June 27, 2012Study: Measures of Employment Turnover from 2001 to 2009 This study analysed the annual employment dynamics of firms in the business sector in a period that includes an expansionary phase from 2001 to 2008, and a recession in 2008 to 2009.
In 2009, firms with 500 or more employees accounted for 50% of the recessionary net job decline. Although those firms contributed significantly to employment growth in 2003, 2006, 2007 and 2008, they were net employment losers in 2001, 2002, 2004 and 2009.
Each year, on average, firms with 500 or more employees created and destroyed fewer than 10% of their jobs. Firms with fewer than five employees created and destroyed more than 25%.
Although the absolute net employment growth contribution of firms with less than five employees was relatively unchanged, at an average of 41,000 employees every year, their annual share of net employment growth varied significantly, depending on the fluctuation occurring in the largest firms.
During the expansion from 2001 to 2008, the four other firm size categories all increased their employment every year, and experienced less variation in their net employment growth than the largest firms.
During the expansionary phase of the decade, gross employment creation and destruction both trended downward, however the decline in gross employment destruction was steadier.
Employment reallocation, which is the sum of gross employment creation and destruction, declined to 20.1% of total employment in 2008 from 25.7% in 2001. That is, one in four jobs was either created or destroyed in 2001, while one in five jobs was affected by employment reallocation in 2008.
Employment destruction increased markedly in 2009, up 3.5%, while employment creation slowed down 1.6%. As a result of the recession, the business sector employed about 369,000 fewer individuals in 2009 than in 2008, an annual decline of 3.2%.
The contribution of firm shutdowns to the recession was minor. Exits accounted for less than 15% of recessionary employment destruction, while declining firms, those that reduced their workforce but did not go out of business, accounted for more than 80%.
Source: Statistics Canada’s Longitudinal Employment Analysis Program.