In a modern tale of two cities, there are economic losers and winners. In the bleak Cape Breton community of Port Hawkesbury (population 3,850), the unemployment rate is a staggering 40 per cent. Two weeks ago the Breton Marine Industries shipyard went into receivership—with the loss of 110 jobs—because the company could not compete with subsidized foreign ship builders. That blow followed last year’s closing of a federal heavy water plant—with the loss of 300 jobs—and the shutdown of a Gulf oil refinery in 1981. By contrast, more than 1300 km to the west, the city of Sherbrooke, Que. (population 74,000), has driven its unemployment rate from 19 per cent in 1982 to five per cent. When cheap foreign competition swamped the local textile industry in the early 1980s, mayor Jean-Paul Pelletier launched a campaign to attract new industries such as computer components manufacturers. “I said that I would run the town like a business,” Pelletier told Maclean's. “We are changing the economic base of our
city to guarantee our future.” The experiences of those cities demonstrate the wrenching economic changes that have revolutionized the modern job market.
Last month the national unemployment rate dipped below 10 per cent—to 9.8 per cent—for the first time since April, 1982. But since the recession of 1981-1982 and the ensu_
ing recovery, the type of Pelletier: new work being done and the location of that work have changed dramatically. From 1981 to 1985 the number of manufacturing and resource industry jobs that traditionally provided solid incomes for workingclass Canadians has plummeted by 291,000 from 3.6 million because manufacturers have learned how to make more products using fewer workers.
At the same time, the
number of service industry jobs—including low-paying restaurant jobs and high-paying positions for professionals—has increased by 512,000 from 7.4 million. As a result, some economists say that the middle class may be shrinking—and that the unskilled have less chance to join it. There are also worsening regional disparities: between 1981 and 1985 employment increased five per cent in Ontario, three per cent in Quebec, 2.5 per cent in Atlantic Canada and less than one per cent in the Prairies. In British Columbia it dropped 3.5 per cent.
Those statistics illustrate the changing economy that this week’s federal budget will try to address. Ottawa already has a $2.1-billion employment strategy. Polls indicate that unemployment remains the prime concern of most Canadians, but few additional measures are expected in the budget. Instead, Finance Minister Michael Wilson wants to reduce the projected 1986-87 deficit of $32.7 billion. As well, pressures from lobby groups for major employment initiatives have decreased because the job situation has improved. Since January, 1983, Canada has created 1.1 million new jobs. Last year Canada’s employment growth of 2.8 per cent was the highest among the major industrialized nations.
Edward Carmichael, senior policy analyst at Toronto’s C.D. Howe Institute, for one, says that the economy is adjusting rapidly to increasing world competition. “Dynamic change is the norm in Canada,” he declared. “People are moving into and out of jobs, into and out of industries, in a far more flexible way than in other countries.” But those encouraging employment statistics also veil some severe inequalities that could have grave implications. Carmichael says he is concerned by the growing differences in regional employment—and by the possibility that older workers in hard-hit provinces such as British Columbia will have difficulty finding new jobs.
_ “They have skills, but
base they are in the wrong
place at the wrong time,” he said. On Canada’s Atlantic coast, Martha MacDonald, an economist at St. Mary’s University in Halifax, pointed out that the participation rate—the percentage of the population over the age of 15 in the labor force—actually dropped in Nova Scotia to 57.2 per cent 2 from 61 per cent bei tween September, 1984, I and December, 1985. In z contrast, the national
participation rate rose to an all-time high last month of 66.2 per cent—with 11.6 million people in the work force.
Other social scientists predict a bleak future for Canada’s unskilled workers. They say that the number of high-paying blue-collar jobs will decline as industries become less laborintensive—and seek out employees with more skills and more education. That trend could create a permanent underclass of unskilled and low-paid service-industry workers. In 1982 Ford Motor Co. of Canada, for one, changed
its minimum education requirements for manufacturing operations from grade 9 to grade 12. University of Toronto economist John Crispo says that those changes are the natural evolution of an industrial society. “In the past it was safe to assume that someone with a grade 10 education could easily get a relatively high-paying unskilled job,” he said. “Now, the number of jobs in the traditional blue-collar market will definitely continue to decline as the professional job groups increase.”
The growth of that underclass raises some new and difficult social questions. Last week a special Senate committee reported that the current 700,000 unemployed youth between 15 and 24 could become “a lost generation.” The committee pointed to the increasing gap between those with postsecondary education and those without
it, and called for more money for education and job experience for youth.
