Fraser Forum

Employment in northern Ontario below pre-recession levels

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Ontario’s economy has experienced more than its share of economic pain in recent years. That pain, however, has not been spread evenly around the province. Some regions have been hit harder than others.

That’s why we recently published a study, which divides the province into five large regions and analyzes labour market performance in each in the years during and since the 2008/09 recession. This series of blogs places a spotlight on specific regions that have had particularly weak economic recoveries since the Great Recession. This blog spotlights developments in northern Ontario.

This is by far the most geographically vast of Ontario’s solitudes, with significant distance between most population centres. The largest city is Greater Sudbury (pictured above), followed by Thunder Bay. Other significant population centres include Sault Ste. Marie, North Bay and Timmins. Northern Ontario is the least populous of our five regions of Ontario, with a population of 798, 000. This is the smallest population of Ontario’s solitudes, but is still more populous than three Canadian provinces (P.E.I., Newfoundland and Labrador, and New Brunswick).

Northern Ontario’s economy is distinctive in a number of respects. One striking feature is that natural resource extraction represents a significant share of the regional economy, to a far greater extent than in the rest of the province. Forestry, fishing, mining, quarrying, and oil and gas extraction taken together represent seven per cent of all employment in northern Ontario, compared to just 0.6 per cent in the province as a whole.

Aside from this fact, northern Ontario’s economy and demographics resemble eastern Ontario in many important respects. Like eastern Ontario, northern Ontario’s demographic profile skews older than the provincial average, and partly as a result, the region has a lower labour force participation rate than the province as a whole.

Northern Ontario was already struggling in the years prior to the recession, with significant job losses in specific natural resource industries. So the province entered the recession with an unemployment rate already well above the provincial average. The recession itself took a further toll on the provincial economy, leading to significant job loss.

Unfortunately, in the years since the 2008/09 recession, the region’s economic recovery has not been strong. In fact, average annual employment growth in northern Ontario has been slightly negative during the years from 2010-2015, the very years when one would have expected Ontario to recover from the recession. As a result, employment levels in northern Ontario are still below pre-recession levels, as of 2015.

The chart below demonstrates this fact by showing total employment levels between 2008 and 2015 as an index, with 2008 levels set at 100 in the index. This means that if employment climbs above 2008 levels, it will be shown as a number above 100 (the starting point) in the index, whereas if employment is below 2008 levels in a given year, that data point will be below the starting point of 100. The chart shows that in northern Ontario, as in southwestern and eastern Ontario, employment levels in 2015 still had not rebounded to 2008 pre-recession levels.

As the chart shows, three out of Ontario’s five major regions have not yet recovered to pre-recession employment levels. These data about those regions, including northern Ontario, suggest it will likely take many years of strong economic growth to undo the economic damage done in the years during and since the Great Recession.

 

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