CANOE Network

The Toronto Sun CareerConnection

Market still experiencing labour pains

By Maryanna Lewyckyj
Toronto Sun

Despite impressive job growth relative to the U.S., Canada is still plagued by major labour pains, says a new report.

Ontario was one of only three provinces to get a passing grade in a study by the Fraser Institute, which compares labour market performance in Canada to U.S. states.

Ontario earned a score of 5.5 out of 10, making it the second-ranked province (behind Alberta), and finishing 24th overall out of 60 jurisdictions in Canada and the U.S.

Although Ontario accounted for 196,000 of the 560,000 jobs created in Canada last year, the Fraser Institute study says the province's prospects are being hurt by a bloated public sector and a high proportion of unionized workers.

"Workers in Ontario are living through a superb period of job growth," says Mark Mullins, director of Ontario policy studies for the Fraser Institute. "However, this report shows that we are only reaching half of our potential, with high unemployment and rigid labour laws."

The study looks at particular characteristics of labour markets, including public sector employment, unionization, minimum wage laws and labour relations laws.

According to the report, Ontario maintains the lowest level of public-sector employment of any province (13.9%) and the second-lowest unionization rate in Canada (28.3%).

The Fraser Institute would like to see Ontario's public sector employment rate fall to the U.S. average of 12%. The right-wing think tank also favours a 14.6% unionization rate to match the U.S. average.

Canada's overall unionization rate of 32.2% last year is heavily skewed by the public sector, of which 75.9% of workers were unionized, compared to 19.6% of the private sector.

"The economic effects of high unionization are clear," says Jason Clemens, director of fiscal studies for the Fraser Institute. "Unionized firms perform worse than non-unionized firms on productivity growth, investment growth, employment creation and profitability."

The study recommends reform of labour relations laws to promote greater flexibility. It also says Ontario should consider laws that prohibit "closed-shop" unionism, in which workers are required to join a union or pay dues as a condition of employment. "The key point here is about worker choice and not forcing people into a monopoly situation," Mullins says.

Another recommendation of the study is the reduction of minimum wage rates.

"If the rate is too high, you actually lock out people from getting jobs," Mullins says.

Meanwhile, another report released yesterday by Scotiabank predicts that demand for highly skilled workers will remain strong despite a general easing of job growth over the next five years.

The report says the retirement of baby boomers could result in more openings for health-care workers, university or college instructors and skilled construction trades.

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