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Study: Job stability and unemployment duration in manufacturing

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2004 to 2008

Job stability in the Canadian manufacturing sector (the likelihood of keeping one's current job for another four years) was at its second lowest level in three decades in 2008. Moreover, the gap in retention rates between manufacturing and non-manufacturing industries was at its widest ever.

In 2008, workers across the economy as a whole had a 56% probability of remaining in their jobs for four years. In other words, 56% of workers in 2004 still had the same job in 2008.

In the manufacturing sector, the probability was 48%. This was the lowest proportion since 1992, and a significant drop from the 62% peak recorded in 1998. In non-manufacturing industries, the probability was 57%.

Manufacturing workers experienced significant drops in their retention rates regardless of tenure in the firm. For example, between 1998 and 2008, the retention rates fell by 22% for workers with less than two years of tenure in their jobs and by 23% for workers with 20 years or more of tenure.

Between 2004 and 2008, employment in the manufacturing sector fell by 322,000, a decline of 14%. Manufacturing's share of total employment fell from 14% in 2004 to 12% in 2008.

The decline in job stability in manufacturing was very likely driven by layoffs because voluntary quitting tends to go down in times of economic slowdown.

Former manufacturing workers tend to experience significantly longer unemployment spells than their counterparts from the non-manufacturing sector. Although the duration of unemployment remains below levels observed in previous recessions, the difference in duration between ex-workers in manufacturing and ex-workers in non-manufacturing has never been so high.

In 2008, the average expected duration of a new spell of unemployment for manufacturing workers of 10.9 weeks was significantly higher than for non-manufacturing workers (9.7 weeks). The gap remained even after controlling for education differences between the two sectors.

Compared with non-manufacturing workers, unemployment spells for ex-manufacturing workers were 12% longer in 2006, 17% longer in 2007, and 13% longer in 2008. These were the widest gaps between the two groups since 1977.

Manufacturing workers in large urban centres have tended to experience lower job stability than their counterparts in smaller cities. In Montreal, Toronto and Vancouver, the three largest census metropolitan areas, the employee retention rate in manufacturing in 2008 was 46%, compared with 50% in non-metropolitan areas with a population of less than 100,000.

Note: This study, based on Labour Force Survey (LFS) data, used two separate measures to examine job stability in the manufacturing sector: the employee retention rate and the expected unemployment spell. Four-year retention rates were estimated for workers in the manufacturing and non-manufacturing sectors. This rate represents the proportion of workers who, in a given year, held the same job four years later. Since the LFS is not a longitudinal survey, this proportion was calculated indirectly, using data on job tenure.

The expected average duration of unemployment spells was calculated using data from respondents who were unemployed. An unemployment spell ends when a new job has been found or when the individual leaves the labour force. For comparison purposes, both the employee retention rates and duration of unemployment spells were adjusted to take age and sex differences between workers in manufacturing and the rest of the economy into account.

Definitions, data sources and methods: survey number 3701.

The article "Job stability and unemployment duration is manufacturing" is now available in the November 2009 online edition of Perspectives on Labour and Income, vol. 10, no. 11 (75-001-X, free), from the Publications module of our website.

For more information, or to enquire about the concepts, methods or data quality of this article, contact André Bernard (613-951-4660; andre.bernard@statcan.gc.ca), Labour and Household Surveys Analysis Division.