Labour Market Seasonality in Canada: Trends and Policy Implications

The objective of this paper is to examine labour market seasonality in Canada over the past three decades in order to shed light on what policies might be best suited to address seasonal economies. The main findings are as follows. The seasonality of the Canadian economy has declined since 1976 according to a wide range of output and labour market variables. However, since 1996 unemployment rate seasonality has increased. Seasonality ?both in employment and the unemployment rate ?is much higher for the young than for older workers and much higher for men than for women. Canada’s level of employment seasonality was more than three times higher than that in the United States in 2003. However, unemployment rate seasonality was perhaps surprisingly the same in the two countries. Relative to OECD countries, Canada has average unemployment rate seasonality, but very high employment seasonality. Atlantic Canada has higher levels of employment and unemployment rate seasonality than the other provinces reflecting a greater importance of primary industries and greater propensity of employers to hire part-year workers. Seasonal unemployment represents a much more important public policy issue than seasonal employment. The basic problem is an underlying lack of employment opportunities in rural and remote areas where seasonal unemployment is concentrated, not seasonal unemployment itself. An economic development strategy that ensures that all persons who want full year work can obtain it must be the most important element in any attempt to reduce seasonal unemployment. But such a strategy might need to be supplemented, at least in the short-to-medium term, by out-migration, particularly in very high unemployment regions, and incentives for firms to transform seasonal work into full-year work, or at least into near full-year work. Since unrestricted benefits for seasonal EI repeaters will not reduce seasonal unemployment, a strong case can be made that long-term income support for the seasonally unemployed is not in the long-run in the best interest of the beneficiaries, high unemployment regions, and the country, although reducing such benefits is politically difficult.