Economic recovery may take longer than advertised

NEWS HIGHLIGHT

Economic recovery may take
longer than advertised
The Canadian Federation of Independent Business (CFIB) has released an economic report shedding light on the fact that there is more to Canada’s international reputation for successfully weathering the recessionary storm than meets the eye.

May 13, 2010, Victoria,
B.C. – The Canadian Federation of Independent Business (CFIB) has
released an economic report shedding light on the fact that there is
more to Canada’s international reputation for successfully weathering
the recessionary storm than meets the eye.

Based on
data representing recessionary shifts of employment by size of enterprise and
industry between the third quarter of 2008 and the fourth quarter of 2009,
CFIB’s report reveals that, although the entire economy lost about 360,000
jobs, the private sector loss was closer to 500,000.    

“These
numbers show that economic recovery in this country might have a longer way to
go than headline stats might otherwise be suggesting,” explained CFIB’s
vice-president and chief economist, Ted Mallett, pointing out that “the pain of
the recession was partly washed over by public sector employment, the very employment
whose sustainability is reliant upon economic performance in the private sector.”
 

Among
private sector employers, it was the smallest ones who were able to support total
employment the best. When compared with the respective percentages of payroll
employment lost by large and medium-sized enterprises (5.6 and 5.9), payrolls
in enterprises employing fewer than 50 people saw a much more modest decline of
two per cent.

“As a group,
small firms have always outperformed large and mid-sized enterprises during
recessions,” stated Mallett. “Between the adaptability inherent in their firm’s
smaller size and the heightened value associated with each employee’s role,
most small business owners only turn to layoffs as a last resort. They are a
stabilizing force in the economy.”  

During the
five quarters of overall private sector employment losses, public sector
employment, on the other hand, increased at a torrid 3.7 per cent.

“The
increase in public sector employment amounts to another form of borrowing from
the future, acting as a brake on future economic expansion,” Mallett concluded.

Mallett is
in British Columbia this week speaking to the Association of Professional
Economists of B.C.

To view the
report in full, please visit www.cfib.ca.