Category: Talent Acquisition Strategy

Canada’s unemployment held steady in December as job creation neared market expectations following a large increase in hiring November. Statistics Canada reported that the Canadian economy added 9,300 jobs last month. Market expectations were for an increase in employment of 10,000, according to economists at Royal Bank of Canada. In November,  Canadian employment rose by 94,100, so the jobs added in December are a steep decline from the previous month. Canada’s unemployment rate was 5.6% in December, unchanged from November when it fell to its lowest level in more than 40 years.

The Numbers

9,300: The economy gained 9,300 jobs in December.

5.6%: The unemployment rate remained at  5.6%.

1.8%: Weekly wages increased to 1.8% over the last year. This is a 0.3% increase from November’s wage growth figure.

The Good

In 2018, employment increased by 163,000 or 0.9%. In 2018, the unemployment rate fell 0.2 percentage points to 5.6%. Full-time employment continued on an upward trend in 2018, growing by 185,000 or 1.2%, while part-time employment barely changed.There were some job gains in important sectors in the Canadian economy in December including transportation and warehousing; healthcare and social assistance as well as manufacturing. 

Manufacturing added 23,900 jobs which is an increase of 1.4% in a one month period.

The year had notable gains for Canadian women and older male workers. Among the core-working-age population (aged 25 to 54), employment in 2018 increased notably for women (+126,000 or +2.2%) and for men (+61,000 or +1.0%). At year end, the unemployment rate among this age group was 4.6% for women and 4.8% for men. For men and women aged 55 and over, employment rose by 50,000 (+1.2%) in 2018, with most of the increase among men (+43,000 or +2.0%), whose unemployment rate fell 0.8 percentage points to 5.3% over the period. For women in this age group, employment was little changed but remained strong, with their unemployment rate at 4.6%.

The Bad

The 0.9 per cent jobs growth rate in 2018 shows that the rate of growth has slowed compared with 2017 (+2.3 per cent) and 2016 (+1.2 per cent). Lackluster wage growth continues to be a concern and even a mystery as The Financial Times notes:

“Overall, average hourly wages increased two per cent in December from a year earlier, lifting the five-month trend to about 2.2 per cent. So, after several years of good-to-great aggregate employment growth, wages are only keeping pace with inflation. That’s as odd as it is disappointing.

Before this year, the jobless rate rarely fell below six per cent. Now it’s the ceiling. The unemployment rate was 5.6 per cent in November and December, the lowest in data that dates to 1976, and it has brushed six per cent only twice since November 2017.

With hiring at levels that economists associate with full employment, you’d expect stronger upward pressure on salaries. But for whatever reason, that’s not happening.”

The Unknown

Some experts consider early 2019 to be the late stages of a positive economic cycle for Canada, setting off speculation on when the next recession will start and generating concern in provinces like Alberta which have experienced recent economic difficulties:

“‘We are in the late stages of a business cycle,’ Craig Alexander, chief economist of Deloitte said. ‘That doesn’t mean that a recession is around the corner, but we need to recognize that we’re 10 years into an economic recovery, expansion. Business cycles are typically eight to 10 years long.’

Alexander said markets are probably overreacting to the possibility that another downturn could be almost upon us. He thinks the more likely case is that growth will continue to slow.

The economy’s evolution will have different impacts depending where one lives, he added.

For example, the energy sector faces big challenges.

Part of it comes from the recent plunge in oil prices, but there’s also been an extra discount on the price of western Canadian crude caused by transportation bottlenecks out of the Alberta oilpatch.

‘This is sad news for Alberta,’ Alexander said. ‘They’ve only barely recovered from the last recession.’”

The Labor Department released its December 2018 Jobs Report which shows that U.S. employers added 312,000 jobs in December. The unemployment rate increased to 3.9 percent last month. Year-over-year wage growth increased to a 3.2 percent pace as the best rate since 2008. U.S. employers have added to payrolls for 99 straight months, extending the longest continuous jobs expansion on record.

