COVER

Will they find work in the '90s?

THE UPHEAVAL HAS TOUCHED ALL CANADIANS

JOHN DALY,Anthony Wilson-Smith,SCOT BLYTHE,2 more... August 2 1993
COVER

Will they find work in the '90s?

THE UPHEAVAL HAS TOUCHED ALL CANADIANS

JOHN DALY,Anthony Wilson-Smith,SCOT BLYTHE,2 more... August 2 1993

Will they find work in the '90s?

COVER

THE UPHEAVAL HAS TOUCHED ALL CANADIANS

At first glance, Barry Stutsky looks like the kind of motivated and highly qualified employee that most companies would love to have on staff. The outgoing 49-year-old Calgary exploration geologist has more than 25 years’ experience in the oil and gas industry, with both small and large companies. In 1989, he joined U.S.-owned Altana Exploration Co. in Calgary after working for several years as a consultant. He and his wife Wendy—who have two children in their 20s—were looking forward to the greater security that would come with a permanent job. But in May, Altana laid off Stutsky, citing cost pressures in the highly competitive petroleum industry. And because jobs like the one he had are now hard to find in the Alberta Oil Patch, Stutsky is hustling his services as a consultant once again. Although he says that the initial shock of the layoff has worn off, it still rankles him that he is facing such an uncertain future this late in his career. Says Stutsky: “I never thought 10 years ago that in my late 40s I’d be a disposable commodity.”

For Stutsky and millions of other Canadians who are looking for work—or who are afraid that they will not be able to hang onto the jobs they now have—the 1990s so far have proved to be a sobering decade. Now, almost two years after the economy began to inch out of a recession, Canada’s unemployment rate remains stuck at 10.8 per cent, the highest among the Group of Seven leading industrialized nations. And forecasters say that there is little relief in sight for the more than 1.5 million (1,550,000 in June) Canadians who are officially unemployed. Most economists predict that growth will continue to be weak this year and next. At the same time, whole industries are undergoing gut-wrenching structural changes that are forcing companies and their employees to adapt quickly or be cast aside. Jobs in the once-robust manufacturing and resource sectors are disappearing, pushing jobseekers into the burgeoning but volatile service sector. Says Gordon Betcherman, director of a Queen’s University human resources project that is completing research left behind by the now-defunct Economic Council of Canada: “The only thing in our favor is that the labor force is growing more slowly than it has in the past 20 years. Everything else points to a higher rate of unemployment.”

The upheavals and the layoffs continued last week, despite government statistics that show that the economy as a whole is expanding. Giant Mississauga, Ont.-based telecommunications equipment manufacturer Northern Telecom Ltd., formerly one of Canada’s brightest high-technology stars, announced that it plans to close several plants and eliminate 5,200 jobs worldwide, roughly nine per cent of its workforce, including 2,000 jobs in Canada. The company also announced a staggering $ 1.2-billion loss for its second quarter, which ended on June 30. In Montreal, Union Carbide Corp.,

a key manufacturer in Quebec’s beleaguered petrochemical industry, announced that it will close a plant in the city’s depressed east end in October, throwing 125 people out of work. Meanwhile, mining giant Comineo Ltd. said that it will lay off 190 unionized employees at its metal-smelting operations in Trail, B.C.

The high unemployment rate is putting an unprecedented strain on the nation’s social safety net—the federal and provincial network of unemployment insurance, welfare and training programs designed to assist the jobless. Last year, Ottawa alone paid $19.3 billion in unemployment insurance to an estimated 3.8 million Canadians. Speaking before a cabinet meeting last week, Prime Minister Kim Campbell acknowledged that the existing safety net, which was designed to ease hardship during temporary economic downturns, simply cannot cope any longer with chronically high unemployment (page 36).

But while Campbell and the provincial premiers agree that they have to revamp the safety net, they are also trying to slash their huge budget deficits. As a result, they

in the '90s? are cutting back on existing assistance programs just when those programs appear to be needed most. Last December, then-federal Finance Minister Donald Mazankowski reduced unemployment insurance benefits, raised premiums and tightened eligibility rules. And in Ontario, NDP Premier Bob Rae’s government last month unveiled a plan to overhaul the province’s welfare system (page 37).

