Ontario Posts Strong Labour Market Performance in 2019

The Financial Accountability Office of Ontario’s (FAO) annual labour market report reveals a strong performance in 2019 with 210,000 net new jobs, the largest increase in the level of employment on record. The annual unemployment rate remained at 5.6 per cent, unchanged from 2018, but the lowest rate since 1989.

The strength in job creation was accompanied by sustained growth in average wages, and an increase in the proportion of Ontarians participating in the workforce for only the second time in the past 10 years.

According to the report, Ontario’s labour market continues to face important challenges, including an uneven distribution of labour market gains across the province’s communities, a surge in self-employment, and a decline in average hours worked per employee, partially reflecting rising part-time employment.

Employment gains in 2019 were driven by strong increases in both full-time jobs (157,000, +2.7 per cent) and part-time jobs (53,000, +4.0 per cent). Job creation was concentrated in the private sector (123,000, +2.6 per cent) and self-employment (78,000, +7.0 per cent), which recorded its largest increase in level of employment since 1997. Public sector employment rose by only 9,000 new jobs in 2019 (+0.7 per cent), reflecting ongoing provincial government spending restraint.

The service sector accounted for the bulk of Ontario’s job creation last year, with employment rising by 196,000, the largest annual gain on record. Within the service sector, job creation was particularly strong in health care and social assistance (54,000, +6.4 per cent) and professional, scientific and technical services (45,000, +7.1 per cent).

Last year, the goods-producing sector created 15,000 net new jobs with gains concentrated in construction (18,000, +3.4 per cent) and agriculture (5,000, +7.2 per cent). Manufacturing jobs declined by 6,500 in 2019, which marked the second consecutive year of lower employment.

Average hourly wages for all workers increased by 3.6 per cent to $28.34 in 2019, marking the strongest wage growth since 2008. After adjusting for the impact of consumer price inflation, Ontario’s average hourly wage increased by 1.7 per cent.

Solid wage gains were recorded in professional, scientific, and technical services (+5.8 per cent), manufacturing (+5.7 per cent), and construction (+5.5 per cent). Workers in the broader public sector recorded more modest wage gains. For example, wages for health care and social assistance workers increased by just 0.5 per cent on average, while average education sector wages increased by 1.7 per cent.

Young workers (ages 15- 24), who are more likely to be employed in minimum wage jobs, saw an average wage gain of 6.0 per cent in 2019, following a 10.5 per cent surge in 2018. Part-time workers recorded average wage gains of 2.3 per cent in 2019, following an increase of 6.4 per cent in 2018, while accommodation and food service workers received an average wage increase of 3.0 per cent in 2019, down from 9.9 per cent in 2018.

Wages for female workers increased by 3.8 per cent in 2019, outpacing a 3.3 per cent rise for male workers, and marking the third consecutive year of a declining gender wage gap.

With healthy employment and wage growth, the proportion of Ontarians choosing to participate in the workforce increased to 65.1 per cent in 2019, up from 64.5 per cent in the previous year. This marked only the second increase in the overall labour force participation rate in the past 10 years.

The rise in the participation rate was observed among all major age groups. For young workers (15-24 years), the participation rate increased to 61.3 per cent in 2019, up strongly from 60.2 per cent in 2018. Among core age workers (25-54 years), the participation rate increased to 86.3 per cent in 2019, up from 85.6 per cent in 2018, and the highest rate since 2013.

Despite the strong job gains in 2019, the report states that five out 15 Census Metropolitan Areas (CMAs) in Ontario saw a drop in employment, with the largest declines in Peterborough, Thunder Bay, and St.Catharines-Niagara.

Ontario’s strong 2019 labour market performancesSince the 2008-2009 recession, most of Ontario’s job gains have been concentrated in large CMAs, in particular Toronto. From 2010 to 2019, Toronto accounted for almost two-thirds (65.9 per cent) of the job creation in Ontario, higher than its share of population.

Self-employed individuals without paid workers rose by 80,000 jobs (+10.3 per cent) in 2019, the largest on record and accounting for nearly two out of every five new jobs created in Ontario. As a result, the share of this category of self-employed in total employment rose to 11.5 per cent, the highest on record.

Growth in individual self-employment was driven by workers in construction (19,400, +21.0 per cent) and transportation and warehousing (19,200, +26.2 per cent).

In 2019, Ontarians worked 32.3 hours on average per week, the lowest on record. Average actual hours among paid employees declined across most industries, with the largest declines in health care and social assistance (-3.3 per cent), public administration (-3.0 per cent), and wholesale and retail trade (-2.9 per cent).

The decline in average hours worked in 2019 partially reflects the rising share of part-time employees in the workforce. It also helps to explain why the increase in employment (+2.9 per cent) last year outpaced the estimated growth in real economic output (+1.7 per cent) by a substantial amount.

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