Non-standard work and precarious employment in London Ontario

Joseph Michalski and Don Kerr

 

 

 

 

Introduction:   

She works "part-time" as a waitress for a locally owned restaraunt.  Her husband works for a manufacturing company for an hourly wage. His work pays $16 an hour with some benefits whereas she gets minimum wage with tips.   She also works "on-call" for a house cleaning service in the city. The household often find it very difficult to arrange child care given the unpredicatablity of working hours, particularly during the summer months.

She’s in her early thirties with a college degree, working for a transportation service company on-call through a subcontractor. She does similar work to many of her co-workers and reports to the same boss. The difference is that they get salaries, benefits, a collective agreement, and some measure of job security. She is paid only an hourly wage.

He worked in the financial services industry for 5 years prior to losing his job. Now he works from home, for a competing company, on contract.  He is self-employed person with no benefits or job security.

(Isabell and Mike can get some video which could be linked here?)


Precarious & non-standard employment 

The term “precarious work” has emerged in the lexicon of Canadians to highlght recent changes in the labour force.  What is certain is that the nature of employment in Canada is changing.   Over the past several decades, the standard employment relationship – based on full-time, secure work, where employees have access to good wages and benefits – has declined in importance.   

Locally, a substantial share of Londoners at the lower end of the wage and skill spectrum are finding themselves struggling to earn a decent standard of living, with little job security and minimal control over their work conditions.  At the same time, there is a substantial share of well educated (often university or college educated) Londoners that are also having trouble landing that "full-time", "permanent" job, with benefits. The issue of non-standard work is not solely an issue of poverty and exclusive to low income residents of London, but also an issue for others who are relatively well trained and educated.

Where does our information on "non-standard work" and "precarity" come from?

 

Providing the broader context for the London Region

The London Region has faced some rather challenging economic condition since the turn of the century. Impacted by broader changes in the Canadian and North American economy, local labour-market conditions appear to be in a state of transition.  The issue of "job precarity" has been shaped by recent trends in terms of the supply and demand for labour.

The good news is that London's unemployment rate has declined to "pre-recession levels".

London ‘s unemployment rate has fallen substantially over recent years.  The economic recession hit London particularly hard in late 2008, with persistently high unemployment through to 2013. As has been true of many other parts of Canada, the economic recovery has seen employment growth (both in terms of full and part time jobs) and a reduction in the "unemployment rate". Yet while London's unemployment rate has declined, it is important to recognize that there are other economic indicators that do not paint as  positive a picture.

What the unemployment rate "does" & "does not" measure".

Changes in the unemployment rate can at times be misleading, as it focuses exclusively on persons who are classifed as being in the Canadian labour force. Using Statistics Canada's definition, the labour force includes only persons "who are currently working", or if jobless, "are currently active in some form of job search". If a person is jobless yet not seeking employment, then by definition, this person is not considered to be part of the labour force. 

Persons who exit the labour are subsequently no longer considered to be either "employed" nor "unemployed".  Hence, the "unemployment rate" can decline for two different reasons; it could decline due to a growth in the number of jobs available in a city, and/or quite simply, it could decline merely due to a reduction in the size of the labour force (as persons exit from the labour force altogether). The difficulty in the London context (as is true of Ontario overall) is that the labour force participation rate has declined as of late, to an extent that differs from many of its neighbors.  In drawing comparisons of the unemployment rate across regions and cities in Ontario, it is emphasized that not all regions have the same poportion of their population in labour force.

The uncertaintly in London is what proportion of persons outside of the labour force are not working due to choice (school, retirement, parenting of young children, etc) and what proportion might not be working due to circumstance beyond an individual's control (discouraged workers, forced retirement, incapable of working, etc).  Nor does the unemployment rate tell us anything about the quality of the jobs that Londoners have, including what proportion are working part-time involuntarily or how many might be employed in particularly "precarious" jobs.