The Numbers

312,000: The economy added 312,000 jobs in December.

3.9%: The unemployment increased to 3.9 percent.

3.2%: Wages increased 3.2 percent over the last year.

The Good

The 312,000 jobs added greatly beat analyst expectations. After revisions to the October and November data, the U.S. added a net 2.64 million payrolls in 2018, the best year for job growth since 2015. Wages, which had been slowing rising for much of 2018, have begun to pick up more quickly. December’s year-over-year increase hit 3.2 percent. While the unemployment rate increased to a five-month high, it is not a cause for concern because the participation rate stands at 63.1 percent and is the highest since September 2017. Reaction to the report has been overwhelmingly positive. As one Bloomberg economist noted:

“This is the strongest employment report of this economic cycle – hands down. While we’ve seen greater job gains in some months, the plus-300,000 number along with another increase in average hourly earnings clearly signals that the economic expansion ended 2018 on strong footing. Perhaps most surprising was the two-tenths rise in the unemployment rate due to an increase in participation. It’s one month of data, but talk of the Fed cutting rates in the near future should be off the table for now.”— Tim Mahedy, Bloomberg Economics

The New York Times reported even more jubilant reaction:

“It’s an unequivocally phenomenal report all the way around,” said Ellen Zentner, chief United States economist at Morgan Stanley. “Anyone that finds something negative in this report is simply cherry picking.”

Economists offered raves that could appear on a movie poster or a book jacket — “Extraordinary!” “Blowout,” “Wow!” The figures, they said, offer a resounding response to the question of whether a recession is imminent: “Never mind!” said David Berson, chief economist of Nationwide. “The fears of the economy tipping into a recession now have clearly been overstated.”

The Bad

While there may be no notable negative points in the jobs report, the U-6, or underemployment rate, was unchanged last month at 7.6 percent. This measure includes part-time workers who want a full-time job and people who are less active in seeking work. This is a possible indication that companies that are contending with a tight talent pool may not be reaching the right part-time workers who would prefer to onboard as full-time workers.

A challenge for employers may be an emerging trend of offering part-time workers the same benefits as full-time employees. Receiving “full-time” benefits can also remove an incentive to look for full-time work.  As the Seattle Times reports:

“Almost half of the 391 companies surveyed by the International Foundation of Employee Benefit Plans now offer the same health insurance coverage for all employees. About a third offer paid maternity or parental leave to their part-time workers, too, the survey found.”

The Unknown

The tight labor market may increase pressure to allow greater immigration to the U.S. or to find a solution that will allow foreign workers to fill the gaps in the country’s workforce. Like the US, Japan is facing a declining birthrate and an aging population which has led to recently passed legislation aimed at attracting foreign workers:

“Japanese lawmakers have passed controversial legislation expanding the number of semi-skilled foreign workers who can live and work in the notably insular nation for up to five years.
Japan has been pressed to make the change because of a critical labor shortage that results from its rapidly aging society and low birth rate.

Japan’s upper house of parliament passed the law 161 to 76 just after 4 a.m. Saturday local time, after a day when the opposition parties tried to unsuccessfully to block the measure.

The law will go into effect in April 2019.

The legislation has been viewed as a last-resort measure by Prime Minister Shinzo Abe’s ultra-conservative government to address a severe shortage of workers in 14 industries, including restaurants, nursing, construction and agriculture.”

If you are inclined to celebrate and have a few friends over when the UK labour market report is filled with positive news, then, by all means, start icing the champagne. December’s report published by the Office for National Statistics includes the following details:

• Wages continued to rise at their highest level in nearly a decade.
• The number of people working in the UK rose by 79,000 to 32.48 million. That is the highest figure since records began in 1971.
• The unemployment rate was 4.1 per cent, virtually unchanged compared with May to July 2018 and lower than the estimate for a year earlier (4.3 per cent).

Rising Wages: The Missing Part of the Recovery. Until Now.

