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OTTAWA — Canadians should expected more “substantial job losses” this year, Finance Minister Jim Flaherty said Friday after Statistics Canada reported the economy shed 34,400 in December.
Last month’s employment contraction pushed the country’s unemployment rate up three-tenths of a point to 6.6 per cent, and was larger than the consensus forecast of 20,000 losses.
The losses included a 70,700 drop in full-time employment, about the same number who lost their jobs — part time and full time — in November. Only a gain of 36,200 part-time jobs kept December from replicating the previous month’s losses, which were the deepest since 1982.
“We’re in for a difficult year,” Flaherty said at a press conference in Thornhill, north of Toronto.
“We regrettably are going to have to expect continuing job losses in Canada. We are going to have substantial job losses (this year).”
Flaherty said the government will need to respond to the needs of people who are laid off in the upcoming Jan. 27 “to help Canadians get through a difficult year,” and suggested Ottawa is likely to expand job training and work sharing measures.
The minister, who was in Thornhill for a pre-budget consultation, said he has been listening to Canadians about what the budget should include, naming infrastructure spending and tax cuts as the two most often-heard recommendations he has received.
But he pointed out that Canada was better positioned to respond to the recession that many others, including the U.S., given Ottawa’s sound fiscal position and the relative strength of the economy.
Canada’s job losses pale in comparison to the carnage in the U.S., which lost another 524,000 jobs in December for a total of 2.6 million for the year.
But given that Canada’s labour contraction has come in the past two months, the time for boasting is over, said Derek Holt, vice-president of economics at Scotia Capital.
“One hundred thousand jobs have been lost in only two months, which now almost fully reverses the large late summer employment gains, and puts Canadian job losses proportionately more in line with the U.S. experience,” he noted.
“The hit to pay will be worse than the body count, since 71,000 full-time jobs were lost while reduced hours drove a 36,000 gain in lower paying part-time employment.”
As worrying for Canadians was that the private sector shed 59,400 jobs, partially offset by an additional 20,500 in government hiring.
For the year, Statistics Canada said the country managed to eke out a gain of 98,000 jobs, far fewer than the 358,000 gained in 2007 and all in part-time work.
Statistics Canada said manufacturing, forestry, building, information, culture and recreation, agriculture, fishing, mining, oil and gas and trade were net employment losers in 2008.
Hourly wages remained relatively robust last month, showing a 4.3 per cent year-to-year increase, double the current inflation rate.
But actual hours worked are declining, down four per cent for the last three months of 2008.
The December report presents a picture of an economy that hit the wall in the latter part of the year, with manufacturing, sales and construction activity taking a plunge in the face of the spiralling financial crisis.
“From the record low 5.8 per cent in early 2008, the unemployment rate climbed 0.8 percentage points by the end of the year, with most of the increase occurring in the last quarter,” Statistics Canada noted.
CIBC economist Krishen Rangasamy agreed with Flaherty that the beginning of 2009 looks as weak as the end of 2008.
“With economic contractions in the cards over the first half of 2009, expect the unemployment rate to head towards eight per cent before coming back down as the economy stages a recovery in the latter part of the year,” he said.
The latest sector to be hit by the economic tsunami was construction, which had previously seemed impervious to the recession.
In December, however, the construction industry lost 44,000 jobs as housing starts dipped to the lowest level in seven years the previous month.
“The sharp decline in construction employment reinforces the need for more public infrastructure investment,” said labour economist Erin Weir of the United Steelworkers.
Also, with private capital drying up, Weir said the federal government should drop its requirement that projects receiving federal funds be organized as public-private partnerships.
Offsetting the losses were gains in transportation and warehousing, up 23,000, education services, public administration, and manufacturing, although the latter industry remains down for the year and has now lost 380,000 jobs since over the past seven years.
With the price of oil tumbling, Alberta’s economy also showed signs of slowing and actually recorded the sharpest employment decline of any province last month with 16,000 fewer jobs, all full-time. That pushed the jobless rate in the province up 0.7 percentage points to 4.1 per cent.
Quebec also shed a large number of jobs in December, losing 9,400 overall with gains in part time employment offset by the loss of 48,700 full-time jobs.
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