Commentary on hires and layoffs in London Economic Region

By Emilian Siman

In a study published last year, Ci, Morrisette, and Schellenberg (2016) successfully untangled some questions surrounding the hiring and layoff rates across 69 economic regions (ERs) in Canada between 2003-2013. Although the study nicely spells methodological considerations and approaches, for the readers with less research training more important are the conclusions. Among their interesting findings were:

·         Net employment growth largely underrepresent workers movement into and out of firms; hires and layoffs rates help better understand the dynamic of the labour market.
·         Across ERs layoff rates experienced higher variation than hiring rates;
·         Smaller ERs that had a higher proportion of temporary employment experienced higher layoff rates;
·         Over 2003-2013 period, the proportion of temporary employment was a good predictor of the average layoff rates experienced by ERs;
·         During the years preceding or following the financial crisis (2008–2009), levels and changes in hiring rates were more influential in the final employment results than levels and changes in layoff rates.

For a researcher, among other useful findings presented in the study were the magnitude and variation of hiring and layoff rates within the ten-year time frame. They can serve as benchmarks for any further studies around these two labour market indicators. These results provide proportion and perspective, as architects would describe their designs.  For example, within the study time frame, on average in Canada 5.8% of employees aged 18 to 64 were laid-off and 20.2% were hired, as a proportion of the average annual paid employment. Variation of these indicators was fairly large across the 69 Canadian ERs within the study, as well as across the years.

For instance, layoff rates in Newfoundland and Labrador averaged more than three times the rates of observed in Ontario, Manitoba, Saskatchewan, and Alberta: 15.7% relative to 4.7%, 4.4%, 4.9% and 5.1%   respectively (Ci, Morrisette, and Schellenberg, 2016, p.2 para 7).

Before this study, did we have an idea about the magnitude of these rates?

Yes and no. As the title of the article suggests these are experimental estimates (Ci, Morissette and Schellenberg, 2016). They are novel in the context of the Canadian ERs’ comparison. However, Morissette had reported in the past research results on permanent layoff rates in Canada (Morissette, 2004), but for an earlier time horizon, 80s and 90s.

What were the hiring and layoff rates for London Economic Region?

Table 1. Selection of hiring and layoff rates in Canada, Ontario and economic regions within Ontario, averages of 2003-2013

Economic Region

Hiring rates

Layoff rates

 

Individuals aged 18 to 64

Individuals aged 25 to 54

Individuals aged 18 to 64

Individuals aged 25 to 54

Canada

20.2

16.6

5.8

5.0

Ontario

18.4

15.0

4.7

4.2

Kitchener-Waterloo-Barrie

18.0

14.1

4.6

3.9

Hamilton-Niagara Peninsula

18.1

14.3

5.0

4.3

London

17.9

13.9

4.9

4.1

Windsor-Sarnia

18.3

14.2

6.7

5.9

Source: Ci, Morrisette, and Schellenberg (2016, p.11)

As Table 1 illustrates, London ER experienced lower ten-year averages for hiring and layoff rates than Canada, for individuals aged 18 to 64: 17.9% relative to 20.2% and 4.9% relative to 5.8% respectively.  While London ER experienced a lower average hiring rate than Ontario, it experienced a slightly higher average layoff rate than Ontario, for individuals within the same age category: 17.9% relative to 18.4% and 4.9% relative to 4.7% respectively. These mixed results invites to interpretation.

It is logic to find that London ER experienced less volatility in the hiring-layoff flows than at the national level. However, the lower hiring rate and higher layoff rate than at the provincial level suggest a slightly lower dynamic of the London ER labour market than at provincial level, on average.

Where did London ER rank among the other Canadian ERs?

It makes more sense to focus our scope on ERs within Ontario, and more specifically on ERs that are neighboring London ER. Table 1 shows that London ER experienced the lowest average hiring rate among the neighboring ERs. Speculating, this is an important conclusion since Ci, Morrisette and Schellenberg (2016) suggested that the final ER’s employment performance is influenced more by the levels and changes in the hiring rates than by the levels and changes in the layoff rates. In our specific case, the London ER’s lower hiring rate potentially could signal a more contained employment growth during the years of study than else elsewhere in the neighboring area.

Can we explain more?

Ci, Morrissette and Schellenberg (2016) triggered attention upon three factors that explain the levels and changes in hiring and layoff rates: the ERs size (less populous – higher layoff rate), the sectoral structure of the ER’s economy (larger exposure to seasonal industries – higher layoff rate), and the proportion of employees in temporary jobs (higher proportion – higher layoff rate).

Without getting involved in advanced modeling, let’s see if we can we identify these effects using simple descriptive statistics. Table 2 allows the comparison among the working populations for the chosen ERs across several years within the authors’ time frame, 2003-2013. We can see that London ER ranks lower in working population size among the neighboring ERs. This could explain the marginally higher average layoff rate than in other neighboring ERs (see Table 1).

Figure 1 illustrates the sectoral structure of the London ER’s economy. One could easily see the limited exposure of the London ER’s economy to seasonal sectors/industries such as Agriculture, Forestry, Fishing and Hunting, and Construction. On the contrary, London ER’s economy has large sectors that require governmental involvement such as Health Care and Social Assistance, Education and Public Administration. In parallel, we observe the solid presence of the somewhat stable sectors of Manufacturing, Wholesale and Retail Trade, and Accommodation and Food Services.

Table 2. Working age population (15+) for select economic regions and years (x 1,000 persons)

Commentary on hiring and layoff rates in London ER - Table 2

Source: Statistics Canada, CANSIM, table 282-0123

 

Commentary on hiring and layoff rates in London ER - Figure 1

Source: Statistics Canada, CANSIM, table 282-0125

Figure 1

 

Table 3 provides the proportion of part-time employment across several ERs. The differences in part-time employment across the presented ERs are larger in 2009, during the financial crisis than afterward, e.g. 2013. Although overall these differences are small or marginal, they give us an indication regarding the potential influence upon the layoff rates.

Table 3. Part-time employment size (x 1,000 persons) and proportion for select economic regions

Commentary on hiring and layoff rates in London ER - Table 3

Source: Statistics Canada, CANSIM, table 282-0123

Conclusion

This work is extremely valuable for analysts and planners associated with workforce planning. These experimental estimates provide a new level of understanding the dynamics of regional labour flows. Further efforts are needed to keep these estimate current and relevant to various levels of planning, local and regional.

References

Ci, W., Morissette, R., & Schellenberg, G. (2016). Hires and Layoffs in Canada’s Economic Regions: Experimental estimates, 2003 to 2013. Economic Insights, no. 060, June 2016. Statistics Canada, Catalogue no. 11-626-X.

Morissette, R. (2004). Have permanent layoff rates increased in Canada? Analytical Studies Branch research paper series. Statistics Canada, Catalogue no. 11F0019MIE-No.218.

 

 

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 This project is funded in part by the Government of Canada and the Government of Ontario. The views expressed in this document do not necessarily reflect those of the Government of Ontario.