Moving beyond the unemployment rate, employment growth in London has been relatively slow

London's low unemployment rate can draw attention away from the fact that the CMA has experienced a relatively poor performance in terms of employment growth. Over the last 15 years.  London's employment growth (with total jobs up by 11 per cent over the 2001-2017 period) has lagged behind cities closer to the Toronto area.  For example, Ontario's fastest growing census metropolitan areas (Barrie, Oshawa, Guelph, Toronto, and Kitchener-Cambridge-Waterloo) have all seen employment growth 3 to 5 times greater than London's (at 57.8, 38.7, 37.0, 34.4 and 32.2 per cent, respectively). Across Ontario’s 14 metropolitan areas, only Ontario's two more western CMA's (Windsor and Thunder Bay) have seen a slower rate of growth in terms of the total number of jobs available.

 

A smaller proportion of Londoners are currently working

While employment growth has been "relatively" slow in London, the city's population has also grown at a "relatively" moderate pace.  Yet while employment growth is up by about 11 per cent over the 2001-17 period, the CMA's population has actually risen at a slightly more rapid pace, up by about 14 per cent over this same period.  As a result, growth in the number of jobs available has not kept pace with growth in the number of people who might be seeking employment.

With this in mind, Statistics Canada also estimates on a monthly basis an alternative to the unemployment rate, i.e. the employment rate. This alternate indicator of local labour market conditions has the advantage of not limiting itself to those classfied as part of the labour force but more broadly considers everyone (i.e. the full population regardless of whether or not one might have entered or exited the labour force).  London's employment rate has declined as of late, partially due to population aging (as persons exit the labour force on retirement) but also due to the aformentioned job numbersIn addition, relative to other cities in Ontario, London's performance on this indicator has been relatively mediocre. Across Ontario's 14 CMAs, London's overall employment rate is second lowest, with fewer than 6 in 10 Londoners working in mid 2017 (58.5 per cent). London's employment rate is lower than both the provincial and national average, which suggests that the CMA has a more "challenging" job market relative to many of its neighbors.

In light of differences in age structure across CMAs (and the possiblity that lower rates might be explained by a higher proportions retired and/or attending college/university), it is useful to consider an alternate indicator of local labour market conditions, i.e. the per cent of persons of "prime working ages" (25-54) who are currently employed.  As most people are finished their formal education by age 25 and very few persons retire prior to age 55, this employment rate focuses exclusively on those age groups whereby we would expect most people to be in the labour force and working.  Relative to a national average of over eight in ten 25-54 year olds employed, a much lower proportion of working aged adults in London are currently working. London's employment rate for persons of "prime working" ages has slipped dramatically over the last decade and a half, from 6th highest across 14 cities in 2001 to dead last in 2017.

While many Canadians think of London as being a relatively prosperous city in the industrial heartland of Ontario, the local economy has taken somewhat of a slide relative to other parts of the country as of late. In this context, the competition for quality employment has intensified somewhat as the ratio in the number jobs relative to the  number of Londoners of prime working age has fallen.  From a situation of relative prosperity a few decades ago, London is now closer to, and even lower than the national average on all sorts of economic indicators.  While the city's "unemployment rate" has fallen to pre-recession levels, a persistently low "employment rate" relative to other CMAs in Ontario suggests that "available labour recources" (people available to work) are not being used to the same extent as elsewhere in the province.

 

The prevalence of  non-standard employment in London

Many Londoners engage in "non-standard work"—that is, employment situations that differ from the traditional model of a stable, full-time job.  By way of contrast, the concept of  "standard employment" can perhaps best be understood as a sort of "ideal" type of workplace that in reality has never in fact characterized all London workers.  By standard employment, typically we think of an employee who obtains a full-time job, works for a single employer, experiences steady advancement with seniority, earns various job benefits (e.g. a drug plan, vision, dental, and/or life insurance), and on retirement receives a pension. The general idea here is that the employee is rewarded for his or her loyality and effort, whereas the employer benefits from the longer term commitment and experience of its workers. 

This standard work arrangement is a reality that has never involved all Canadian workers. For example, there has always been workers that end up employed on a part-time basis, some who might only find temporary work (e.g. contract and seasonal work), whereas others who might opt for self employment.   In addition, there are many workers who are working full-time, yet do not experience job security, might earn a relatively low wage and have absolutely no work-based benefits.  Building on this, while many Londoners have non-standard forms of employment, not all such jobs can be classified as precarious (for example, consider the successful entrepreneur who is self-employed). The documentation of how Londoners are involved in non-standard and/or precarious employment is not a straight forward exercise.  

