In this blog, I compare Eastern Ontario’s job performance in the new millennium with the rest of Southern Ontario with a particular interest in seeing how resilient the regional job market has been following the Great Recession. With the exception of Ottawa and Kingston, Eastern Ontario has historically lagged behind the rest of Southern Ontario and continues to face economic challenges in terms of plant closures in traditional manufacturing industries and out-migration of younger workers in search of jobs outside their communities for example.
Back in 2008, in the aftermath of the collapse of the US subprime mortgage market and subsequent financial crisis, the global economy entered a recession that was rightly described as “great”. The Canadian economy survived the Great Recession in relatively good shape. Canada was one of the last industrialized nations to enter into a downturn and was a leader among the G-7 countries coming out of the recession. The Great Recession in Canada lasted between Q4 2008 to Q4 2009.
However, global economic instability and uncertainty have persisted in the post-recession years. Economic activity and job growth have been flat in the United States. Canada’s economy has been more resilient partly due to rising commodity prices which in turn favoured Western Canada especially Alberta and Saskatchewan, as well as Newfoundland and Labrador. On the other hand, Ontario’s economy has lagged behind, at least until recently, as a result of a floundering manufacturing sector, weak exports and a high Canadian dollar which traded over $1.00 US during most of 2011.
Economic fortunes have again shifted dramatically over the last 1.5 years. Oil prices have nosedived as has the Canadian dollar. According to recent economic forecasts from the Conference Board of Canada, “Ontario, with its minor exposure to the oil and gas extraction sector, is expected to receive a significant economic boost in the short term … Ontario’s economy is projected to grow by 2.9 per cent this year, bolstered by strong exports and consumer spending—the first year since 2002 in which economic growth in Ontario outpaces the national average of 1.9 per cent.”
The remainder of this blog looks at employment trends in Eastern and Southern Ontario since the turn of the new century. For the analysis, I use the annual averages of employed labour force from 2001 and 2014 as collected and published from Statistics Canada’s Labour Force Survey. The Great Recession officially started in Q4 2008 and ended in Q4 2009 so most statistically noticeable impact will be apparent in the 2009 annual average job numbers.
Statistics Canada publishes labour force data at the sub-provincial levels for Economic Regions, Census Metropolitan Areas (CMAs) and Census Agglomerations (CAs). A CMA or CA is formed by one or more adjacent municipalities centred on a population core. A CMA must have a total population of at least 100,000 of which 50,000 or more must live in the core. A CA must have a core population of at least 10,000. To be included in the CMA or CA, other adjacent municipalities must have a high degree of integration with the core, as measured by commuting flows derived from previous census place of work data.
Excluding Northeast and Northwest Ontario, there are 9 economic regions that comprise Southern Ontario as delineated by Statistics Canada with 3 regions approximating the geographic area of the Eastern Ontario Wardens’ Caucus – Ottawa, Kingston-Pembroke and Muskoka-Kawarthas. Arguably, the Muskoka-Kawarthas region can be also considered to be more economically linked to the Greater Toronto Region than Eastern Ontario. Regardless, I keep the three regions separate in the analysis.
Each of the 3 Eastern Ontario includes CMAs – Ottawa (Ottawa region), Kingston (Kingston-Pembroke) and Peterborough (Muskoka-Kawarthas). Cornwall is the only CA in Eastern Ontario located in the Ottawa Economic Region. By subtracting the CMA and CA employment levels from their corresponding Economic Region totals allows analysis of employment trends for smaller sized towns and rural areas. Statistics Canada, however, does not published labour force data for all CAs. In the case of Eastern Ontario, for example, employment data for larger communities like Brockville, Belleville, and Pembroke are not available and therefore are included in the “rest” category of their corresponding economic regions.
Setting the overall context, the following graph shows year-to-year growth rates in annual total full-time and part-time employment in Southern Ontario for the period from 2001 to 2014.
Employment growth in Southern Ontario was the strongest during the early years following the turn of the century. This time period was also at the tail end of a prolonged positive job growth phase starting in 1997. For example, Ontario’s annual total employment growth rates were above 3.0% for each of the 3 years between 1998 and 2000 (data for sub-provincial areas are not available online before 2001). Job growth for most of the last 10 years has been generally weak especially when compared to the previous decade. The negative impact of the 2008/09 Great Recession on employment levels is also clearly apparent especially in full time jobs.
The following graph compares changes in total employment in each of the 3 Economic Regions in Eastern Ontario with the rest of Southern Ontario. The trends are based on an employment index which is calculated by taking the ratio between total employment in each year with total employment in the 2001 base year. The employment indices can then be compared in terms of how growth over the time period between 2001 and 2014.
