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Ontario’s Job Market Hit Disproportionately Hard by Recession, Further Declines Likely

A new StatCan report regarding May’s Employment Numbers indicates that employment in Canada decreased by 42,000 in May and unemployment rose to 8.4% – Canada’s highest rate for 11 years. The job losses were concentrated in Ontario, where unemployment reached 9.4% – its highest value in 15 years. In fact, Ontario lost 60,000 jobs in May, bringing total losses since last October to 234,000 or 3.5%. While Ontario accounts for 39% of the total working-age population, it has experienced 64% of overall employment losses since the start of the labour market downturn. The remaining provinces saw little changes in May, and Manitoba, Nova Scotia and Saskatchewan even experienced increases in employment.

The job losses were led by the Manufacturing sector, where 58,000 jobs were lost in May alone (mostly in Ontario), bringing total losses since October to 186,000 or 9.4%. Among the Manufacturing industries, the largest decline was recorded in transportation equipment manufacturing. In May 2009, there were 778,000 factory workers in Ontario — the lowest level since comparable data became available in 1976. Manufacturing employment in Ontario reached a peak in November 2002 with 1,115,000 workers.

The labour market in Ontario is in the midst of a long-term adjustment, which was likely accelerated by the ongoing crisis. A hiring demand report focusing on the suburban GTA that we published recently (found here) also found that in the first quarter of 2009, the demand for lower-skilled jobs declined the most. Those types of jobs are like often found in the manufacturing sector.

We expect to see continued increases in unemployment in Ontario during the next months, because for employment to start growing, hiring demand must pick up. Hiring demand has yet to start growing – although it seems to have at least stopped deteriorating. And even when hiring demand does pick up eventually, many lower-skilled jobs that were lost in Ontario will likely never return. They will be replaced by jobs in other occupation classes – Healthcare, Social Services, Technology, etc. The real danger for Ontario is that it may end up with high structural long-term unemployment: People available to fill new jobs may not have the skills that these jobs require. To avoid this fate, Ontario must step up efforts to retrain workers who have lost their jobs in the past months – and those who will join the ranks of the unemployed in the months to come.

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