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Does more self-employment mean decline in job quality?
BY DEREK ABMA, FINANCIAL POST JANUARY 25, 2012
Having a job ain't what it used to be, but is that such a bad thing?
You might think so, looking at the latest report on "employment quality" from Benjamin Tal, deputy chief economist for CIBC World Markets.
It says the quality of employment in Canada has worsened, based largely on the fact that much of the recent growth in jobs has involved self-employment and lower-paying positions.
"From a quality perspective, the surge in self-employment reduces the overall quality of employment, largely due to the fact that, on average, a self-employed person earns 10 per cent to 15 per cent less than a regular employee," the report said.
The CIBC report noted that self-employment grew by two per cent last year, double the pace of staff employment. Statistics Canada's last jobs report, for December, showed overall employment grew by 17,500, but it was entirely due to the additional 31,100 self-employed people making up for the decline of 13,600 working for others.
But Tal acknowledged in an interview that deeming self-employment as "lower quality" is based strictly on financial considerations, and for some people, it's actually a better fit.
That seems to be the case for Montreal's Cindy Fagen, 42, who voluntarily left her job with software development firm Dassault Systemes in 2008 because of personal reasons. She started her own website, The Kid Scoop, meant for parents in Montreal and Toronto seeking activities for their kids.
"I was just coming back from maternity leave, and the positions that were available to me in my return to work were not as interesting and as challenging as what I had left," she said.
Fagen said she's taken a pay cut beyond the 10 to 15 per cent cited in the CIBC report, not to mention losing perks and benefits. But she added that, for her, there's more to consider when assessing the quality of employment.
"For me, the quality of job also meant satisfaction at work (and) the schedule," she said. "With young children, I was able to work autonomously and independently. That's not for everybody, but it fit my profile."
Tal acknowledged that many people become self-employed by choice, but he added that others have been forced into this role because of tough job-market conditions.
Data from Statistics Canada shows that employment in the country grew by more than 180,000 people last year, but most of that growth was in the first half of 2011 and employment actually fell by 55,000 in the last quarter.
Tal added that the decline in employment quality is long-term and has been ongoing for about 20 years.
"That's not a big surprise, given the shift away from manufacturing toward service-oriented stuff," Tal said, adding that the movement of higher-paying factory jobs to lower-paying countries like China and India are a big part of the story.
The report also said growth of full-time jobs considered "high-paying" was only 0.4 per cent last year, which was a quarter the rate of growth in "low-paying" full-time jobs. Tal said this is because new jobs tend to be in lower-paying sectors such as accommodation, restaurants and personal care, and less in more lucrative areas such as chemical and high-tech manufacturing, public administration and mining.
But he added that a turnaround is likely about seven or eight years from now as an exodus of retiring baby boomers from the workforce leads to labour shortages. This will essentially shift the job market in Canada toward being a seller's market.
"I expect a huge increase in quality (of employment) because I think there will be a shortage of (workers) in this country," he said. "We are at the end term of this process of (lower employment quality)."
Tal added that the high-quality jobs that become available in the future will require much skill, and he predicted multi-task, highly technical manufacturing positions will be among those needing to be filled, as well as various other specialties in areas such as computing, software design and engineering.
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