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CURRENT ANALYSIS rbc.com/economics
Many jobs lost in the pandemic will be recovered relatively quickly
as vaccinations ramp up and the Canadian economy re-opens. But
for visible minorities and women—groups whose employment was
among those hit hardest by the pandemic—a return to labour mar-
kets considered ‘normal’ prior to the crisis won’t be good enough.
As we steer closer to the end of this recession, it’s worth remem-
bering that for these groups, a revival of the status quo will mean
once again coping with longstanding employment and wage gaps
that placed them at a distinct disadvantage. Closing these gaps
would not only address ongoing inequities in the job market but
would open powerful economic opportunities for Canada. For in-
stance, finding ways to better engage the skills of visible minority
workers could boost GDP by close to $30 billion per year.
Long-run structural labour market gaps to re-appear
In many cases, those hit hardest by the pandemic job downturn in
Canada were already struggling. The unemployment rates for some
groups have long exceeded the rest of the population, and re-
mained above national levels even when the economy was thriving.
Indeed, since 2001, the jobless rate for visible minorities has ex-
ceeded that of non-visible minorities by an average 2% annually.
This gap grew even wider during the crisis—with the unemployment
rate hitting 16.3% in July for visible minorities compared to 9.3% for
Rebuilding Canada’s labour market: The inclusive recovery imperative June 4, 2021
Rannella Billy-Ochieng’ | Economist | 416-974-8840 | [email protected] rbc.com/economics
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2001 2006 2016 2021*
Unemployment rate gap visible vs non-visible minority population
Higher jobless rates for visible minorities entrenchedfor decades
Source: Statistics Canada, RBC Economics 2021 figures are sourced from the Jan-May LFS supplementary data for population group 15-69 relative to non-visible minority (excluding indigenous)
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NotIndigenousor a visibleminority
Unemployment rate for persons aged 15 to 69, not-seasonally adjusted, May 2021
Jobless rates for visible minorities in Canada remain high
Source: RBC Economics, Statistics Canada
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SoutheastAsian
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% low wage employees (left axis)
% of people that reported it was difficult/very difficult tomeet basic household financial commitments (right axis)
% of employees earning low wages (less than two-thirds of the 2019 median hourly wage of $24.04)
Many of Canada’s visible minority workers struggle to meet financial obligations
Source: Statistics Canada LFS supplement Jan 2021, RBC Economics
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Median 2015 earnings reported in 2016
Visible minority workers relied more heavily onincome supports
Source: Statistics Canada, RBC Economics
CURRENT ANALYSIS
rbc.com/economics
non-visible minorities. This is in part because visible minorities are over-represented in hospitality and other industries, that are
among the hardest hit sectors of the economy.
What’s more, visible minority Canadians have historically underperformed in the labour force —a pattern that translated into a total
earnings gap of more than 15% in 2016. There is, of course, diversity among groups. Recent data shows that Chinese Canadians
take home comparable wages to the non-visible minority population, although unemployment in this group is more than 2.5% higher
in 2021. And in recent months, fewer Filipino Canadians were unemployed than non-visible minority Canadians, though this group,
on average, earns sharply lower wages (as little as 76c/$1). The impact of labour market underperformance among visible minori-
ties is significant. More than 25% of Southeast Asian workers earn low wages. And nearly half of all Latin American workers have
trouble meeting their financial obligations.
Labour force participation among women remains persistently be-
low that of men. This is one of the key inequities that the newly-
announced federal childcare program is meant to address. But
participation among visible minority women is even lower, running
more than 0.5 percentage points below that of women at-large
since the pandemic began. And even before the crisis, the unem-
ployment rate for female visible minorities was over 3% higher than
that of the broader female population. Government income sup-
ports for those losing work during the pandemic have been signifi-
cant, but that aid is set to wind down later this year. At that point,
there will be fewer guardrails in place to support these women that
have historically been at a disadvantage.
