The labour market: Year-end review 2001

Geoff Bowlby

• The economy and the labour market both took a turn for the worse in 2001. Employers responded to weak business conditions by cutting hiring by almost 7%, while permanent layoffs increased 2.1%. This resulted in a very small increase of 25,000 (0.2%) in employment, and an unemployment rate that nudged up 1.1 percentage points to 8.0% by December.
• With factories running at only 83% capacity (compared with 86% a year earlier), fewer workers were needed. Manufacturing employment peaked at 2.3 million in December 2000, but by the end of 2001, it had plummeted 111,000 or 4.8%, the largest year-over-year drop in factory employment since 1991.
• Much of the drop in manufacturing employment was concentrated in computer and electronic products, where the value of shipments took a drastic dive during 2001. Towards the end of the year, $1.7 billion worth of such products were being manufactured in Canada, less than half the amount produced at the peak in October 2000. In December 2001, employment in this industry was 121,000, about three-quarters the level of a year earlier.
• With less factory activity, demand for trucking services eased. As well, the airline industry, already dealing with fewer travellers before September 11, cut back throughout the year. Together, truck and air transportation led the decline in the transportation and warehousing sector, which employed 42,000 (-5.3%) fewer workers by the end of the year.
• Some industries did well in 2001. The leading source of new employment was retail and wholesale trade, where employment increased by 76,000 or 3.2%-similar to the gains made a year earlier.
• Young men aged 15 to 24 were affected more than any other group by the economic slowdown. At the end of the year, 52,000 fewer young men were employed, a drop of 4.2%. While employment growth was slow for core-age (25 to 54) men and women, gains continued to be made among people aged 55 and over.
• Self-employment fell by 83,000 in 2001-the second consecutive yearly decline. As in 2000, the drop was associated largely with a decline in farm work.
• In British Columbia, employment tailed off in the second half of the year. Compared with the same period a year earlier, employment in the fourth quarter of 2001 was down 46,000 (-2.3%). After growing strongly in 2000, employment in Ontario grew only 10,000 by December 2001. At the end of the year, Ontario had an estimated 83,000 fewer factory jobs, a drop of 7.1%, erasing all the gains made the year before.

Geoff Bowlby is with the Labour Statistics Division. He can be reached at (613) 951-3325 or geoff.bowlby@statcan.gc.ca.