 

The estimation of non-standard work

How do we document "standard" versus "non-standard" employment in the current study?

In documenting "non-standard" employment, the current study begins with several concepts that are consistent with Statistics Canada Labour Force Survey.  For example, Statistics Canada's survey provides information on the employment type of Londoners (whether or not someone works full time, i.e 30 hours or more),  job permanency (whether or not the current job is considered permanet or temporary, with a fixed end date) and class of worker (whether someone is self-employed or works as an employee).  For current purposes, such estimates are supplemented with data on work arrangments - information was also collected on “the extent to which London workers earn workplace benefits”, i.e. workers were directly asked whether or not they received "employment benefits (e.g. such as a drug plan, vision, dental, life insurance, and/or pension)".

For the purpose of the study, we combine the aformentioned concepts to estimate the proportion engaged in (i) standard employment (identifying workers who have a full-time, permanent job, with benefits), (ii) non-standard employment (identifying workers who either have a full-time job without benefits, a part-time job, and/or a temporary job), and (iii) the self-employed.  The first category is roughly equivalent to what is conventionally understood as standard work, whereas the second category is roughly equivalent to what might be considered the most precarious types of "non-standard" work.  In the current study, given their relatively unique characteristics of the self-employed, we separately distinguish this cateogory as a unique form of non-standard work.

Both the Canadian Labour Force Survey and the London Poverty Research Center's Survey on Non-Standard work are characterized by sampling error (relating to sample size) and non-sampling error (relating to survey non-response and response error).   As a rule of thumb, the estimates available from the Canadian Labour Force Survey are considered superior to those provided by Leger research, primarily due to the very high standards of Statistics Canada and the mandatory nature of the Labour Force Survey.  In both surveys, inevitable errors occur; for example, a respondent might erronously report that a job is permanent whereas in reality it is temporary or casual, or that a respondent might errneously report a government based pension plan (CPP) as an employee based benefit.   In light of these issues, the estimates provided in the current study are merely considered to be the best point estimates currently available on non-standard work for the London CMA.  Both surveys attempt to work with a scientifically representative sample of Londoners.  When inconsistencies were idenfitied across the two data sources, Statistics Canada's estimates were preferred over those provided by Leger Research.

 

Part-time employment

In thinking of "non-standard" employment, a general misconception is that the proportion of Canadians (& Londoners) working part-time has increased dramatically over recent years. Yet in working with Statistics Canada's Labour Force Survey, it can be shown that the per cent of Londoners working part-time has remained relatively stable over the last decade and a half.  As of 2016, roughly 1 in 5 persons working in London did so on a part-time basis (20.4 per cent in 2016), a level that remains virtually unchanged from a decade and a half earlier (at 20.5 per cent in 2001).   This rate remains slightly higher than for both Ontario and Canada overall, with part-time rates of 19.0 and 19.2 per cent, respectively. While the percent working part-time in London rose somewhat during the last economic recession, it has since returned to pre-recession levels. Much of the increase in part-time work actually occured at an earlier point in history, during the 1980s and 1990s.

Some Londoners who are currently working part-time do so as a matter of preference and work/life balance, whereas others do so as a matter of circumstance. Some part-time workers experience a high level of job precarity, whereas for others this is not the situation.  Among Londoners who work part-time,  the "underlying reasons" for part-time work remain uncertain, as we do not have direct data on this for the CMA.  Yet for the province overall, Statistics Canada has estimated that over one in four part-time workers (or 27.7 per cent) are doing so "involuntarily", i.e. would prefer to be working full-time if given the opportunity (up slightly from 24.2 per cent in 2001).  Since this data are not currently available for London, it is uncertain as to whether a similar situation chararacterizes the city or whether the state of London's local labour market has resulted in an even higher  incidence of "involuntary" part time work.  