The annual Maclean's Poll by Decima Research Ltd. picked up disturbing signals last fall when “class-based attitudes” emerged for the first time since Decima started tracking public opinion six years ago. Although most of the 1,575 respondents said they were satisfied and optimistic about their personal economic situation, the nine per cent who considered themselves members of the lower class generally stated that they were not satisfied or
optimistic. Said University of Toronto historian Desmond Morton: “Society itself will be divided by class—and that class distinction will create hostilities similar to those in Prime Minister Margaret Thatcher’s modern-day Britain.”
Some economists also say that the middle class will shrink—and that the upper and lower classes will grow—as the job market changes. The Economic Council of Canada recently completed a preliminary study showing that the middle-class share of jobs and employment income decreased to 41 or 42 per cent from 50 per cent between 1971 and 1981. “On the basis of that first count, there is preliminary evidence of middle-class shrinkage,” said Keith Newton, the council’s director of projects on technological change. But federal employment department officials told Maclean’s that their data
shows no evidence of such a decline.
The employment revolution began to affect large numbers of workers in 1981 when the recession hit Canada’s construction, manufacturing and natural resource sectors. Some industries such as automobile manufacturing were able to restore employment levels —largely because their export market strengthened. Other manufacturing sectors, particularly the textile, rubber and furniture industries, have suffered permanent job losses—in some cases as much as 50 per cent. The resource
industry also cut back, but jobs and profits remain low because commodity prices continue to be depressed.
The shifting pattern of employment in Canada’s manufacturing and resource industries can be seen across the country. In Montreal manufacturing now accounts for 23 per cent of the jobs—down from 32 per cent in the early 1960s. Canada’s 50 largest private sector employers cut their work forces by about 100,000—about 10 per cent—between 1981 and 1984. Employment in British Columbia’s forest industry has fallen from 96,000 in 1982 to 75,000 because of technological improvements. Said Roslyn Kunin, federal employment department economist in Vancouver: “The only way to stay competitive in a worldwide business is to have fewer workers per unit of output.”
Canada has also experienced an in-
crease in the number of service sector jobs for managers and professionals. There are more jobs in the banking, insurance and real estate sectors, because the size and sophistication of Canada’s financial system have grown. Carmichael says that highly-skilled engineers and managers, laid off during the recession, created many jobs by starting their own small service firms. Large corporations now buy that expertise on a contract basis. Paul Matthews, the director of graduate placements at Toronto’s DeVry Institute of Technology, says that Toronto’s “hot” employment market is now third-party repairs: large manufacturers who farm out repair work to small high-tech companies because it is cheaper than keeping experts on staff. But the service sector has also created many lowpaying jobs for unskilled and semiskilled workers, especially in the amusement and recreation industries as leisure time has increased.
The size of the companies that are creating the jobs has also changed. Between 1976 and 1984 firms with less than 20 employees created a staggering 85 per cent of the new jobs. A decade ago the DeVry Institute placed 30 per cent of its graduates with a handful of large companies. This year 70 per cent of its 800 graduates will find work in small firms.
Few of those changes have escaped the notice of Canada’s crusading employment minister, Flora MacDonald. Three and a half years ago MacDonald spent three weeks on the shop floor at Bell-Northern Research, a producer of sophisticated high-technology equipment near Ottawa. She emerged with the realization that the job market was changing rapidly and workers would have to train and retrain throughout their lives.
As a result, MacDonald has shifted the ministry focus from temporary make-work projects to training programs. She scrapped the Canada Works program which treated seasonal and cyclical labor market fluctuations by creating short-term jobs. Instead, there are now six major training initiatives, including programs for workers in obsolete jobs, for the hard-core unemployed and for high school dropouts. Said MacDonald: “We live in a society that is going through the greatest revolution that has ever transpired.”
MacDonald’s approach has been criticized by both opposition parties. A New Democratic Party task force last week called for a $1.1-billion program to provide allowances to young people to enable them to pursue an education or gain on-the-job experience. And both the Canadian Federation of Labour and the Canadian Labour Con-
gress have called for job creation spending to restore the country’s degenerating infrastructure of bridges, roads and water systems.
Experts at the C.D. Howe Institute say that direct incentives to specific industries will not work, because most new jobs are produced by small firms, and it is difficult to predict the small firms that will become major job creators. Instead, the institute calls for changes in taxes, regulations and trade policies that will encourage growth.
Constant change appears to be the
one factor that Canadian workers will be able to count on. Carmichael points out that in 1984 more than five million people changed their employment status at least once. “There is a continual turnover, a constant and dynamic state of flux,” he said. That quiet but inexorable revolution has brushed, blighted or brightened lives across the land.
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