Offshoring and Employment in Canada: Some Basic Facts
by René Morissette and Anick Johnson
Business and Labour Market Analysis Division
Analytical Studies Branch Research Paper Series, No. 300
Context
New waves of technological changes often cause job destruction in some sectors in the short run, thereby increasing workers'anxiety about job security. Growth in international trade, whether induced by tariff reductions, exchange-rate movements or the emergence of new countries in specific markets, may have similar short-term effects. In recent years, the emergence of information and communication technologies (ICT) and the fast-growing supply of relatively skilled workers in low-wage countries have combined these two phenomena. They have allowed Canadian firms to contract out highly skilled jobs in service sectors such as engineering and informatics, thereby increasing the international trade of relatively sophisticated commercial services. The common perception is that countries such as China, India and some other non-OECD countries have provided the skilled workforce required for these jobs, which generally pay high wages in Canada.
A widespread concern, highlighted by the media during the last U.S. presidential campaign, is that these new forms of foreign outsourcing may reduce the number of jobs available—especially those that are well-paid—in OECD countries. Put simply, the fear is that foreign outsourcing may be driving offshore jobs that are currently held in industrialized countries such as Canada.
Objective(s)
This study assembles a wide variety of data sets in an attempt to produce a set of stylized facts regarding offshoring and the evolution of Canadian employment in recent years.
Findings
The main finding of the present report is that, in almost all of the data sets used, there is, so far, little evidence of a correlation between offshoring, however defined, and the evolution of employment and layoff rates. While the analyses are fairly simple, they all suggest that if foreign outsourcing has had an impact on Canadian employment and worker displacement so far, this impact is likely to be modest and thus, unlikely to be detected either with industry-level or occupation-level data.
Data source(s)
Two sources of data are currently available for measuring offshoring. The first data set originates from the Balance of Payments Division in Statistics Canada and consists of a series of business surveys that measure the imports and exports of commercial services. The second source of data consists of statistics from Input-Output tables regarding the share of intermediate goods and services that each 3-digit industry purchases outside the country.
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