Workplace Challenges
Ontario job-market in disarrayIn March and April 2009, the Jobboom Index in Ontario, a monthly forecast of the job market’s strength, hit rock bottom. Is there any light at the end of the tunnel for Ontario’s job seekers? Yves Schaëffner |
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 [ 2009-04-14 ] |
Experts say there is, but the economic downturn in the United States may keep them in the dark for quite some time.
“It’s the first time in the history of the Index that we have seen this kind of situation,” admits Patricia Richard, Director of Content, National, for Jobboom.
What went wrong? In March, Ontario’s Jobboom Index that launched in April 2002 fell to zero. This is uncharted territory for this job market barometer.
“This means that the employment situation in Ontario has never been this bad,” says Richard. “The job creation market is at its lowest in ten years.” In February, Statistics Canada calculated Ontario’s unemployment at 8.7 per cent, its highest since 1997. The province’s jobless rate has even surpassed that of Quebec’s for the first time in at least 30 years.
A downturn linked to the U.S.A.
Why has the Ontario economy hit the skids? The severe downturn in the United States, the automobile industry’s crisis and the general decline of the manufacturing sector are the main culprits behind Ontario’s economic nose-dive. In the last four years, the province has lost one-quarter of its manufacturing jobs– a drop of 272,000. And since 2002, this sector’s share of employment has fallen from 18.2 per cent to roughly 13 per cent in Ontario alone.
“The worst hit area seems to be southwestern Ontario, around Windsor and St. Catharines where a lot of the manufacturing plants for the automobile industry are located,” says Peter Dungan, professor at the Rotman School of Management at the University of Toronto.
Forestry, the mainstay of the north, is equally suffering, and commodity demands in mining have also been hit by the global downturn. The rise of the Canadian dollar last year hasn’t helped Ontario’s exports, the professor adds.
Even though Ontario’s economy is in disarray, Mr. Dungan believes in the possibility of a “fair rebound” in 2010. “But that of course is contingent upon there being at least some kind of recovery in the United States and no one knows for sure,” he says.
Will the Obama stimulus work? Will the American automobile sector turn around? Many questions still need to be answered. The “good news” is that after being in recession for 17 months—the longest period since 1929’s depression—it’s hard to imagine that the US economy will fall much further. Since the United States is Ontario’s largest trading partner—many look for a rise in American consumer confidence as a potential spark for exports down the road.
Paul Ferley, Assistant Chief Economist at the Royal Bank of Canada, expects a rebound in the second half of this year. “Even if we think that Canadian and Ontarian economies will go into recession, we are not assuming that the downturn will be as pronounced as it is in the US,” he explains. This partly comes down to Canada’s banks having tighter regulation and being more risk averse.
But he does not expect a rapid turnaround. “The pace of decline should start easing and eventually by the second half of the year Ontario should return to positive growth.” Some brave experts are already speaking of a market bottom.
Toronto hasn’t been immune to the economic downturn either. Toronto-Dominion Bank economists has warned recently that the city’s unemployment could jump to 9.5 per cent this year from 7.8 per cent, with an expected 75,000 jobs to disappear within the Greater Toronto Area (GTA). Ontario’s export-dependent manufacturing sector will particularly suffer, and the Conference Board of Canada also predicts the economic decline will cause job losses in Toronto’s construction and service sectors.
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