September 10, 2020 - No. 60

Reflections on the Statistics Canada Report

Labour Market Dynamics Since the 2008/2009 Recession

Why does Canada have a state-organized and sanctioned labour market and third party labour traffickers who for a fee find buyers for workers' capacity to work? Why in the 21st century must workers search for someone to buy their capacity to work and be under the constant threat of losing their livelihoods when either individual tragedy strikes or a general economic crisis generates massive unemployment and despair? In the given circumstances, the working people serve the economy and those in control; the economy does not serve the working people and come under their control.

The role of the working class has not changed during the long transition period of the economy from the petty mainly rural based economy of the previous mode of production to the mainly urban based economy of industrial mass production. Workers continue to be a subjected labour force beholden to a small minority of rich oligarchs who control competing parts of the economy for their private interests. What has changed is the quality of the working class. It has become a mature educated international social class comprising the vast majority of the population. The working class is now completely capable of leading and looking after the economic and political affairs of modern society. The working class no longer needs a social class overseeing and directing its actions and the economy, wherein workers produce the social product. Lacking is the independent organizational strength of the working class and the broad consciousness of the necessity and social responsibility to empower working people and build the new.

The labour market came into being over 250 years ago to serve the transition from petty to industrial mass production. Working people fought for civil rights but those civil rights no longer suffice. The people need human rights that belong to them by virtue of being human. Of primary importance are human rights at the workplace and in the economic and political affairs of the country. Human rights are not compatible with a labour market of human beings and third party traffickers of those human beings. The control of the modern fully developed economy has to go to those who do the work. The economy must serve those who do the work and their society. This requires, in part, a transformation from the existing outdated one-sided social relation at the workplace between workers and the boss. New relations of production throughout the economy are required that uphold human rights and empower those who do the work and produce the social product and give them conscious control of society's economic, political and social affairs.

Chattel slavery in the United States and elsewhere up to the mid-nineteenth century had state-organized and sanctioned slave markets and slave traffickers to sell those held in captivity to buyers who wanted them for work.

The state, in abolishing chattel slavery, marked the official end of the slave market and slave trafficking and the social relation between chattel slaves and their owners. The vast majority of former chattel slaves joined the working class and went from being captured within a slave market to being captured within a labour market. Social relations between freed slaves and those purchasing their capacity to work came into being, which today face a similar necessity of replacement.

The imperialist system of today, the highest and final stage of capitalism and transition period from petty to industrial mass production, has a state-organized and sanctioned labour market and traffickers of workers at home and abroad. What would be required to end the labour market and the trafficking of workers in today's conditions? Would this not require a replacement of the existing social relation between workers who sell their capacity to work and those who buy it? What new direction for the economy is required that would eliminate the labour market and the scourge of constant mass unemployment and recurring economic crises that generate such insecurity and distress for the working class and loss of productivity for the economy?

Labour Market Dynamics since the 2008/2009 Recession

The StatCan report shows that the working people serve the economy and are at its mercy as something superior to them and beyond their control.

Statistics Canada has done extensive research on the labour market and labour force or workforce. The research identifies categories of the population such as the following. (Note: all figures are from before the current crisis and all quotations are from the report.)

The working-age population of those 15 to 64 years old, who without distinction are eligible to sell their capacity to work in the labour market = 24,500,000.

StatCan does not distinguish the social class differences of those in the working-age population. It includes Canadian oligarchs in control of the economy who even appear on the books of the Canada Revenue Agency as earning income as directors and senior executives of enterprises they control.

Canadian population 0 to 15 = 6,000,000

Canadian population 65+ = 6,600,000

"In 2015, one in five (19.8 per cent) Canadians aged 65 and older, or nearly 1.1 million seniors, worked at some point during the year, including 5.9 per cent who did so full year, full time."[1]

The labour force of those who found a buyer for their capacity to work = 19,190,000 workers. (This number has fallen significantly during the current crisis to 16,184,900).

Those who wanted to find a buyer but were presently unemployed = 1,134,000. (This number has increased dramatically during the crisis to 2,619,200).

The labour force of those who found a buyer for their capacity to work plus those who wanted to find a buyer but had not been able to do so = 20,324,000.

Those in the working-age population who left the labour force and were not looking to find a buyer for their capacity to work at that time for whatever reason = 4,176,000.

The report studies the number and movement of workers in and out of each status of the labour force from one month to the next from October 2007, just prior to the economic crisis of 2008-09 through to September 2018. The study looks at the flows among the three main labour force statuses of employed (E), unemployed (U) and not in the labour force (N).