Beyond cutbacks, Campbell and the premiers are struggling to devise new strategies to cope with unemployment. At last week’s cabinet meeting,

Campbell and her ministers decided to shelve a comprehensive plan to reform social programs, although she promised to outline parts of it during the coming election campaign. In fact, although Employment Minister Bernard Valcourt and some other Tories wanted to announce dramatic changes soon, they were overruled by party strategists who argued that the proposals could backfire on them in the campaign.

Campbell and the premiers have a much tougher unemployment crisis to wrestle with than any that have faced other post-Second World War Canadian leaders. Although the 1990-1991 economic recession was not the deepest, as measured by the drop in industrial output, it cut across more age groups and occupations than any other postwar downturn. As well, unlike the 1981-1982 recession, it hit the manufacturing heartland of Ontario and Quebec with full force. Although output began to rebound in April, 1991, the unemployment rate has actually increased since then—to 10.8 per cent in June from 10.4 per cent. By contrast, during the 1981-1982 recession, unemployment peaked at 12.8 per cent in December, 1982, and began to decline as soon as the economy started growing again in 1983.

The stubbornly high unemployment rate this time around has bred hard feelings among recent university graduates and other young adults in their 20s and 30s who have never had secure full-time jobs (page 35). Vancouver author Douglas Coupland dubbed this group Generation X in his best-selling 1991 novel of the same

name. Like the characters in the book, many real-life Generation Xers have drifted through a series of what Coupland calls Mcjobs (after McDonald’s)—“low-pay, low-prestige, low-dignity, low-benefit, no-future jobs in the service sector.”

Take Andrea Marsan, 23. She speaks five languages and graduated from Toronto’s York University in April with a BA in international studies, hoping to work for an international agency such as the UN. But she is working as a waitress in the same bar where she worked while she was studying. “I hoped when I graduated that I wouldn’t have to do this,” says Marsan. “But there doesn’t seem to be a lot of jobs I’m interested in or qualified for.”

COVER

PROFILE

NAME: Eileen Wadman

AGE: 43

HOME: Freshwater, Nfld.

LAST FULL-TIME JOB: fish plant weigher, July, 1992

Wadman’s whole family was affected by the federal government’s July, 1992, two-year moratorium on northern cod fishing. Her husband Ronald, 48, a cutter, was also among the 200 workers thrown out of a job when the Dalton Fishery plant closed. Eileen Wadman’s view of being out of work:

“Some people have this image that we are happy to sit and collect unemployment in Newfoundland, but everyone I know would sooner be working. I loved every minute I worked in the plant. It was like an extended family—everybody knew everybody.

“It’s a way of life they’ve taken away from us. I don’t see any solution, not in the near future. I hate to say that, it’s sad. I think retraining is a good idea.

If I was 10 years younger, I would take retraining. But where am I going to find a job, when young people with degrees can’t find a job?”

PROFILE

NAME: Patrick Hynes AGE: 35 HOME: Toronto

LAST FULL-TIME JOB: electrician, March, 1992

When the commercial real estate market slumped in Toronto in the 1990s, so did Hynes’s job prospects. He has picked up occasional jobs, but has not worked full-time since 1991. Maclean’s interviewed him at an anti-welfare reform demonstration at the provincial legislature.

“I went to the rally because I’ve got nothing better to do. I’m a carpenter as well as an electrician so I’ve been doing some small work myself. But that’s not been going very well. I collected ui for 50 weeks until that ran out, but I haven’t gone on welfare. I’ve just been living on my savings. I’m single and I rent a place, so at least I don’t have to worry about a mortgage.

“I guess I’m going to have to decide soon what my next move is. I don’t know where I go from here—anywhere there’s work. That’s the way construction is. Toronto is now built.”

Still, most of the Generation Xers’ problems pale in comparison with those of the more than 300,000 workers in the manufacturing sector who have lost their jobs over the past five years. Most large manufacturers, whether unionized or not, lay off employees according to seniority. As a result, the earliest casualties of the corporate cost-cutting and downsizing drives that began in the late 1980s, and continued through the recession, often had more formal education than the older workers laid off in recent months. Frank Ball, the director of the Toronto-based Canadian Steel Trade and Employment Congress, a unionmanagement body set up in 1988 to assist laid-off steelworkers, says that his group has retrained more than 6,000 workers since then, and that about two-thirds of them have found new jobs. But Ball warned that the success rate is bound to decline among the older workers now passing through the program.

