Actual Lack of Employment Versus Officially Recognized Unemployment

Statistics Canada defines its Labour Force Survey as "a monthly survey which measures the current state of the Canadian labour market and is used, among other things, to calculate the national, provincial, territorial and regional employment and unemployment rates. The survey results are used to make important decisions regarding job creation, education and training, retirement pensions and income support. At this time, as Canadians continue to deal with the COVID-19 pandemic, it is more important than ever to have an accurate picture of the job situation, the cost of living, and the economy. Data will be used to guide government decisions and assist Canadians through these challenging times."

Statistics Canada states: "The concepts of employment and unemployment are derived from the theory of the supply of labour as a factor of production. The production referred to is in turn defined as those goods and services included in the System of National Accounts."

"While the logical and precise unit of measurement of total labour supply is person-hours, the conceptual terms of reference for the survey require that individual members of the population be classified as employed, unemployed, or not in the labour force. Accordingly, persons who are supplying services in the reference period, regardless of the quantity supplied, are classified as employed while those who provide evidence that they are offering their labour services to the market (again regardless of quantity) are classified as unemployed. The remainder of the population, those neither currently supplying nor offering their labour services, are referred to as persons not in the labour force.

"The definition of unemployment is therefore the following:

"Unemployed persons are those who, during reference week: 

- were on temporary layoff during the reference week with an expectation of recall and were available for work, or 

- were without work, had looked for work in the past four weeks, and were available for work, or

- had a new job to start within four weeks from reference week, and were available for work."

Therefore, those who are without a job but are not considered to be offering their labour services to the market are not classified as unemployed and therefore are not classified as being a part of the labour force either.

Based on those definitions, Statistics Canada reaches these figures for January 2021 (in thousands, except for rates):

Canada' s population: 31,191.2
Labour force: 20,171.0
Employment: 18,272.0
Full-time employment: 15,132.3
Part-time employment: 3,139.7
Unemployment: 1,899.0
Participation rate: 64.7 per cent
Unemployment rate: 9.4 per cent
Employment rate: 58.6 per cent

For reference, in April 2020, when the country was under severe lockdowns because of the COVID-19 pandemic, the figures were:

Population: 31,094.7
Labour force: 18,603.2
Employment: 16,184.9
Full-time employment: 13,662.8
Part-time employment: 2,522.0
Unemployment: 2,418.3
Participation rate: 59.8 per cent
Unemployment rate: 13.0 per cent
Employment rate: 52.1 per cent

For January 2021, Statistics Canada makes observations from the figures among which are the following:

- Employment fell to lowest level since August.

- Employment fell by 213,000 (-1.2%) in January. Losses were entirely in part-time work and were concentrated in the Quebec and Ontario retail trade sectors.

- The decline in January followed a 53,000 drop (-0.3%) in December and brought employment to its lowest level since August 2020.

- Compared with February 2020, employment was down 858,000 in January and COVID-related absences from work were up 529,000.

- The unemployment rate rose 0.6 percentage points to 9.4 per cent, the highest rate since August 2020.

- The number of long-term unemployed (people who have been looking for work or who have been on temporary layoff for 27 weeks or more) remained at a record high (512,000).

- Employment declined in January in three services-producing industries most affected by new and continuing public health restrictions -- accommodation and food services (-8.2%), retail trade (-7.4%), and information, culture and recreation (-2.4%).

- Employment in construction rose by 39,000, manufacturing lost 12,000 jobs, while, as a whole, the goods-producing sector gained 23,000 jobs.

- Employment among youth aged 15 to 24 declined by 108,000 (-4.6%) in January, falling to its lowest level since August 2020. Employment for female youth fell by 69,000 (-6.1%) and was farther (-17.4%) from its pre-COVID-19 February 2020 level than any other major demographic group. Male youth employment fell by 39,000 (-3.3%) and was 11.6 per cent lower than it was in February 2020.

Statistics Canada attributes the overall loss of employment to extended public health measures taken by a number of provinces in December 2020 in response to increasing COVID-19 cases.

While these statistics indicate definite trends, they do not accurately indicate the number of people who are unemployed, or the unemployment rate, because according to the criteria quoted above, actually offering one's services to the labour market determines if one is considered unemployed.

It has been known for a long time that all those workers who find themselves without a job and are not actively looking for one (offering their services to the labour market) during the time the labour survey is done are not considered unemployed or part of the labour force. This means that at all times, even at the best of times in terms of the performance of the labour market, the actual rate of unemployment is much higher than the official rate.

Aside from this, the full extent of the large increase in unemployment because of massive layoffs during the pandemic is far from being reflected in the unemployment figures.

In April 2020, with the massive surge of unemployment due to severe COVID-19 lockdowns across the country, Statistics Canada wrote:

"Large increase in unemployment

"The unemployment rate rose 5.2 percentage points in April to 13.0 per cent. This followed an increase of 2.2 percentage points in March. Over the period since comparable data became available in 1976, the April unemployment rate was second only to the 13.1 per cent observed in December 1982.

"The April unemployment rate would be 17.8 per cent, when adjusted to reflect those who were not counted as unemployed for reasons specific to the COVID-19 economic shutdown. During the week of April 12, 1.1 million people were not in the labour force but had worked recently (in March or April) and wanted to work. They were not counted as unemployed but were counted as not in the labour force because they did not look for work, presumably due to ongoing business closures and very limited opportunities to find new work." (Emphasis added.)

The assessment of a rate of unemployment of 9.4 per cent in January 2021 is clearly far below the actual rate. If one uses the same methodology, using the discrepancy that was recognized by Statistics Canada in April 2020, the January rate would be around 12.8 per cent. That is without counting all those workers who, during the period in which the survey was done, did not actually look for work for reasons other than COVID-19.

Historically, one of the aims of the assessment of unemployment based on participation in the labour market has been to ensure that Employment Insurance (formerly Unemployment Insurance) is not a social program that protects all those who find themselves unemployed in an economic system in which everything is subordinated to narrow private interests. A lower official rate of unemployment means that workers have to work more hours before becoming eligible and the duration of their benefits is shorter. This along with all the other criteria for eligibility adopted over the years which have led to a situation in which it is assessed that only about 40 per cent of the unemployed receive EI benefits. An exception made by the federal government since the end of September 2020, which will last until September 11 this year, assumes a minimum unemployment rate of 13.1 per cent is being applied in all EI economic regions across Canada. This was not done to provide justice to the unemployed but to maintain a certain amount of money in circulation in the economy so as to prevent further economic collapse.

Unemployment remains a plague inherent in the man-eating capitalist system which is made worse by the neo-liberal nation-wrecking agenda of the ruling elite. It shows the necessity for a new direction for the economy, a pro-social direction aimed at upholding the well-being and the rights of all, under the control of the people themselves.

This article was published in

Volume 51 Number 2 - February 7, 2021

Article Link:
Actual Lack of Employment Versus Officially Recognized Unemployment


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