"The Canadian labour market is very dynamic, with 6.2 per cent of the working-age population, on average (1,520,000 workers), having changed their labour force status each month between January 2007 and September 2018."

Dynamic indeed! One could say dynamically destructive to the economy and distressing and stressful for the working class to say the least. The constant flows from one labour status to another, the incessant high level of permanent unemployment of over one million workers and recurring crises that damage the interests of the working people generally, as well as small and medium sized businesses, reveal an extremely chaotic and anarchic situation for both the economy and working class.

Bringing the modern economy under control to serve the people and society is the social responsibility of the working class. The ruling oligarchs with their agendas to serve their competing private interests are incapable of bringing the economy under control. Only the modern working class with its broad agenda to serve the public interest can do so. The working class can serve its individual interests if it as well serves the collective interests and society. This corresponds to the truth that the working class can only emancipate itself if it emancipates all humanity and eliminates the exploitation of humans by humans.

The 6.2 per cent monthly total changing their status within the three labour force statuses equals approximately 1,520,000 workers. The report says this phenomenon remains fairly constant except during periods of crisis such as the 2008-09 economic crisis, the aftermath of the 2014 oil price collapse and the current crisis associated with the pandemic when the number of workers changing their labour force status dramatically increases.

"The transition rate from employed to unemployed increased notably during the 2008/2009 recession, and remained higher for several years after the economic shock. The notable increase in the number of unemployed observed during this recession was caused by the rise in both components of the inflows to unemployment (that is, employed to unemployed, and inactive to unemployed). The proportion of unemployed who stayed unemployed saw a notable increase during the recession, and remained higher than the proportion that was observed over the 12 months before this period."

"During the last recession in 2008/2009, employment fell by 426,000 between October 2008 and July 2009, while the number of unemployed persons rose by 460,000."

StatCan notes, "A change in unemployment caused by major layoffs does not have the same implications as one caused by difficulty in finding a job."

StatCan suggests that the average difficulty in finding a job is "normal" while major layoffs for whatever reason including a general crisis convulse the labour market bringing severe hardship to workers.

The report does not explore the various categories of workers who wish to sell their capacity to work and the difficulties and humiliations they endure, including new immigrants, migrant workers, temporary foreign workers, workers on term contracts directly with enterprises, workers on contracts through employment placement companies and other worker traffickers, those considered self-employed including those designated as such in the gig economy etc.

The necessity for change is international. Guest workers without rights is a widespread scourge. For example, guest workers without even civil rights in the six countries of the (Persian) Gulf Cooperation Council far outnumber official citizens. In Japan, over 40 per cent of workers are considered "irregular," employed on temporary work contracts organized mainly through labour trafficking companies. Putting workers in this "irregular" social relation greatly strengthens the power of those who buy workers' capacity to work. Also, the third party labour contractors and traffickers have become another layer of parasites feeding off the value workers produce.

"During significant recessions, changes in the rate of job separation (transition rate from employed to unemployed) account for most of the fluctuations in the unemployment rate."

StatCan says the size of the unemployed labour market can doubly increase when someone is laid off especially during a crisis because when "a household member loses their job, another household member enters the labour force to offset the loss, thereby increasing the labour supply (e.g., married women with a family, students)."

Because workers in general change their labour status fairly constantly outside of periods of crises, StatCan has created a transition rate representing the probability that a person who is employed during one monthly period (t) will lose or leave their job in the next period (t+1) and will be looking for employment.

"The rate is calculated by dividing the number of persons who moved from employed to unemployed (Et Ut+1) between the two months by the total number of persons employed in month t."

"To show the extent of transitions in the labour market, Table 1 presents the estimated average for each of the nine principal gross flows over the study period; in other words, the average monthly flows between October 2007 and September 2018."

"For example, (over the period of the eleven year study) almost 17 million workers, on average, remained employed in the subsequent month, which represents 59.5 per cent of the population aged 15 and over."

"Over the study period, an average of 289,000 jobseekers in a given month were employed in the subsequent month (gained employment), or 1.0 per cent of the working-age population. Similarly, an average of 233,000 workers became unemployed (0.8 per cent of the population aged 15 years and over)." Note that the total number of unemployed never went below 1.1 million during the period of the study and rose considerably higher during the 2008-09 crisis and oil price shock after 2014 and is now over double with the present pandemic economic crisis.

"The period referred to as the 'recession' includes the peak employment level (October 2008), followed by a sharp downward turn, and the low point reached in July 2009."

See Chart 2 below -- Unemployment rate and employment rate in Canada, January 2007 to September 2018, monthly.


