Migration and Emigration in Canada until 2003

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The Canadian Labor Market:
As was noted above, Statistics Canada data indicates that exports to the U.S. have grown rapidly during the FTA/NAFTA era. Imports from the U.S. have also grown but not as quickly, resulting in a growing trade surplus. The average annual trade surplus was $19.7 billion (in Canadian dollars) during the 1990s, more than double the $9.4 billion average in the 1980s. Canada's current account surplus with the U.S., which includes net payments to U.S. investors, was also positive although much lower, averaging $6 billion annually. Here too, though, it was a lot higher than in the 1980s when the bilateral current account was roughly in balance. Manufacturing employment bore the brunt of corporate restructuring, most severely in the first wave (1989-93), falling by 414,000 or 20 percent of the workforce. The number of manufacturing establishments fell by 19 percent during 1988-95. High-tariff sectors were especially hard hit. Leather experienced a 48 percent drop in employment, clothing 31 percent, primary textiles 32 percent, and furniture 39 percent. But employment was also slashed in medium-tariff sectors such as machinery (32 percent) and electrical and electronic products (28 percent). By the end of the decade manufacturing employment was still 6 percent below ist 1989 level. Employment in clothing, for example, was still 26 percent below 1989, and electrical/electronics was down 19 percent. Wages were flat or falling even in the so-called winning export sectors. Unemployment in the 1990s averaged 9.6 percent compared to the U.S. rate of 5.8 percent, which is a doubling of the gap compared to the 1980s (Sharpe, 2000). This level of unemployment was higher than in any other decade since the 1930s. While average worker earnings were stagnant, casualized (or nonstandard) employment exploded, as people struggled to cope during the prolonged slump and restructuring. Paid full-time employment growth for most of the decade was almost nonexistent (Jackson and Robinson, 2000). The absolute number of full-time jobs did not recover ist 1989 level until 1998. Self-employment skyrocketed, accounting for 43 percent of new job creation between 1989 and 1999. Part-time employment accounted for another 37 percent of net employment growth during 1989-99. More than half of this growth was involuntary, due to the inability of people (mainly women) to find full-time work. Temporary work grew from 5 percent to 12 percent of total employment during the first half of the decade. Labor force participation rates dropped sharply, and at the end of the decade they were still well below their 1989 rates. Evidence that the trade expansion and economic integration under NAFTA have had adverse employment effects in Canada comes from the government itself, in the form of a little-known study commissioned by Industry Canada. The study, authored by Dungan and Murphy (1999), found that, while business sector exports grew quickly, import growth also kept pace. At the same time, the import content per unit of exports also grew markedly, while the domestic content per unit of exports fell.
What did this mean for jobs? Employment, direct and indirect, in export industries rose from 19.6 percent of total business sector employment in 1989 to 28.3 percent in 1997. However, the rapid rise in imports displaced or destroyed even more employment. The job-displacing effect of imports rose steadily from an equivalent of 21.1 percent of total business employment in 1989 to 32.7 percent in 1997. The authors concluded: "imports are displacing 'relatively' more jobs than exports are adding" (Dungan and Murphy, 1999).
What did this mean in terms of actual jobs created and destroyed? It is a simple matter to derive these numbers from Dungan and Murphy's data. The result is striking. Between 1989 and 1997, 870,700 export jobs were created, but during the same period 1,147,100 jobs were destroyed by imports. Thus, Canada's trade boom resulte