People all over the world are suffering through a kind of post-traumatic stress in the wake of the financial crisis still sending aftershocks through the global economy. Even here in Canada, where we were largely insulated from the worst effects of the sub-prime mortgage debacle, fear hangs in the air.
A friend was talking to me this week about her mother who worries about losing her job. She’s 60, a single professional, and she’s not nearly ready to retire. A layoff now would be disastrous, because she doubts she’d ever be able to find a job as good as the one she’s got. After seeing roughly 400,000 Canadians lose their jobs during the downturn, her anxiety is understandable.
But, as a new report by the Conference Board makes clear, most Canadians shouldn’t be too worried about a wave of unemployment. If anything, we should focus on the opposite scenario.
In a way, the financial crisis and market plunge of 2008 — 09 was a blessing in disguise for the Canadian economy. All those falling stocks trimmed the retirement savings of the baby boomers just enough so that most will delay their retirement plans for at least a couple of years. It may be bad news for boomers, but it’s good news for the country, because we’re going to need them.
As the Conference Board noted, a labour shortage is one of the top challenges facing the Canadian economy over the next decade. Job cuts have dominated the popular discussion for more than a year now, but look closely at the numbers and it’s clear that Canadian employersare performing a delicate balancing act. Yes, last year companies cut staff to weather the storm, but the losses were nothing like the catastrophe playing out in places like the U.S., U.K. and Japan. Overall, our unemployment rate is expected to peak around 9% – which is still lower than the rates we saw typically between 1976 and 1999.
What’s more, 56% of those who lost their jobs last year were between the ages of 15 and 24. Again, bad news for them, but good news for the economy, because it means that, by and large, firms were cutting junior staff rather than their most experienced (and highly paid) employees. Executives realized that when the economy turns around, they would need those seasoned staffers and all the institutional memory they possess, to capitalize on the recovery. Young people are easy to rehire, and you can rest assured that companies will do so just as soon as stability returns.
Indeed, that seems to have already begun. Since last August, the Canadian economy has added 137,000 jobs, including 43,000 in January. Over the same period, the U.S. has lost another 555,000 jobs. While the U.S. continues to struggle to find its balance, Canadian companies can begin to focus on the challenge of the years ahead, when qualified staff will be at a premium.
We’re at a turning point in the domestic economy. And while the headlines will likely continue to focus on job cuts, the trend suggests that my friend’s mom need not lose sleep over it. If they’re focused on the future, her employers will be relying on her to stick around as long as possible.