For many Londoners who work part-time, the option of fewer hours is preferred, for example, consider the full-time student who attempts to balance studies with a part-time job.  As another example, consider the parent with "pre-school" age children, who chooses to spend more time with child care rather than work full time.   And as families share resources, part-time work does not necessarily imply poverty, as for example, many who work part-time do so to supplement what is already a relatively high household income. Yet while some part-time employees have jobs with some permanency and benefits, the difficult reality is that for most, the part-time job implies fewer benefits, typically lower wages and less job security.  While the slightly higher level of part-time work in London relative to other parts of the province and country is not necessarily problematic,  it is potentially problematic to the extent that Londoners find themselves in a "involuntary" part-time job situation.

 

Temporary Employment

Job permanency—whether or not a job has a predetermined end date—can serve as a useful indicator of job quality. While temporary employment can provide short term savings and flexibility to employers, enabling them to more easily adjust to economic conditions, it can come at a major cost to both the workers directly impacted as well as for the broader community. Temporary jobs, by definition, are far less stable than permanent jobs, and subsequently, employers typically invest far less in their temporary staff then is true of their permanent personal.  This situation is particularly true when employees are easily replaceable. Under such conditions, there is nothing to force employers to take on the costs of medical/dental benefits, sick pay, retirement and/or other income security benefits.  In this regard, temporary jobs are an important type of precarious employment that characterizes London.

Statistics Canada regularly publishes data on temporary employment, meant to document the per cent of Canadians involved in " term or contract, casual or seasonal-types" of jobs.  As of 2016, roughly 1 in 9 persons working in London (11.0 per cent) are employed on a "temporary" basis.  This is up slightly from 2001 (10.4 per cent), while being at levels quite comparable to both the provincial and national situations (at 10.7 and 11.2 per cent, respectively).   

Statistics Canada has documented that the largest share of temporary employees  are currently those who are in term or contract jobs, including those that are set up by temporary help agencies.  As of 2016, term or contract jobs now comprise over half of all temporary jobs in Ontario (56 per cent), followed by casual workers (23.8 per cent) and seasonal employees (19.3 per cent). While Statistics Canada doesn't break this down for specific CMAs, it is known that seasonal employment in particular increases both during the summer months (in agriculture) and during the Christmas holidays (in retail).  Many of those who work in temporary jobs also work "part-time", which contributes to lower wages relative to other types of jobs.  

 

Self Employment

Self employment has consistently involved about 13-14 per cent of all persons employed in London over the last decade and a half.  This is a slightly lower than both the provincial and national averages, where roughly 15-16 per cent are self-employed  The self-employed is a highly diverse group, ranging everything from the working owners of large, incorporated businesses through to persons working alone and earning relatively low wages.  For example, the self-employed could involve an independent contractor  who employes several workers, has a high net worth and considerable earnings.  On the other hand, the self-employed could involve a part-time service provider who earn relatively little and works few hours (for example, provides baby sitting services or delivers newspapers on a part-time basis).

The financial situation of the self employed varies widely, making it very difficult to draw generalizations about this subsector of workers. For example, Statistics Canada has estimated that 3 in 10 self-employed Canadians employ others, down somewhat from about 35% in  2001.   Those who employ others are considerably more likely to have relatively high earnings and net worth.  Yet on the other hand, many of the "own account" self-employed who do not employ others are also doing quite well economically.  Many of the self-employed, as entrepreneurs, carefully evaluate their asset-building potential and prepare for own retirement.  

Research conducted by Statistics Canada has shown how some self-employed persons do so in the absence of other available work, and that self-employment tends to increase during economic downturns (LaRochelle-Côté 2010).  This is particularly true among self-employed Canadians who are non-incorporated (i.e. without registered businesses).  On average, they earn less than one half of what the self-employed with incorporated businesses earn. Some are clearly precariously employed, whereas others have secure work and considerable net worth.

As a result of these differing circumstances, it is unwise to think of this type of "non-standard" employment in uniform terms.   While they do not with the traditional idea of what many think of as "standard employment", it would be  misleading to equate this form of non-standard employment with precarious work.  This is only true of an uncertain proportion of the self-employed in London, typically among those who work for themselves without any employees, often part-time and in non-encorporated home businesses.   

