Have permanent layoff rates increased
in Canada?
by René Morissette
Business and Labour Market Analysis
Division
Analytical Studies Branch research paper series, No. 218
Context
Media
reports of mass layoffs in large, often profitable companies are not uncommon.
Presumably globalization has opened new market opportunities for some firms while
confronting others with greater competition abroad. Whether layoffs have increased
between the1980s and the 1990s has significant implications for the well-being
of Canadians. Namely, those related to the instability of family earnings, consumption
and savings patterns, the need for re-training and the impact on retirement incomes
and wealth.
Objectives
This paper attempts to answer the following
question:
Are permanent lay-off rates in Canada higher in the 1990s than
the 1980s?
Findings
Permanent layoff rates did not rise substantially
between the 1980s and the 1990s. In 1989, 5.9% of Canadian employees permanently
lost their job. In 1999, a year comparable in terms of labour market conditions,
the corresponding proportion was no higher, as it stood at 5.7%.
While
overall permanent layoff rates did not trend upwards, two groups-men aged 55 to
64 and women aged 35 to 44-saw their permanent layoff rates rise. Rates for this
group of men went from 7.4% in 1989 to 8.1% in 1999, while rates among this group
of women increased from 3.2% to 3.7%.
Risks of permanent layoff also rose
in large firms. In contrast, permanent layoff rates either fell or changed little
in smaller companies. Even though job loss rose in large firms, employees in these
companies were, at the end of the 1990s, about three times less likely to lose
their job than their counterparts employed in small firms.
While workers'
chances of losing their job did not rise substantially during the 1990s, their
chances of finding a new job in the event of a layoff-as proxied by hiring rates-fell
markedly. Between 1985 and 1989, 25% of jobs existing in a given year were filled
by new hirings. This hiring rate declined to 21% between 1995 and 1999.
As
companies hired fewer workers, employees left their position much less often.
While 9.2% of workers quit their job permanently in 1989, only 7.3% did so in
1999. The decline in quitting was widespread and was not simply due to the aging
of the workforce.
Since many employees were no more likely to lose their
jobs but were choosing to stay longer with their employer, job stability-as measured
by average job duration-rose between the 1980s and the 1990s.
Data
source: Longitudinal Worker File, 1983-1999.
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