Chart 2 -- Click to enlarge

"Over the course of the recession (2008-09), employment declined by 426,000. During this period, outflows from employment rose significantly to an average of 691,000 per month, while inflows remained essentially stable (629,000 on average)."

"During the recovery period, employment grew, and regained the level observed prior to the recession in January 2011. Over this period, the increase in employment was characterized by a notable decrease in outflows (625,000 on average per month) combined with a moderate increase in inflows (637,000 on average)."

"From January 2015 to February 2016, both inflows and outflows were smaller, on average, than in the previous period. Although the transition rate from employed to unemployed was lower on average than earlier periods, it did trend upwards. Therefore, an employed person had a higher chance of becoming unemployed in the subsequent month."

Statements such as this in the report show that the working class does not control its fate. This reality must change with a new direction for the economy and an enforceable state guarantee of the rights of workers. These include the right to a livelihood and to participate consciously in the affairs at the workplace and in setting the direction of the economy and society.

"The number of people moving from inactivity to employment (expressed in the graph as NE) declined during the recession and remained relatively stable during the recovery period. The decrease in the NE flow may be an indication that it had been taking longer for individuals to find employment. There is normally a period of job searching before employment is found, and if this period is very short, the NU (from not in the labour force to unemployed and looking for work) transition will not be captured."

Chart 6 -- Click to enlarge

"During the recession, the number of unemployed finding work (UE) increased because of a composition effect due to a notable rise in the number of unemployed persons. Even though the flow increased, the probability of moving from unemployed to employed decreased. This finding was also noted in the United States. The number of people moving from unemployment to employment (UE) fell, on average, over the four years following the recovery period, while the number of people leaving or losing their job and exiting the labour force (EN) was relatively stable."

"Chart 8 presents flows into and out of unemployment. (Page 15 in report.) Inflows (EU + NU) are the sum of persons moving from employed to unemployed (EU) and from not in the labour force to unemployed (NU). Outflows (UE + UN) are the sum of persons moving from unemployed to employed (UE) and from unemployed to not in the labour force (UN)."

Chart 8 - click to enlarge

"Over the 12 months before the recession, the number of unemployed persons rose, as inflows were greater than outflows (493,000 and 489,000 on average, respectively). Inflows rose notably during the recession, the number of unemployed persons increased sharply (+460,000)."

"From January 2015 to February 2016, coinciding with the oil price shock, flows into unemployment trended upwards. Outflows also increased, somewhat later in the period. Consequently, a gap formed between the number of people entering and exiting unemployment. The unemployment rate peaked at 7.2 per cent in January and February 2016. Following this peak, inflows to and outflows from unemployment both decreased and inflows went back to being less than outflows."

"During the recovery period (July 2009 to January 2011), as the number of people moving from employment to unemployment dropped back to its pre-recession level, the number of people entering the labour force to look for work remained higher than the average level observed before and during the recession. This higher average NU (not in the labour force to unemployment) flow dampened the declines in inflows to unemployment and the number of unemployed persons. The fact that the NU flow increased and remained high could indicate weaker growth in employment. Chart 10 shows the share of individuals not in the labour force who entered the labour market and did not find employment during the first few weeks of job searching. In October 2008, this proportion was 41.8 per cent, while it was 51.9 per cent in July 2009, an increase of 10.1 percentage points. This increase in the share of individuals not in the labour force who entered the labour market and did not find employment quickly was also observed during the recession periods in the United States. In Canada, although the share decreased during the periods following the recession, it remained greater than it had been in the 12 months before the recession. The number of people moving from employment to unemployment rose between January 2015 and February 2016. Although the transition rate between employment and unemployment was lower on average during that period, the rate trended upward. This increase followed a downward trend over the previous two periods. The flow of people from inactivity to unemployment also rose on average over this period, but began somewhat later. An increase in the transition rate between inactivity and unemployment was also observed. These changes in the gross flows and transition rates coincided with the oil price shock."

"Over the more recent period, both components of the inflows to unemployment decreased, but the decline was less notable than that observed for the outflows. In terms of flows out of unemployment (Chart 11), the number of unemployed who left the labour force in the following month (UN or unemployment to not in the labour force) started to increase after the recession period began. It is well documented in the literature that many different factors may have contributed to this rise in the UN flow. For example, job seekers who stopped searching when faced with less than ideal job prospects, or individuals who returned to school."

"It is difficult to determine if part of the increase in the UN flow (from unemployed to not in the labour force) was a composition effect caused by the rise in the number of unemployed persons or by the increase in the number of discouraged searchers. During the recovery and the subsequent four years, the number of job searchers who stopped searching (UN) was higher than the average level observed over the 12 months prior to the recession. Nevertheless, the UN flow did trend downwards over the period. This trend persisted until the summer of 2015 (the oil shock). The increase in the flows out of unemployment observed between January 2015 and February 2016 stemmed primarily from the rise in the number of unemployed leaving the labour force."

