Outlook 2010: When will the job market rebound?

While employment is rising, in a few key sectors the losses look permanent.

In the two decades Mary-Ann Verkuyl worked at the GM plant in St. Catharines, Ont., she was laid off several times — a month here, 13 weeks there. In 2003, Mary-Ann and her husband, Ron, who worked at GM for 18 years, were laid off at the same time. Luckily, they and their two children could get by on unemployment benefits until Ron went back to work eight months later. But when Mary-Ann returned to the plant in June 2006, after a three-year layoff, only to be let go again in September, she knew this time was different. She decided not to just wait to be called back: she went back to school through a provincial government program and trained as a personal support worker. “I think we all thought after 20 years we were safe,” Mary-Ann says now, “but I guess we never are.”

With 400,000 positions lost in Canada between October 2008 — when employment peaked — and October 2009, many Canadians are wondering if they will be able to hold on to their jobs and, if not, how hard it’s going to be to find another one. Employment grew every month from August to November last year, but just as the losses were concentrated in certain sectors, some industries will be faster to respond to the recovery. And other sectors may continue to shrink.

The manufacturing industry has seen the largest decline during the recession — 218,000 jobs eliminated. Some jobs that were lost during the downturn appear to gone for good. Downsizing in manufacturing is not new, of course. Since the dollar began to rise in 2002, demand for exports has fallen. But the recession rapidly accelerated this trend — according to Statistics Canada, a third of the 573,000 jobs lost in manufacturing since 2002 were wiped out in the 12 months after October 2008.

The construction industry also suffered during the downturn, but it has enjoyed a strong recovery. Beata Caranci, TD’s director of economic forecasting, says the housing sector has shown more strength than in previous recessions, but she expects a loss of momentum in housing and construction in the second half of next year.

The concentration of job losses in male-dominated industries has led some economists to call the downturn a “he-cession.” But that trend is waning: cyclical industries that employ mostly men, such as manufacturing and construction, tend to respond quickly to recoveries. And men weren’t the only hard-hit demographic. Job losses were concentrated among youth, which is characteristic of recessions. Less typical is the large number of people in the prime ages of 26 to 54 who lost their jobs. Job losses also affected some areas more than others during the downturn — in particular Ontario and British Columbia, where manufacturing and forestry were hit by the more severe downturn in the United States. The good news, Caranci says, is that the export sectors are typically the first to gain momentum once recoveries take hold.

The economy created 79,000 jobs in November — the fourth consecutive month of job creation and the first month since the downturn that the private sector showed growth. In November, unemployment fell to 8.5% from 8.6%, where it held in December. “This is a clear sign that the labour market has turned around,” said Avery Shenfeld, chief economist at CIBC World Markets. But he cautions that the recovery could be slow. (Indeed, December saw modest job losses across the country.) If the economy produces jobs at a rate of 25,000 a month, like it did from August to November, unemployment would decline by only 0.1% per quarter. And in some cases, the jobs just are not coming back. Even though manufacturing has begun to create employment again, Caranci thinks that as government stimulus money tapers off, the high dollar and weakness in the U.S. economy will take a toll. “I wouldn’t hang my hat on that sector doing very well in 2010,” she said.

Neither would Mary-Ann Verkuyl. With her training as a support worker, she has a job with Pro Wellness Health Services. She loves the work, but it pays less than GM, and she doesn’t get benefits. So she would go back to the plant if she were recalled — with a son in college and a daughter in university, she could use the money. But she isn’t counting on it happening. “We have recovered, but not fully,” says Mary-Ann. “Like sleep, you can never catch up on paycheques missed. We live according to our new income. That is the beauty of being human: we can always keep going.”