Job turnover and labour market adjustment
in Ontario from 1978 to 1993
by Zhengxi Lin and Wendy Pyper
Business
and Labour Market Analysis Division
Analytical Studies Branch research paper
series, No. 106
Job turnover (especially permanent layoffs and permanent
separations for other reasons) indicates, to a large degree, not only the on-going
birth and death processes of firms but also the changing structure of employment
among existing employers. As well, labour market adjustment (including inter-provincial
migration and inter-industrial mobility, among other things) reflects the changing
structure of employment among provincial economies and among industrial sectors.
In other words, any significant structural change of the economy will inevitably
be reflected in the job turnover and labour market adjustment processes. To help
better identify and understand structural changes in the Ontario economy since
the late 1970s this paper documents job turnover and labour market adjustment
activities in this province from 1978 to 1993.
Both the permanent layoff
rate and the total permanent separation rate vary substantially from one industry
to another. For example, in 1992, they ranged from 27.3% and 34.2% in construction
to only 1.4% and 9.3% in public services, respectively. They also differ noticeably
by gender, age and firm size. In most industries, the rates are higher among male
workers, younger workers and smaller employers.
While the permanent layoff
rate increases during economic downturns and decreases during upswings, the reverse
trend is observed with the total permanent separation rate. This is because the
latter (i.e. quit rate and other permanent separation rate) declines during downturns
and rises during upswings, more than offsetting the opposite trend associated
with permanent layoff rate. When comparing the impact of the two recessions, both
categories of jobless workers had a much more difficult time in finding employment
during the most recent downturn. Almost 40% of those who lost or left a job in
1989 did not have a job in 1993—a marked contrast with the experience of
the early 1980s when only 29% of them were still jobless three years after the
separation.
There is a great deal of out-of-province migration among permanently
separated workers who did find a job. Nearly 45% of workers in that situation
in 1989 who had found a job in 1993 were employed outside of Ontario. There is
also a tremendous inter-industrial mobility among this category since less than
44% of those separated from a job in 1989 and employed in 1993 in Ontario have
remained in the same industry. The phenomenon is even greater for those who found
a job in other provinces—only 38% stayed in the same industry. Very similar
patterns were observed among those who were permanently laid-off who found a job
in Ontario as well as outside of Ontario.
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