"During periods of economic shocks, such as recessions, the number of long-term unemployed increases. The number of unemployed who remain so in the following month can be seen in the gross flows. The proportion of the unemployed who remain unemployed (UU transition rate from unemployed to continuing unemployment the following month) increased notably over the recession and remained high thereafter. Over this period, the proportion of the unemployed who had been looking for work for 27 weeks or more also increased markedly. The probability of remaining unemployed over two consecutive months fell over the recovery period, and this reduction persisted until the summer of 2012. However, this proportion remained higher that what had been observed before the recession. This was also true for the proportion of people who had been looking for work for 27 weeks or more. The proportion of the unemployed who remained unemployed rose between January 2015 and January 2017. The movements in the data are clearly observable during economic shocks. The sharp decrease in employment observed during the 2008/2009 recession was mainly attributable to the increase in outflows from employment, while inflows remained relatively stable. The proportion of unemployed who stayed unemployed the next month increased notably over the 2008/2009 recession."

The report reveals the insecurity of the working class and the enormous waste of workers' productive power. The working class in its movements into and out of employment and the labour force altogether is greatly influenced by the economic conditions. Individual fortunes may play a role but the determining factor for significant changes arises from the economic conditions, both the general condition of the economy, its contradictions and problems, and those of its particular sectors and workplaces. Of note as well is the parasitism that has arisen with imperialism, which weighs heavily on the working class not only with its forms such as the stock markets and other financial institutions but in the third party manipulation and trafficking of workers and expropriation of a portion of the value they produce.

In the current conditions many workers are left without even civil rights let alone their modern human rights. The labour market operates on the basis of compulsion; one could say a form of voluntary servitude but to say voluntary would be a stretch. Recently certain members of the imperialist oligarchy made this clear when they complained that the government's $2,000 per month pandemic stipend for laid off workers will act as a disincentive for them to return to work. Workers are forced to sell their capacity to work on pain of poverty and deprivation if they do not. This is not modern. It violates the human rights of workers. Compulsion, whether involuntary or voluntary servitude represent oppressive class societies dominated by a ruling elite that exploit the work and production of the people to serve their own narrow class interests.

A new direction for the economy is required that would eliminate the recurring economic crises, the labour market, the scourge of unemployment, and the constant moving into and out of employment and the workforce that generates such insecurity and distress for the working class and loss of productivity for the economy. A new direction would unleash the productive power and enlightenment of the human factor/social consciousness. In such a situation, workers would fulfill their duty to work without the compulsion or threat of poverty upon losing a job and becoming unemployed. The motivation to work would come from the changed social conditions where workers are in control of their work and the social product they produce and the direction of society. Such a profound change towards empowerment of the people and social consciousness would entail a profound change in the social relations at the workplace from the unjust one-sided domination of a ruling elite to one that the working people themselves develop in conformity with the new aim of the economy to serve the well-being of the people and society and to humanize the social and natural environment.

The complete report by Emmanuelle Bourbeau, Labour Market Dynamics Since the 2008/2009 Recession is available here.

Note

1. From StatCan "Census in Brief: Working Seniors in Canada"

- In 2015, one in five Canadians aged 65 and older, or nearly 1.1 million seniors, reported working during the year. This is the highest proportion recorded since the 1981 Census.
- Of the seniors who worked in 2015, about 30.0 per cent did so full year, full time, and the majority were men.
- The percentage of seniors who reported working nearly doubled between 1995 and 2015, with most of the increase coming from part year or part time work. Increases in work activity were observed at all ages, for men and women alike.
- Seniors with a bachelor's degree or higher and those without private retirement income were more likely to work than other seniors.
- Employment income was the main source of income for 43.8 per cent of seniors who worked in 2015, up from 40.4 per cent in 2005 and 38.8 per cent in 1995.
- Senior men who worked full year, full time were most commonly managers in agriculture; retail and wholesale trade managers; transport truck drivers; retail salespersons; and janitors, caretakers and building superintendents.
- Senior women who worked full year, full time were most commonly administrative assistants, managers in agriculture, administrative officers, retail salespersons, general office support workers, and retail and wholesale trade managers.
- Seniors in the territories as well as in Saskatchewan, Alberta and Prince Edward Island were the most likely to work. Those in Newfoundland and Labrador, Quebec, and New Brunswick were the least likely to do so.
- Across the country, seniors living in rural areas were more likely to work than seniors living elsewhere.

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