Austerity Bites? Public-Sector Implosion Hits Canada’s Job Market

Statistics Canada reported a loss of 39,000 jobs in July, even as Canada’s working-age population grew by 39,000. As a result, unemployment rose and many Canadians withdrew from the labour market altogether.

The decline reflected a loss of 74,000 public-sector jobs, which was only partly offset by modest growth in private-sector employment and self-employment. There have been some doubts about erratic employment changes in educational services reported by the Labour Force Survey during summer months. However, July’s public-sector plummet was driven more by healthcare, social assistance and public administration than by educational services.

One month does not make a trend, but an obvious question is to what extent July’s Labour Force Survey reflects government cutbacks. Austerity has clearly had a negative effect on employment prospects, but did it take such a large bite out of Canada’s job market in a single month?

Erin Weir is an economist with the United Steelworkers union and a CCPA research associate.

UPDATE (August 13): I was interviewed on CBC Toronto’s Metro Morning yesterday about why Canadian unemployment is worse than the official rate of 7.2%. The supplementary measures of unemployment that I mentioned are available on Statistics Canada’s website.

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