Even highly educated and high-ranking professionals say that it is now difficult for them to find secure jobs. Beng Fai Siew discovered that the hard way. Siew, 36, holds an engineering degree from California State University in Chico, Calif., and an MBA from the National University of Singapore. In 1990, he was hired as a robotics and automation engineer by Novatel Communications Inc., the nowdefunct Alberta-based cellular telephone manufacturer. Siew was laid off in May, 1991, and took nine months to land a job as an engineering manager with a Markham, Ont.-based manufacturer of air quality monitoring equipment. ‘Today, there is no such thing as a job for life,” says Siew. ‘You have to cultivate a skill set and make sure it doesn’t go obsolete.”

The persistent slowdown has also taught employers some harsh but valuable lessons about how to minimize the dis-

ruption caused by layoffs. Federal Crown corporation Atomic Energy of Canada Research Co. has expanded and contracted its 3,220-member staff several times over the past decade. “We’ve learned a lot from the early days, when we had to downsize,” says Don Koroluk, the company’s compensation manager. Like most other large companies, Atomic Energy provides laid-off employees with severance payments, counselling and offices that they can use while looking for work.

As for the employees that remain, Atomic Energy’s managers are attempting to make them more aware of the costs and other market forces that could affect their jobs. The goal, says Marc Wilson, the company’s senior adviser on culture and organizational design, is to create “a more proactive anxiety.” Explains Wilson: “That way, they’re not caught by surprise by a boss sitting down with them and saying, You’re going to lose your job in two weeks.’ ”

Despite widespread layoffs over the past three years, psychologists and other experts note that most employees, initially at least, still have difficulty coping with the loss of their jobs. Fred Miles is a Calgary-based psychologist who joined Novatel in 1990 as a management development specialist, only to be laid off nine months later and then rehired the next day to counsel other laid-off employees. “When I arrived at the company, it was obvious that it was going down the tubes,” says Miles. But once they were dismissed, Miles says, many employees were still bitter and depressed. Miles, who has written a self-help book, After the Fire: Don’t Get Stuck, Get on With It!, which is scheduled to be published this fall, says laid-off workers cannot afford to wallow in that kind of grief if they hope to find a new job quickly.

On a national level, however, it will take a lot more than a positive attitude to solve the unemployment problem. The roots of the current crisis stretch back far beyond the 1990 beginning of the current recession. Two of the most powerful forces are the ongoing shift from a manufacturing-dominated economy to a service-dominated economy, and the continuing job cutbacks by large corporations.

The shift to a service-dominated economy has been underway since the end of the Second World War. At that time, half of all employed Canadians worked for goods-producing companies. Now, three out of four provide services. But until the late 1980s, growth in service sector employment merely outstripped the growth in manufacturing. Since then, employment in manufacturing has actually been shrinking.

PROFILE

NAME: Ross Hooper AGE: 48 HOME: Winnipeg

LAST FULL-TIME JOB: truck driver, May, 1991

Hooper started working for Canada Packers Inc. in 1970 as a shipper-receiver until the company closed its Winnipeg fresh meats division. In 1991, his job of driving a truck out of Canada Packers’ distribution centre in Thunder Bay, Ont. also ended. After working at odd jobs since then, Hooper in July began a one-year government retraining course in industrial electronics.

“I applied to get into the course one-and-a-half years ago. ui paid for the $1,500 tuition and pays me a training allowance of $187 a week. That’s not much compared with the good salary I used to earn. Fortunately, my wife works in a bank as a personal banking representative and we own our own home. If we didn’t, we might be in dire straights.

“It’s not easy to find a job. Most employers want someone younger. But I’m a lot more optimistic now that I’ve gotten into the course. They claim a 70-percent record of placing graduates in course-related jobs.”

According to Queen’s University’s Betcherman and other experts, the stampede to the service sector results in increased volatility in the job market. Traditionally, he says, manufacturing jobs have tended to be secure, paying good wages and benefits. The service sector, by contrast, is much more sharply divided into “good jobs” and “bad jobs.” On one side, there are professions like computer programming. On the other, there are maintenance and retail jobs, many of them part time with few or no employee benefits.

