Jobless stints shorter this time around

Canadians who recently find themselves involuntarily unemployed may take comfort in the fact that the average duration of unemployment is fifteen weeks, according to a new report from CIBC World Markets.

This is a marked improvement to the 1991 recession when the average duration of unemployment was 20 weeks. Moreover, the current unemployment period is only a modest increase to the pre-recession level of 14 weeks.

Not surprisingly, Canadians are experiencing a shorter unemployment time than Americans who have recently become jobless. In the U.S. the average length of employment has risen to 25 weeks.

Compared to previous recessions and the situation in the U.S., Benjamin Tal, senior economist, CIBC World Markets, describes Canada’s situation as being “relatively stable.”

While the report acknowledges that the unemployment rate measured in July at 8.6% — the highest in 11 years — is concerning, it points out that the downward trend in long-term unemployment offers a positive story in the labour market.

The long-term unemployment rate tracks those out of work for 6 months. It is an important measure because the more people in this category, the greater its affect on the economy. Currently, this group represents 15% of unemployment in Canada — 30% lower than the 1991 recession level.

Tal says the number of Canadians falling into this group is expected to increase in the next 12 months. However, this will unlikely have a daunting affect on the labour market because the long term unemployment rate is starting off at such a low level.

He added that as the job prospects improve there will be fewer people experiencing long term employment. He added that for Canadians who have recently loss their jobs, they will likely find a new job or start their own business in the next few months — a significant improvement to the 1991 recession unemployment situation.

Despite the improvements in the duration of unemployment, job security is still a concern for many Canadians. For those who fear that they will be given the pink slip soon — whether real or imagined — there are some steps they can take to prepare for the worst.

First, keep a resume updated and start job searching. It is easier finding a new job while employed because being employed builds credibility.

Clients should revisit and re-arrange their cashflow situation, trimming down on unnecessary expenses and bulking up on savings. Ideally, there should be 6 month’s of living expenses tucked away. Also, clients should apply for line of credit while employed because there is a better chance of being approved while they still have a job.

Those who are worried they might be on the chopping block should start networking by building relationships with previous and current colleagues and anyone else that may be in the know of when job opportunities come along.

Equally important advice: don’t get laid-off. Sometimes employees can avoid being on the short list to receive the ax. To do this they need to show that they are valuable. This means going above their core duties by solving problems, contributing to more projects and innovating work processes.

Meanwhile, those who remain employed may expect an increase in their compensation, as pay freezes at some companies are expected to thaw. Approximately one third of employers froze salaries in 2009, but in 2010 only 8% report that they expect to implement a freeze — a number closer to a normal market response, according to the 2010 Canadian Compensation Planning survey from Mercer.

The survey showed that with the salary thaw employers plan to award average base pay increase of 2.7% in 2010 — a rebound from the actual increase of 2.0% awarded in 2009.

“There are a number of signs that organizations are in recovery mode. Of the companies that plan to award increases, the all-employee average is 3.0% for 2010, but it’s important to note that about 30% of employers are undecided on next year’s salary budgets,” said Iain Morris, leader of Mercer’s Human Capital business for Central Canada. “Many are still taking a wait-and-see approach to planning for next year. This degree of indecision on salary increase plans at this time of year is unusual. All eyes will be on the business results in the balance of 2009.”

(08/19/09)