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JOB RETENTION RATES: Is there more stability in the workforce?

Recently, a research paper from CIBC pointed out that job retention has been increasing. Below is an excerpt from the report:
 
The share of Canadians with a job tenure of more than five years is at a record high, and the share of those with less than one year in tenure is at a record low. That marks increased stability in the Canadian labour market.

This stable and boring job market is the complete opposite of what was envisioned not too long ago. The job market of the “new economy” was supposed to permanently alter employer-employee relationships and workers were seen as becoming increasingly disposable, with the implication that job stability would tumble.[i]
 
This edition of Peel Halton Insights will explore- in more detail- the issue of job retention rates.
 
Retention rates in Canada and Ontario
As stated in the CIBC document, over the long term, the percentage of workers who have been in their jobs for more than five years has been rising while the percentage of workers who have been in their jobs for less than a year has been dropping, as indicated in the chart below.
 
Chart 1: Job tenure, less than one year and more than five years, Canada, 1976 to 2013

 
There was one notable period in the late 1980s when this trend was interrupted as the rates of long-term employment dropped and the proportion of those employed in their job for less than a year increased. It also seems the percentage of those who were employed for less than a year dropped at the same time as when recessions hit Canada (the recessionary drops were in 1982, 1992 and 2009). This is not surprising; during a recession, it is not so much that people get laid off as it is that employers stop hiring, and so there are fewer new hires and fewer people with less than one year job tenure.
 
The corresponding figures for Ontario show slightly higher proportions of workers who have held jobs for five years or more over this period of time and slightly fewer who have held jobs for one year or less.
 
There are three trends, other than the job retention practices of employers, which have had an impact on these trends.
 
Trend #1: Aging workforce and job retention
Older people tend to have stayed in their jobs longer than younger people. One way to illustrate this is by comparing the average time (tenure) in a job by different age groups.
 
Chart 2: Average job tenure (in months) for select age groups, Ontario, 1976 to 2013

 
Notice how the average job tenure figures for each age group (15-24 year olds in blue, 25-44 year olds in red, and 45 years and older in green) have hardly changed at all, yet the average figure for all workers (in purple) has increased noticeably. That is because the proportion of all workers who are over 45 years of age has increased, and with their tendency to stay in jobs longer (employers may wish to hold on to experienced workers and older people may be less inclined to change jobs), the average figure has increased.
 
Trend #2: Part-time work
The other trend is the growing proportion of jobs which are part-time. Part-time jobs tend to have lower tenure rates than full-time jobs. But over the period under analysis, the job tenure of part-time jobs has been increasing at a slightly faster rate than that of full-time jobs. So, as the share of part-time jobs is increasing, the level of job tenure appears to be rising (Chart 3).
 
Chart 3: Job tenure, less than one year and more than five years, full-time and part-time jobs, Ontario, 1976 to 2013

 
Thus, while the increase in the percentage of employees working for five years or more in the same full-time job has increased (dark blue line), the share of employees working for five years or more in the same part-time job has increased even more (light blue line). Whether it is a good thing that more people are working in part-time jobs and that their tenure in these jobs lasts longer depends on whether these individuals would rather be in a full-time job or not.
 
Trend #3: Growing participation of women in the workforce
Over the past 40 years or so, women have been increasing their participation in the workforce, not only in taking on more jobs, but in forging careers. What this has meant is their job tenure rates have grown. With maternity leave provisions, available both through government programs and employer benefit packages, women no longer have to leave their jobs but instead take a leave of absence. All these factors have had a great impact on the job retention rates of women (Chart 4).
 
Chart 4: Job tenure, less than one year and more than five years, males and females, Ontario, 1987 to 2013

Data is only available for 1987 to 2013
 
As can be seen from Chart 4, the job retention rates for males have improved only slightly while the change for females has been very significant. Consider how the gap has shrunk between the proportion of males and females who had worked in the same job for five years or more (males in dark blue, females in red), or how the gap has shrunk between the proportion of males and females who had worked in the same job for one year or less (males in light blue, females in pink).
 
Job retention rates by industry
Job retention rates vary by industry. This is due to a number of factors: some sectors experience far less turnover than others; for example, government jobs. Some sectors have a higher proportion of older workers, such as Agriculture or Real Estate and Rental and Leasing; some have a higher proportion of youth, such as Accommodation and Food Services. Table 1 shows the average length of job tenure (in months) by industry in Ontario for 2013 as well as how much that figure has changed since 1987.
 
Table 1: Average length of job tenure (in months) and percentage change, by industry, Ontario, 1987 to 2013

Notes:
  • Forestry, fishing, mining combines two industry sectors: Forestry, fishing and hunting and Mining, quarrying, and oil and gas extraction
  • Trade combines two industries: Wholesale Trade and Retail Trade
  • Business, building and other support services combines two industry sectors: Management of companies and enterprises and Administrative and support, waste management and remediation services
  • Information, culture and recreation combines two industries: Information and cultural industries and Arts, entertainment and recreation
  • The major industry employment categories under Management, administrative support are: Services to buildings and dwellings (cleaning, landscaping); Business support services (call centres, copy shops); and Employment services (temp agencies) 
The colour-coding in the table highlights those values that are significantly higher (green) or lower (red) than the average for all industries.
 
Agriculture has the highest job tenure average, followed by Utilities and then Public Administration. Accommodation and Food Services has the lowest, followed by Business, building and other support services.
 
Most industries have increased their average job tenure rates. Those that have lower than average increases are ones that either already have high job retention averages (Utilities or Educational services) or which have a traditional high turnover rate and/or a younger workforce (Information, culture and recreation, which combines Information and cultural industries and Arts, entertainment and recreation).
 
[i] Benjamin Tal and Nick Exarhos, “Canadian Labour Market – The Roots of Budding Change,” Economic Insights, June 18, 2014, CIBC World Markets, Inc., p. 6.
WHY IT MATTERS
What this information means for job seekers and career choices:
  • Job retention rates have indeed gone up, but the reason may not be so much that there is greater job stability in the labour market. Instead, our workforce is aging; we have more part-time jobs (which themselves have become more “permanent”); and we have more women participating in the workforce (and pursuing careers).
  • The growth in part-time work, and the increasing permanence of that work, has contributed to a type of job stability which may or may not be desirable.
  • Knowing the different job tenure rates by industry and by employer is an important piece of information for a job seeker: higher turnover may reflect poorly on the quality of the job (pay levels, working conditions).
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