Wages are growing ahead of the rate of inflation and it is thought that this rise is pay is due to the tight job market. As the Financial Times reports:
“The rise in salaries is also beginning to overcome significant increases in prices. Real regular pay, which takes into account inflation, was up 1.1 per cent in the October period — a level not seen since late 2016.

‘While Brexit uncertainty and political paralysis are having a cooling effect on the wider economy, the labour market is proving more resilient,’ said Stephen Clarke, senior economic analyst at the Resolution Foundation.

‘Britain’s tightening jobs market is delivering stronger pay rises, particularly for workers in ICT (information and communication technology), hospitality, and real estate,’ he said. ‘2019 looks set to be a far better year for pay than this one.’

Real pay growth has, until recently, been the missing part of the UK’s post-crisis recovery. While unemployment fell and employment rose, pay growth remained stubbornly low and, in real terms, median pay packets are still worth less than they were in 2008.”

The December ONS report notes that for October 2018 average regular pay (excluding bonuses), before tax and other deductions from pay, for employees in Great Britain was £495 per week in nominal terms (that is, not adjusted for price inflation), up from £479 per week for a year earlier. This would be £1,916 in a four week month. This is certainly welcome news for Britain’s workers. But while wages are rising faster than inflation, it is not clear that they are keeping up with key elements of the cost of living. For example, the average cost of renting a home in Britain per month was £1,212 in November or nearly two thirds of the average wage earner’s monthly salary.

Historic Employment Figures: A Challenge for Employers

While the number of people working in Britain rose to a record high, unemployment also increased by 20,000 to 1.38 million. The ONS report notes that “The reason both employment and unemployment have increased is a result of the UK’s rising population and more people joining the labour force, such as students and older people.”

The challenges presented by a tight labour market is a cause for concern for UK employers:

Suren Thiru, head of economics at the British Chambers of Commerce, commented, “Businesses report that the political and economic turbulence, together with significant difficulties finding the right staff, are diminishing recruitment intentions, which is likely to increasingly weigh on the UK labour market over the near term. More must be done to support firms looking to recruit.”

The lack of available workers is compounded by a skills shortage in the UK, particularly in the technology sector as The Times reports:

“The technology industry fears that a skills shortage could stunt its growth, with new figures showing that job vacancies are growing.

The number of unfilled positions in the information and communication technology sector last quarter rose by 24.3 per cent compared with a year ago, according to data from the Office for National Statistics, one of the largest increases of any industry.

The ratio of jobseekers with previous employment in the industry to relevant jobs has dropped below one, meaning that there are more vacancies than people looking to fill them.”

Brexit Uncertainties: The Unwelcome Guest that Just Won’t Leave

No matter how good a jobs report may be, uncertainty over Brexit continues to cast a shadow over any positive economic news:

“Leaving the EU is likely to disrupt many sectors of the UK economy, including those that rely heavily on European workers. The magnitude of the disruption will depend on the details of the final Brexit agreement, which is making its way through a tortuous political process leading up to the March 29 deadline. In the longer term, the trading relationship between the UK and the EU after the Brexit transition period will be crucial. Will trade continue to be nearly frictionless or will it suffer economic and administrative barriers? Will migration policy support or hinder growth? The answers to those questions will determine the extent to which Brexit affects the economy’s productivity and thus the living standards of UK residents.

Hiring challenges. Low unemployment, falling migration and uncertainty about post-Brexit migration policy mean that businesses in many sectors are finding it increasingly difficult to hire staff. To recruit the workers they need, will employers tap more into under-utilised demographic groups? Young people, single parents, minorities and people with disabilities are less likely than average to be part of the labour force and their unemployment rates are above average. Whether employers manage to attract those groups into employment through higher wages or benefits — or whether they respond to hiring difficulties in other ways, like investing in automation — is a trend to watch in 2019.”