Compared to the rest of Southern Ontario, the 3 Economic Regions performed relatively well before the 2008-09 Great Recession in terms of employment growth. Job growth in the Ottawa Economic Region did lag behind the other regions during the first 6 years but performed stronger during the following years. Employment changes in the Muskoka-Kawarthas Economic Region displayed greater volatility compared to the other regions which reflects in part the smaller labour force base and the nature of the labour force survey itself.
All Economic Regions experienced a drop in total employment during the Great Recession years although the decline in the Kingston-Pembroke region continued beyond 2009 into the next year. During the years following the Great Recession, employment levels generally remained stagnant in the Kingston-Pembroke Economic Region as well as in the Muskoka-Kawarthas Economic Region with the exception of the somewhat dramatic increase in jobs that was experienced during the last year. The Ottawa Economic Region maintained relatively strong positive growth in jobs except for the 2012-13 one year period when total employment dropped again due to the federal government budget austerity cutbacks. It did take both the Ottawa Economic Region and the rest of Southern Ontario about 3 years to reach the levels of employment prior to the Great Recession.
In the following tables, I drill down deeper in the labour force data to compare job performances of urban centres and rural areas in Eastern Ontario with the rest of Southern Ontario plus other selected Canadian metropolitan areas. The overriding observations that can be drawn from the tables are summarized as follows:
- The impact of the booming energy sector in Western Canada is clearly evident in the job growth experienced by Calgary and Edmonton throughout the time period.
- Eastern Ontario’s job market fared relatively well between 2001 and the 2008/09 recession when compared to the rest of Southern Ontario. Job losses during the recession were also comparable in terms of relative severity with every economic region and almost all urban centres experiencing declining employment.
- The job market conditions changed somewhat in the post-recession years. Eastern Ontario’s job recovery was generally less resilient compared to the rest of Southern Ontario especially in communities like Cornwall which has lost over ¼ of its employed labour force since 2009. As noted above, the relatively strong job performance shown in the Muskoka-Kawarthas economic region, is somewhat misleading in that almost all of the job gains occurred during the last year following a succession of years of declining employment.
- The weak job recovery in the post-recession years was not only limited to Eastern Ontario but was also experienced in most other economic regions of Southern Ontario including Hamilton-Niagara Peninsula, London, Windsor-Sarnia and, Stratford-Bruce Peninsula. Indeed, employment growth has increasingly become concentrated in communities located in or around the Greater Toronto region since the turn of the century. This polarization trend has increased in momentum since the recession. Employment growth has been particularly strong in cities like Oshawa, Barrie and Kitchener-Waterloo which have experienced job growth rates comparable to those found in Calgary and Edmonton.
- Industry sectors experiencing job increases or losses tend to vary somewhat across economic regions. Manufacturing jobs have generally declined in every region. Interestingly, the manufacturing sector was hit particularly hard in the Ottawa CMA after the recession even though Ottawa is not considered to be a manufacturing city compared to other Southern Ontario cities. Ottawa did also experience significant employment losses in the Public Administration sector due to job cuts by the federal government.
- The Professional, Scientific and Technical Services industry sector represented an important source of post-recession job growth in southern but not eastern Ontario. This trend is significant in that this industry sector includes specialized business services considered to be important to supporting new business start-ups and includes advanced technology companies. Once again, cities located in close proximity to Toronto like Kitchener-Waterloo have experienced the strongest job growth in this sector.
There are three points I want to conclude this blog with, First, Eastern Ontario’s job market has struggled since the 2008/09 recession and has generally lagged behind the rest of Southern Ontario in terms of employment growth. However, whereas in the past, Eastern Ontario has always lagged behind the rest of Southern Ontario economically, except for Ottawa and to a lesser degree, Kingston, the every expanding influence of the Toronto mega region appears has resulted in increased polarization in employment growth in and around the GTA at the expense of other economic regions.
Second, if the global and national economies continue to grow even modestly, this polarization is expected to increase in momentum as Toronto’s role as a leading Canadian global city continues to strengthen. The lower Canadian dollar will help Ontario’s manufacturing sector but any resulting job growth will likely skip more peripheral economic regions like Eastern Ontario. Economic regions like Hamilton-Niagara will increasingly become economically integrated with the mega region.
Finally, while Ottawa will remain as an economic growth centre with its dominant federal government sector combined with a dynamic technology sector, the rest of Eastern Ontario will continue to lag behind the rest of Southern Ontario. To repeat a point made in my previous blog, I believe that the economic strategic thinking for Eastern Ontario needs to focus on strengthening the economic linkages within the region with Ottawa and Kingston representing the primary growth nodes.