Jan 28, 2008

OTTAWA - The Canadian economy created an abundance of high-paying,
high-quality jobs last year to offset the loss in the battered
manufacturing sector, says a new study by the Canadian Imperial Bank of
Commerce.

The bank said Monday that the economy created an
impressive 400,000 new jobs last year and “the vast majority of them
were in high-paying sectors.”

This is in contrast to the bad news
coming out of the manufacturing sector, which shed about 130,000 jobs
in 2007, and in contrast to what is happening in the United States.

The
bank said its employment quality index, which combines part-time and
full-time jobs, as well as self-employment, rose by 2.8 per cent last
year - the largest increase since 1999 - whereas it dropped 1.9 per
cent in the U.S.

“It seems that in Canada the loss of
manufacturing jobs is being offset by job gains in sectors with
equivalent and higher employment quality,” said the bank.

“That’s
not the case in the U.S., where the jobs now being lost in sectors such
as construction/real estate and manufacturing are being replaced by
lower quality jobs.”

The credit for making up the losses in
manufacturing goes mostly to a 3.6 per cent increase in the number of
full-time employees in high-paying sectors such as oil and gas
extraction, the public service and computer services.

As would be
expected, Alberta and Saskatchewan led the way in job gains in the
energy industries, where earnings run 50 to 125 per cent higher than
the industrial average.

Meanwhile, jobs in low-paying industries such as general merchandise stores, textiles and furniture-making dropped 1.2 per cent.

“The
combination of rising employment and improving quality is a sure recipe
for rising personal income, which as of the third quarter of 2007, rose
by more than six per cent (over 2006),” the report states.

There
were some negative trends in the index, including that self-employment
rose three times faster than paid employment last year. Typically,
self-employed workers earn about 80 per cent of the average of
full-time paid employees.

And the bank said it expects the
quality index to decline somewhat in the first half of 2008 as the
slowing economy pushes more individuals into the self-employment
sector, and into part-time jobs.

The bank added that it is
unlikely the public sector, including health care and education, will
continue to create jobs at the high rate those sectors managed in 2007.

For
years, the Canadian economy has benefited from strong growth in the
energy sector and agriculture industries in Western Canada as well as
homebuilding and related sectors across the country. That has helped
offset losses in the restructuring auto industry and manufacturing
sector, centred in Ontario and Quebec.

Critics of government
industrial policies have called for more strategic investments for
manufacturing and revamped trade policy to increase exports to foreign
markets, especially auto sales to South Korea and other Asian markets.

However,
the federal government argues that troubled manufacturers are being
hurt by a high Canadian dollar and are part of a global restructuring
of blue-collar industres, with jobs shifting to low-wage countries in
Asia and Latin America.

Moreover, Finance Minister Jim Flaherty
has said Ottawa’s cuts to corporate, personal and the GST will help
Canadian companies become more competitive and attract new investment.

At
a business conference Monday in Toronto, Flaherty said Canada’s
economic fundamentals remain strong despite a slowing job market.

“The
consensus is that 2008 is shaping up to be a tough year,” he told a
conference on corporate takeovers. “There has been significant
turbulence in the capital markets, not only here in Canada but abroad,
growth projections globally are being adjusted downward, but I can tell
you this: when they (economists and forecasters) look at our Canada,
they are amazed at how right we are in terms of our economic
fundamentals, and how favourably we compare in fact with our large
neighbour to the south”.

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