Exarhos. "The
job market of the "new economy" was supposed to permanently alter
employer-employee relationships and workers were seen as becoming
increasingly disposable, with the implication that job stability would
But he finds that the opposite is happening, driven by the changing
needs of employers in the country that has seen vacancy rates rise
without a corresponding decrease in unemployment.
"Rising survival rates between years of employment and increased
stability makes sense in a world where there is a low supply of newly
unemployed—and presumably still qualified—individuals. The situation
today keeps employers motivated to keep workers they have. At the same
time, a large overhang of long-term unemployed reduces the motivation
of lower skill employees to branch out."
Looking closer at the unemployed in Canada shows a diverging pattern
between those with in-demand skills and those without. The share of
those unemployed for roughly three months or less has been approaching
cycle and all-time lows recently. On the other hand, the number of
those who have been unemployed for 27 weeks and longer remains at
elevated levels. The authors conclude that this means the sticky
unemployment rate of the past couple of years is largely due to
stagnation in long-term unemployment as opposed to an increase in the
number of newly unemployed.
"The abnormal relationship between recent vacancy rates and unemployment
suggests that large swaths of those unemployed are not what employers
are seeking," says Mr. Tal. "A discontinuity between the types of
workers desired and those that are available in the ranks of the
unemployed would explain how a growing number of unfilled vacancies
could co-exist with a higher level of unemployed—and potentially
And for those individuals who have been unemployed for longer stretches,
the trend of people staying in their jobs longer makes it even more
difficult to find a vacancy they are qualified to fill.
He notes that, unlike past recoveries, this one has also seen stronger
pay increases amongst higher paid professions relative to others.
Canadians with higher levels of relevant education and training—who are
unlikely to be those stuck in unemployment—have more bargaining power
than those who are engaged in less remunerative professions.
These changes are taking place at the same time that an aging Canadian
workforce has driven a decrease in the country's labour market
participation rate. Canadians 55 and over have seen their share of the
country's working age population climb nearly 4 per cent since 2008,
with those 25-54 falling by roughly 2.5 per cent over the same time. An
overall aging population has driven this change but this understates a
deeper deterioration as working Canadians 55 and over are rapidly
reducing their level of job-market engagement. Since 2007, the number
of older self-employed individuals has risen much faster than in any
other age group, seeing their share in total self-employment rise
Mr. Tal notes that Canadians have to go a little higher these days to
climb over the employment bar with an aging population shrinking the
workforce coupled with a growing skills mismatch. "But the current
environment also suggests that once that higher bar is cleared, a
career featuring higher stability lies ahead."
The CIBC job market report is available at: http://research.cibcwm.com/economic_public/download/feature1.pdf
The complete CIBC World Markets report is available at: http://research.cibcwm.com/economic_public/download/eijun14.pdf
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SOURCE: CIBC World Markets
For further information:
Benjamin Tal, Deputy Chief Economist, CIBC World Markets Inc. at (416) 956-3698, firstname.lastname@example.org or Kevin Dove, Head of External Communications at 416-980-8835, email@example.com.