Labour Market Adjustment Issues In Canada

Essays on labour market adjustment to structural change and technological change in Canada - examines the role of education and training in view of changing skill requirements; considers the effects on employment and wages; comments on the role of labour legislation, trade unions and collective bargaining in dealing with layoffs, redundancy and plant shutdown. References, statistical tables.

Changes in traditional patterns and structures of work, along with traditional notions of employment security, create pressures on both managers and workers to adapt to new forces for change, and to adjust to evolving workplace realities. This report is the outcome of over a year of joint business and labour research and consultation on that challenge to adjust, particularly as it applies to the changing relationship of human resources to economic activity. The primary focus is on the roles, practices, and interactions of public and private employers and labour, as the principal labour market players in adjustment, with special emphasis on the sectoral and workplace levels. In addition, the role of governments in establishing public policy relating to adjustment and/or in facilitating adjustment is considered, along with the practices of governments as employers in providing instructive models of adjustment. Innovative responses to change are illustrated with reference to case studies.

The paper assesses the labour market adjustment experiences of Canadian workers who were permanently laid off between 1981 and 1984. Such lay-offs could be due to structural or cyclical causes. Data from a special survey are used to answer a number of questions. What types of workers were most likely to experience job loss and in which industries or occupations did they work? What happened to these workers when their jobs were abolished? Did they adjust relatively quickly and successfully, finding new jobs in a short time at the same income level? Or did a significant number spend long periods seeking new jobs and undergo large pay cuts? How many turned to retraining or relocation in an attempt to find a new job? Were there major movements among industrial sectors in the process (say from manufacturing to services), and how did workers who made such a transition fare? Circumstances varied tremendously from one worker to another. Nearly one-quarter of the workers who found new jobs did so within three weeks, while 10% took more than one year. Of those finding new jobs, 55% found jobs paying higher wages, 45% took pay cuts in their new jobs. On the whole, however, these permanently laid off workers fared poorly compared to the rest of the labour force. Their unemployment rate in January, 1986 (the time of the survey) was 25%, more than double the national average. Even among workers with considerable experience in the lost job (3 years or more), the unemployment rate was 24%.

Economic and social factors are creating changes in Ontario's labour market, changes which have implications for the mix of jobs available to workers, for the skills and levels of training they receive, and for the ability of employers to recruit qualified workers. This review highlights recent changes in Ontario's labour market which have ramifications for the province's economic growth, including labour supply and demand, global trends, and labour markets for high-skill technical occupations. Labour supply and demand trends are provided for 1960 to 1996 in terms of the province's economic context.

This paper provides a quantitative assessment of the relative importance of different labor market adjustment mechanisms in Canada and the United States and also examines the effects of the unemployment insurance (UI) system on labor market adjustment. At the aggregate level, employment growth shocks result in similar unemployment rate responses but smaller wage responses in Canada relative to the United States. Although overall UI generosity has increased aggregate unemployment persistence in Canada, the endogenous component of UI has affected unemployment persistence only marginally. The lower degree of aggregate real wage flexibility in Canada has not been an important determinant of unemployment persistence.