So by all means, open up that bottle of champagne. The ONS report provides plenty of good reasons to celebrate. Just be aware that there are many sobering details that must be dealt with after the celebration ends.

Canada’s unemployment rate fell to 5.6 per cent, the lowest level since 1976. Canada added 94,100 net jobs for its largest monthly increase since March 2012, Statistics Canada said in its most recent labour force survey. But even with healthy job growth, wage gains appear to be slowing. Both hourly and weekly wage growth rates have been dropping since May and are below the rate of inflation.

The Numbers

94,100: The economy gained 94,100 jobs in November.

5.6%: The unemployment rate fell to 5.6 per cent.

1.5%: Weekly wage increases are 1.5 per cent over the last year. This is a 0.3 per cent decrease from October’s wage growth figure.

The Good

The 94,100 jobs gained in November were fueled by 89,900 new full-time positions and 78,600 employee jobs in the private sector. Employment among the core age group (those aged 25 to 54) was up 49,000 in November, the result of increases for both women (+32,000) and men (+17,000). The unemployment rate fell by 0.4 percentage points to 4.6 per cent for core-aged women, and by 0.2 percentage points to 4.7 per cent for core-aged men. In the 12 months to November, employment within this age group rose by 208,000 (+1.7 per cent), largely the result of gains for women (+129,000). In the 12 months leading up to November, employment grew by 219,000 or 1.2 per cent.
Employment was up in six provinces including Quebec with 26,000; Alberta with 24,000; Ontario with 20,000; British Columbia with 16,000; 5,500 in Saskatchewan and 2,600 in Manitoba. On a year-over-year basis, the number of private sector employees rose by 146,000 (+1.2 per cent), while the number of public sector employees grew by 48,000 (+1.3 per cent).

The Bad

Average weekly wage growth fell to just 1.5 per cent and hourly wage growth slowed as well as the CTV reports:
“Year-over-year average hourly wage growth for permanent employees continued its decline in November to 1.46 per cent — its lowest reading since July 2017.
‘There’s no question that the headline job growth is gangbusters strong,’ said Frances Donald, head of macroeconomic strategy at Manulife Asset Management
‘I would caution us against celebrating too quickly, however, because wage growth is decelerating sharply.’”
Experts have been expecting wage growth to pick up its pace, thanks to the tightened labour market. But the opposite has been happening — wage growth has dropped every month since its May peak of 3.9 per cent and now sits well below inflation.
Employment declined in information, culture and recreation (-10,000 or -1.3 per cent), continuing the downward trend that started in August. The decrease was driven by Ontario. Compared with 12 months earlier, employment in this industry was down by 25,000 (-3.2 per cent) at the national level.

The Unknown

The Financial Times reports that the digital economy has created a demand for 216,000 more tech workers, according to a new study. However, it is unclear whether there are enough available workers in Canada to meet this demand:
“Blockchain, artificial intelligence, 5G mobile networks, 3D printing and virtual reality are creating a need for digital skills that will see a demand for an estimated 216,000 additional technology workers by 2021, according to a new report.
A study by the Information and Communications Technology Council (ICTC), found that employment of information and communications technology professionals outpaced the economy last year six-to-one.
‘What’s happening now is we are seeing fast-paced industries go from low growth to high growth,’ said Namir Anani, president and chief executive of ICTC.
‘We have to look at how do we reposition the workforce rapidly through short-duration training to provide pathways and mobility to get into fast-growth sectors of the Canadian economy that are increasingly becoming digital.’
As more industries recognize the importance of a digital strategy, competition for tech workers has increased. ICTC highlighted transportation, retail, healthcare, finance and manufacturing as sectors where demand is ramping up.
‘The environment is changing fast and every sector is seeing its own disruption,’ Anani said.
‘We have to reflect as a country on how do we leverage (disruption) and what are the transitional strategies we have to build to move some of the displaced workers from low-growth to high-growth areas of the economy.’
There was a five per cent increase in employment for digitally skilled workers in 2017, the highest growth in 10 years, according to ICTC’s report. Meanwhile, 60 per cent of Canada’s tech workers were now spread across non-tech sectors.
Not only are Canadian companies struggling to find enough digitally skilled workers to fill positions in the present, but the largest group of tech workers is already approaching retirement, with 13.1 per cent being between the ages of 55 to 64. ICTC’s research was conducted with the support of Microsoft Canada.
‘The issue is really about supply and demand. The demand is increasing as more sectors are adopting digital technologies and the supply of talent and skills is a challenge,’ said Navdeep Bains, the federal Minister of Innovation, Science and Economic Development.
‘When we put forward our Innovation and Skills Plan, by far this was the number one issue — around training and people having the right skills to succeed today and for the job tomorrow.’”