Predictably, union leaders blame large corporations for aggravating the division by contracting out work once performed by full-time salaried employees, to poorly paid so-called contingent workers.

“The whole business services sector grew very quickly in the 1980s,” says Andrew Jackson, a senior economist with the Canadian Labour Congress in Ottawa. In the worst cases, Jackson notes that companies have contracted out tasks at piecework rates that work out to less than the minimum wage.

“I’m worried that we’re dividing people into core and periphery labor forces,” says Jackson. “You could end up with two-thirds of society in secure, well-paying jobs and one-third permanently marginalized.”

But many contingent workers say that they have chosen to strike out on their own by choice, not because they were pushed. William Maki, a 31-year-old Toronto freelance advertising writer and computer consultant, worked for a large advertising agency before he went into business for himself in 1990. Maki says that he was moving around laterally at low levels in the company and, because the agency itself was not growing, he saw little opportunity to advance. “I was thinking about my long-term future rather than simply making enough money to pay the rent,” he says.

Most economists predict that, whether by choice or necessity, the job shift from manufacturing to services, and to small firms from large corporations, will continue. According to Pierre Fortin, a professor of economics at the University of Quebec in Montreal, Canada can no longer compete with low-wage foreign producers in many areas—and cannot prevent further losses of low-level assembly jobs. “There’s not much you can do if they are paying one dollar an hour,” notes Fortin. But he and other experts argue that both individuals

and governments can take steps that will reduce unemployment. One possibility is more education and training. Whatever happens to the overall unemployment rate, economists predict that the gap between the rates for educated and uneducated workers will get even wider. ‘Two decades ago,” says Graham Lowe, a sociology professor at the University of Alberta, “a university degree would have provided you with a lifelong job. That is no longer true, but higher education still opens more doors.”

COVER

Still, many economists insist that increased training alone is not enough. They say that unless governments stimulate economic growth and job creation, the training programs may only succeed in displacing unskilled workers in existing jobs with better-educated replacements, without reducing the total number who are unemployed. Although governments have little or no room to increase spending or reduce taxes, they say that the Bank of Canada has room to reduce interest rates. Like many of his colleagues, Fortin argues that Bank of Canada Governor John Crow has gone too far in his high interest rate battle against inflation and added to long-term unemployment as a result. Ever since the 1950s, policy-makers in Canada and other Western industrial countries have assumed that there is a trade-off between inflation and unemployment. But Fortin says that, over time, it is taking higher and higher doses of unemployment to bring the inflation rate down. He calls it a “ratchet effect,” and notes that Canada’s average unemployment rate in each decade has climbed steadily since the end of the war.

PROFILE

NAME: Jacqueline Gervais AGE: 39 HOME: Port Alberni, B.C. LAST FULL-TIME JOB: wood chipper operator, April, 1991

Gervais was one of 367 people who lost their jobs when Vancouver-based MacMillan Bloedel Ltd. permanently closed its plywood mill in the Vancouver Island community. For Gervais, originally a nurse from Chatham, Ont., it was history repeating itself. She was laid off at the plywood mill in 1981, but was rehired full time in 1985.

“This is the second time around for about 120 of us, so we were more adjusted to being laid off. But there is a major difference. Last time, the mill was still there. This time, the mill is gone and all the equipment taken out. There is no chance of ever being called back.

“In 1981, a lot of people lost their homes and vehicles. So I started saving money when I got back to work in 1985.1 have a small house—it’s not the Taj Mahal—and so far I’ve been able to make the mortgage payments. Still, there’s a lot of stress going around this town. Marriages are breaking up, parents can’t do the things they want to do for their kids.”

With 1.5 million unemployed, part-time work may become the way of the future

But for the moment, neither Campbell nor her counterparts in Europe appear to have any alternative strategies. At the Tokyo economic summit in June, the G-7 leaders issued a ringing declaration that said: “We are particularly concerned about the level of unemployment. More than 23 million people are unemployed in our countries; that is unacceptable.” But the leaders then renewed their commitment to contain inflation. And that means that Barry Stutsky and millions of other Canadians are going to have to rely primarily on their own initiative—and some luck—to find a good job.

JOHN DALY

ANTHONY WILSON-SMITH

SCOT BLYTHE

JULIE CAZZIN

BARBARA WICKENS