April 18, 2008

TD report examines loss of manufacturing jobs and consequences for Canada

OTTAWA

Canada is losing tens of thousands of its best and most productive workers in the manufacturing slump caused by stiff foreign competition, the high dollar and the U.S. recession, says a new bank report.

The Toronto-Dominion Bank estimates Canada lost 130,000 factory jobs in 2007 and will likely lose more this year as conditions worsen for manufacturers, particularly in Ontario and Quebec.

“In short, we are losing many of the high-quality, high-productivity jobs in manufacturing, not just the jobs in low-productivity industries,” writes Beata Caranci, the bank’s director of forecasting.

Prime Minister Stephen Harper and Finance Minister Jim Flaherty have often noted that Canada’s strong job market has fortunately been able to replace those lost manufacturing jobs by strength in other areas of the economy.

But TD’s nine-page report disputes the notion that these jobs are of the lower-end variety that would be lost to cheap-labour economies like China and India in any case, or that laid-off workers find comparable jobs elsewhere.

While many have found new jobs in the growing services sector, TD’s report says on average the displaced workers wind up making about 25 per cent, or about $10,000 a year, less than what they were earning before.

The report found that 55 per cent of the 212,000 jobs lost in the sector in the past five years have been unionized, which tend to be higher paying and more productive.

“It’s been an unfortunate set of circumstances. The auto sector for instance is facing a lot of global competitive pressure and slowing U.S. demand and that’s been made worse by the fact we have a high Canadian dollar,” said Caranci in an interview.

“Those conditions are worsening, so it’s going to get worse as the year goes on,” she added.

Canadian Auto Workers economist Jim Stanford said the report confirms what the union and others have been saying for years.

Stanford added that the findings should send government alarms ringing because the manufacturing slump will eventually be felt in other sectors of the economy.

“We’ve lost 400,000 jobs since the peak in 2002, and we’ll see another 400,000 losses in the next few years if the U.S. has a recession and the dollar stays high,” he said, noting that his estimate of job losses is higher than the TD Bank’s.

“The reason we’ve had more jobs created than lost is consumer spending and construction has continued growing while the export side has been contracting, and that dichotomy can’t last forever,” Stanford said.

Canadian Press

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