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Job loyalty is not a thing of the past: report

Job loyalty is not a thing of the past: reportA worker walks on a construction site in Hamilton, Ont., November 14, 2013. THE CANADIAN PRESS/Aaron Lynett

OTTAWA - A job for life? It sounds like an outdated notion, but a new report suggests that workers staying with the same employer for most of their career is as prevalent today as it ever was.

The study, by CIBC (TSX:CM) economists looking at the changing labour market, concluded one aspect hasn't changed much over the past three decades. It found that most Canadians tend to stay at their place of work, if not for life, at least for a long time.

Using Statistics Canada data dating to 1986, economists Ben Benjamin Tal and Nick Exarhos calculate the probability of keeping a job — referred to as the retention rate — once an a employee has been with one company for five years or more is now at 95 per cent.

About 50 per cent of Canadians in the workforce have been with one employer longer than five years, a record high, and well up from 42 per cent in the early 1990s.

In fact, retention rates appear to rise with each year of seniority, starting at 60 per cent for those who have been at a job for one year — also near record levels — and rising to 95 per cent after five years.

That is the opposite of what many expected in the new information economy where it was thought that workers would constantly need to retrain as jobs changed and employers outsourced more and more of their workforce.

"It was not too long ago people were talking about the new labour market, that there would be no loyalty, that the average career would have five, six, seven jobs. But the opposite is happening, the stability of the labour market is as high as ever," said Tal.

The reason for the trend, however, goes beyond loyalty.

Tal believes "fear" has played a big role, particularly in the post-recession economy where the number of Canadians officially unemployed remains higher today than in 2008.

His analysis suggests that many employers are retaining workers and paying more for the privilege because they fear losing skilled and trained staff that might prove difficult to replace.

Those skilled workers are staying with one employer longer because they are being treated well, he said. The data shows the highest wage gains in the past 20 years or so have come among skilled workers.

Among low-skilled workers, the fear is that they had better hang on to their jobs because of the large pool of unemployed.

The report arrives at that conclusion by comparing short-term unemployed workers who have been jobless for roughly three months or less against long-time unemployed, those who have been jobless for 27 weeks or more.

The most recent data shows the former is at cyclical lows, while the long-time unemployed remain at elevated levels.

"The abnormal relationship between recent vacancy rates and unemployment suggests that large swaths of those unemployed are not what employers are seeking," Tal says.

In other words, there are jobs out there for skilled workers, but not enough skilled workers to fill them. On the other hand, low-skilled workers are begging for work that is not available.

Canadians may need to upgrade their skills to win well-paying and stable jobs, but once that hurdle is cleared, "a career featuring higher stability lies ahead," Tal said.

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