The Labor Department released its November Jobs Report which shows 155,000 jobs added to the U.S. economy. The pace of hiring slowed while the unemployment rate remained at 3.7 percent, which is the lowest point since 1969. The participation rate also remained unchanged at 62.9 percent. U.S. employers have added to payrolls for 98 straight months, extending the longest continuous jobs expansion on record.

The Numbers

155,000: The economy added 155,000 jobs in November.

3.7%: The unemployment remained to 3.7 percent.

3.1%: Wages increased 3.1 percent over the last year.

The Good

The 155,000 jobs added to the economy in November adds to an unprecedented run of continuous growth. 2018 is shaping up to be a year of impressive expansion given the 12 month job growth in key sectors of the American economy: Healthcare employment has increased by 328,000; Manufacturing has grown by 288,000 and Business and Professional Services has expanded by 561,000 jobs.
The annual wage gain is also a sign that the economy is continuing to grow, but at a more measured pace than earlier in the year. As the New York Times reported:
“It’s obviously an economy that is well in expansion mode but that is coming off the boil after a strong second and third quarter,” said David Donabedian, chief investment officer of CIBC Private Wealth Management. “So the state of the job market is good. It’s just that the pace of job creation is slowing a little bit.”
Yearly wage growth remained at 3.1 percent for the second month in a row, a level not seen since the recession. “If you have solid wage growth while productivity is improving, that is the best of both worlds,” Mr. Donabedian said.

The Bad

The 155,000 jobs added in November fell below analyst expectations. The slowing pace of hiring is perceived to be caused by the inability of employers to find the right workers to fill their open positions. This appears to be the case in many parts of the economy, including those with some of the highest job gains this year such as healthcare. The Wall Street Journal reported on one such business in the high-demand area of elder care:
“The modest job-growth slowdown could be a sign of slightly softer demand for goods and services by consumers. For some companies, hiring also might be slowing because they can’t find the workers they need because unemployment is so low.”
That was the case for Home Instead Senior Care, an Omaha, Neb.-based in-home care provider, said its Chief Executive Jeff Huber. The company employs about 65,000 U.S. caregivers through its franchises, a 23 percent increase from three years ago.
“We could grow even more robustly if the labor market weren’t so tight,” Mr. Huber said. “The competitive job market is really restricting on our growth. There’s just tremendous demand for caregivers.”
Labor costs for the company, including wages and benefits, have risen about 20 percent annually in recent years, he said, but revenue is also growing robustly. The company is offering more training and flexible schedules to attract and retain employees, and recruiting older workers who have finished careers but aren’t ready to fully retire. A third of caregivers are older than 60, Mr. Huber said.

The Unknown

The recent announcement that General Motors would be laying off nearly 14,000 workers raises the question of whether these newly available workers would have the skills required to find new work, even in the current labor market in which job seekers are highly favored. This point was underscored by General Motors CEO Mary Barra:
“As Barra announced the cutbacks, she also said GM plans to acquire “skillsets of the future” by hiring in software development, battery and fuel cell technology and autonomous vehicle development,” The Detroit News reported. “You will see us having new employees join the company as others are leaving,” she said. “We still need many technical resources across the company.”