between the mass technical layoffs, Rising interest rates and extremely high inflation, talks of recession are everywhere. Economists say the impending recession will have an impact on the job market in the form of shorter hours, longer job searches and layoffs. Good News? The current tightness in the Canadian labor market may result in fewer job losses than in previous recessions.
Economists at the Royal Bank of Canada said in October that Canada’s job market is the tightest it has been in decades, but expect a moderate recession in the first quarter of 2023. With this, the unemployment rate will reach close to seven percent. next year, up from 5.2 percent currently. “An overabundance of job opportunities and a shortage of workers will protect against a large increase in unemployment in the very near term,” RBC said.
So what does all this mean for you and your career? If you’re job hunting, looking for a pay raise or considering starting your own business, we analyze how the recession could affect you.
if you are looking for a job
The job market is in a good position to head into a potential recession, says Brendan Bernard, senior economist at the Indeed Hiring Lab. Bernard highlights the current low unemployment rate and still high job posting levels. bank of canada latest business outlook survey found that while businesses anticipate a recession, most have no plans to slow their hiring yet.
Bernard says Indeed’s own data shows job postings are up 60 percent from pre-pandemic levels, as recently as mid-October. Postings in the tech, manufacturing and construction sectors – areas of the economy that are particularly sensitive to interest rates or the macroeconomic outlook – have cooled slightly, but are still “significantly high”. Indeed found that hiring is slowing for high-wage occupations, but low- and mid-wage job postings, such as driving and food services, have seen modest increases. While the massive layoffs in the tech sector grabbed headlines, Bernard said job losses have not yet affected the broader economy.
Speaking laid offEven though he is concerned about a “painful, protracted recession,” says Jim Stanford, economist and director of the Center for the Future of Work, employers may think twice about immediate job cuts. “In the past, employers cut jobs as soon as they saw sales decline in an effort to contain costs and preserve profits,” he says. “But they may be concerned, and with good reason, that it will be harder to re-hire those people.” [as the economy rebounds], You may see a greater desire to preserve the workforce.
But that doesn’t mean things haven’t changed. In a recent briefing, RBC economists said that in the near term, we can expect job seekers looking for a new gig to experience longer search hours, and hourly workers potentially having to reduce hours. Will have to face
If You’re Looking for a Raise or Promotion
One of the things that has made this recession more challenging for inflation-seeking folks is inflation. Stanford says we are entering a recession at a time where material costs are rising and wages have not kept pace. Statistics Canada reported that average hourly wages were up 5.6 per cent year-over-year in October, but record-high inflation has eaten up those gains. “Wages have risen much slower than prices since then,” says Stanford.
He says that while unions with greater bargaining power have had a good fortune in negotiating wage increases in collective agreements, he doubts that individual workers will be successful in demanding increases as their employers face an economic downturn. .
Canadians looking to change jobs to improve their pay or advance in their careers currently have plenty of opportunities, but Barnard says it’s a “slightly riskier proposition” than it was six months or a year ago. ” Is. Back then, job-hopping was one of the best ways to get a big raise in salary. Now, the stakes are higher.
“If things turn south in the economy, those newly hired workers may be more likely to be let go,” he says. “Job seekers who are currently employed but looking for another job, [are] In a bit of a tough situation if they are not getting the salary hike they were expecting at their current employer.
If you are starting your own business
According to Statistics Canada, the ranks of self-employed Canadians have grown by almost 36,000 to 2,646,000 as of October last year. Even in a recession, “there’s never a bad time to start a business,” says Dave Valere, professor of entrepreneurship and business strategy at Toronto Metropolitan University’s Ted Rogers School of Management. He adds that it has become easier than ever for budding entrepreneurs to set up an online store and target their ideal customers through tech platforms.
However, the economic climate affects which types of businesses will thrive. During a recession, “it’s a good time to provide things that are needs, not wants,” he says. Although he notes that luxuries such as brand-name clothing and accessories tend to fall out of favor with cash-strapped consumers, shoppers are more likely to indulge in “small luxuries” like a fancy chocolate bar or a new lipstick. .
Valliere says that many people view starting a business as a back-up plan in case they are laid off, which takes time to understand who your potential customers are — and what they want. are particularly important.
“There’s a huge risk of flooding the market with too many start-up businesses,” he says. “The environment will be less forgiving for those who haven’t done their homework to figure out [if] Will their business model work or not?