 

Full time work, without benefits

Many Londoners are involved in non-standard work.   As emphasized above, roughly 20 per cent of London workers do so part-time, 11 per cent have a temporary job, whereas self-employment currently involves roughly 14 per cent.   In addition, there are many Londoners who may be working full-time, but for all practical purposes, do not have standard employment as conventionally understood.  In other words, many Londoners are working in jobs that are classified by Statistics Canada as full-time and permanent (i.e. 30 hours a week or more, with no designated end date), yet in reality, work in jobs that lack good wages, benefits and even job security.  In many cases, these employees are treated like they are easily replaceable. In terms of all employed Londoners, we estimate here that roughly 12 per cent work full-time without benefits (excluding those who are classified as either temporary or self-employed). 

The concepts of job type, class of worker and job permanancy as documented in the Canadian Labour Force survey provide for some information as to the incidence of non-standard work, yet does not allow us to isolate this latter category of persons full-time, yet without job benefits.  As an additional issue, these concepts from the Labour Force Survey are not mutually exclusive and subsequently not merely additive.  For example,  among those working in temporary jobs, some are working full-time whereas others are working part-time, a generalization that also applies to self-employment.   For this reason, it is neccessary to supplement this information from Statistics Canada with additional data collected directly by the London Poverty Research Center in its Survey on Non-Standard Employment.  

Using this information, it is possible to distinguish among Londoners working full time with "workplace benefits" relative to those who report no such benefits. More specifically, the sample of employed Londoners were asked whether they received employment benefits from their current employer (e.g. such as a drug plan, vision, dental, life insurance, and/or pension).  In combination with the aformentioned categories of self-employment, part-time and temporary work, the percentage of all employed Londoners engaged in some form of non-standard employment is subsequently estimated as now approaching roughly 1/2 of all workers.

 

The current work status of Londoners

As aformentioned, the current study sets out to estimate the proportion engaged in (i) standard employment (identifying workers who have a full-time, permanent job, with benefits), (ii) non-standard employment (identifying workers who either have a full-time job without benefits, a part-time job, and/or a temporary job), and (iii) the self-employed.  The first category is considered to be roughly equivalent to what is conventionally the secure or standard job, whereas the second category is roughly equivalent to what might be considered the most precarious types of "non-standard" work.  In the current study, given their relatively unique characteristics of the self-employed, we separately distinguish this cateogory as a unique form of non-standard work.

On this basis of the above, we estimate here that only about one half (52 per cent) of employed Londoners are currently engaged in standard employment (in a full time job, considered permanent, with some benefits).

Consistent with Statistics Canada's definitions, we estimate that an additional 14 per cent are self-employed.  The remainder (35.9 per cent) fall into the third category of non-standard employment - identifying workers who have either a full-time job without benefits (12.4 per cent), a temporary job (11.0 per cent), and/or a part-time job (12.5 per cent).  This latter estimate on part-time work is somewhat lower than Statistics Canada's estimate (20.6 per cent), which is completely logical in recognizing that the concepts of job type, job permanence and class of worker are not mutually exclusive.

As roughly 1 in 4 persons of working age in the London CMA are not working, this per cent in standard employment falls from about 52 per cent of all employed Londoners down to only about 38 per cent of all working age Londoners, regardless of whether or not they are currently employed.  Overall, we conclude here that the promise of a full-time job over a lifetime, with benefits and a pension, is a reality that is true for only a minority of Londoners.    

 

Comparing the characteristics of Londoners based on their work status

Non-standard employment has been shown here to be an important part of the local labour market.  In the London context, when also considering self-employment, it has been shown to involve roughly one half of all London workers.  However, non-standard work is not spread evenly across the labour market, as certain Londoners are far more likely to work in non-standard type work arrangements than others.

 

Non-standard work and age

Non-standard work and gender

Non-standard work and visible minority status

Non-standard work and education

 

Work Precarity in London

 

Precarious work and age

Precarious work and gender

Precarious work and visible minority status

Precarious work and education

 

Distribution on "Self-Reported Health"