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The REAL Unemployment Figure

It's much higher than we're led to believe.

Article which ran in the

This month (early 2004), David Dodge, Governor of the Bank of Canada, raised the bank rate for the first time in 17 months. It’s a signal of just how confident he is that we're doing fine. “The Bank judges that the economy is now operating close to its production capacity,” boasted their press release.

This raises a curious question: If our economy is buzzing along so smoothly, why has the unemployment rate stood pat at 7.2%, the same level it was a year ago? And what does this mean for job seekers?

To start with, let’s look at how the unemployment rate is calculated. For that we go to the Labour Force Survey from Statistics Canada (www.statscan.ca). In August 2004, the latest available release, there were 1.25 million unemployed people in Canada. That’s pretty much unchanged from a year ago.

The release also states that there were 17.3 million Canadians in the labour force. If you take the 1.25 million unemployed as a percentage of the total labour force, you get 7.2%. So far it ain’t rocket science.

Getting Into The Nitty Gritty

Of course, the unemployment rate by itself doesn’t tell us a great deal. Let’s say that next month 100,000 new jobs are secured (a very unlikely scenario, unfortunately). The rate would stay at around 7.2% if an equal number of people entered into the labour force.

Then there are things like participation rates, seasonal adjustments to data, definitions of marginal and discouraged employees…arcane terms that leave a guy like me bleary eyed. So I went to the source itself, and spoke to a very helpful fellow by the name of Vincent Ferrao. He’s the Analyst of StatsCan’s Labour Force Survey.

Ferrao explained that the 17.3 million Canadians in the labour force represent nearly two thirds of all Canadians over the age of 15. That leaves about 8.2 million people over the age of 15 who are not in the labour force. Included in this category are full-time students, stay at home parents, retirees, and those too ill or disabled to work.

Guess what though: Not everyone who isn’t in the labour force wants to be unemployed. Upwards of 400,000 potential workers are itching to job hunt but are hindered from doing so. Reasons cited are temporary illness, school obligations, and waiting to be recalled from layoffs. There is also the “discouraged worker” category. These are folks who are willing and available to work, but who’ve given up looking because they don’t believe they can find a job.

According to Ferrao, StatsCan calculates “supplementary” unemployment rates that are more defined than the broad measures. For instance, if you take the official rate of 7.2%, and add on discouraged workers, you’re up to 7.4%. Then there’s the “involuntary part-timers.” This group is clocking fewer than 30 hours a week, but only because they can’t find full-time gigs. Add them to the mix and you’re up to 10.1%. Not to mention people waiting for recalls or for promised new jobs to start—which bumps us up to a whopping 10.6%!

Think this is high? In Europe, where “official” unemployment is 10 to 12% lately, they’d consider us lucky.

It Gets Higher and Higher...

Meanwhile, the Canadian figure would soar if you threw in a category called "under-employment.” Here you’d find all those people who are counted as working, but who earn extremely low wages because they can’t find better paying positions. Or those recent immigrants, many armed with Masters degrees and Ph.D.’s, who are reduced to menial employment when their credentials aren’t properly recognized here.

Then there’s the massive problem of “involuntary self-employment.” We all know the joke about what you call an unemployed executive—a consultant. Not so funny if you’re over 40 and have been forced to hang out a shingle, or start some kind of business, just because you couldn’t get a “real” job at a reasonable level. There are thousands and thousands of people in this very situation. Many are ill equipped or resentful about their situation. Many more are working on contract without benefits or vacation, hoping a much sought after “permanent” position will materialize.

StatsCan reports that nearly 2.5 million Canadians are self-employed. What we don’t know is how many of these entrepreneurs are barely scraping by, if at all.

On a more positive note, in August the Canadian economy generated a net increase of 14,000 jobs in the private sector. And, this being September, we’re into the peak hiring season. Between now and mid-December is when a major chunk of recruiting gets done. So if you’re among the unemployed, or under-employed, there’s no better time to be looking than right now.

Meanwhile, keep in mind that competition is fierce for good positions. Don’t be lulled into complacency by the stable unemployment rate. It’s the number of new jobs being generated that counts most. And, year to date, Canada has performed absolutely dismally on this front. Not that David Dodge seems to be taking this into account.

All told then, redoubling your job search efforts is your best bet for success. There are opportunities out there. Plus self-employment is a very viable option if you can find a relevant niche (think: aging population, stressed out working parents, etc.) It doesn’t really matter if true unemployment is twice the official figure: Your hunt for work still comes down to persistence, focus and, determination. I wish you all the best in your efforts.

Mark Swartz, MBA, M.Ed., is a speaker, career coach and author. He can be reached via e-mail.

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