There are substantial economic benefits to reducing structural labour market gaps
Canada stands to gain significantly if it can engage the skills of these groups. For instance, ensuring that the skills of visible minority
workers are re-aligned to their most productive means—essentially
better utilizing Canada’ available supply of labour—would lift GDP
by nearly $30 billion per year. Making that shift won’t be easy, how-
ever. Much of the potential economic gain depends on closing a
substantial wage gap that has affected many highly-skilled visible
minorities and women.
Canada’s future labour force will be increasingly diverse. Over a
million visible minority youth will hit working age over the next dec-
ade. Immigration is also accounting for a rising share of expected
Canadian population growth. In 2016, 22% of Canadians identified
as a visible minority. By 2036, 34.7% to 39.9% of working Canadi-
ans will belong to the visible minority community, according to Sta-
tistics Canada. Improving labour market outcomes for these groups
will require finding new ways to recognize, and ultimately reward, the credentials of recent immigrants.
Engaging workers at the margins will hedge against an aging workforce
Baby boomers continue to retire in ever-greater numbers, putting a strain on labour supply. Difficulty finding workers has long been
a problem for Canadian companies and will continue to be post-pandemic. Amid such a pronounced demographic shift, it is impera-
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Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21
Total - Visible minority
Not Indigenous or a visible minority
Pre-covid average employment rate
Female employment rate as % of population aged 15 to 69, not-seasonally adjusted
Visible minority women fall further behind in recoveringjobs post-pandemic
Source: RBC Economics, Statistics Canada
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% wage gap visible vs non-visible minority Canadians, median employment income
Most visible minority groups face significant wage gaps
Source: Statistics Canada 2016 Census, RBC Economics
CURRENT ANALYSIS rbc.com/economics
tive to attract new workers, but also to more effectively utilize the
workers we have. The underutilized talent pool of visible minority Ca-
nadians can help bolster Canada’s aging workforce. It can also give
Canada a skills advantage since many of these workers are universi-
ty educated.
We can rebuild a better, more inclusive Canadi-an labour market
As Canada rebuilds its economy, it has an opportunity to re-envision
its labour market and make a deliberate effort to close gaps that have
put many Canadians at a disadvantage. The challenge for policymak-
ers will be to ensure that the right infrastructure is in place to recog-
nize skills and credentials and to encourage dislocated female and visible minority workers to rejoin the labour force. For women,
the issue is even more pronounced, given the overarching needs of balancing work, child/elder care and other domestic responsibil-
ities.
The crisis has opened a unique opportunity for Canada to address these longstanding shortcomings in our job market. Failing to
seize it, will mean missing out on a sizeable economic opportunity.
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Visible minorities as % share of the total population
Canada’s future workforce will be increasingly diverse
Total share of visible minorities
Source: RBC Economics, Statistics Canada 2016 Census
Disparities vary by region
Interestingly, despite the fact that Atlantic Canada has the smallest visible minority population, it’s the only region where the unem-
ployment rate for this group is comparable with non-visible minorities. By contrast, Central Canada is home to some of the largest
unemployment rate gaps in Canada. In Quebec and Ontario, the unemployment rates for members of the visible minority communi-
ty are 4.8% and 5.3% higher respectively.
The success of Atlantic Canada likely stems from its approach to immigration (the Atlantic Immigration Pilot) which makes it easy
for employers to draw from a pool of talent (whether in Canada or abroad). However, nearly half (45%) of the international immigra-
tion flows last year were concentrated in Ontario.
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visbile minorities unemployment rate gap (left axis)
% share of visible minorities (right axis)
Unemployment rate gap visible vs non-visible minority population as at May 2021
Pronounced unemployment gaps found in Central Canada
Source: RBC Economics, Statistics Canada
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Wage gap for visible vs non-visible minority full time workers aged 25 to 54 years
Structural labour market gaps more common in larger cities
Source: RBC Economics, Statistics Canada 2016 Census