Economists say the economic slowdown expected in 2023 may not translate into an increase in “odd jobs”, unlike previous recessions, which saw levels of contract work and self-employment soar.
According to them, the tightening of the labor market, combined with a changing labor force and stubborn inflation, will make this recession different from those that preceded it.
“It’s a confluence of factors that we’ve never seen before,” observed economist Armine Yalnizyan.
While odd jobs conjure up app-powered work, like driving for Uber or finding customers through Fiverr, this phenomenon has been around for much longer. Taken in its broadest sense, it includes contract, part-time and sporadic work.
And this type of work tends to increase during recessions, Yalnizyan pointed out.
This spike is happening for two main reasons, explained economist Sheila Block of the Canadian Center for Policy Alternatives. The first is that recessions are normally characterized by widespread job losses, which means more unemployed people are looking for work wherever they can find it. The second is that during a recession, employers are generally looking to cut costs and are more likely to hire contract or part-time labor, rather than offer full-time permanent positions.
A different slowdown
According to Statistics Canada, the share of gig economy workers among all workers increased from 5.5% in 2005 to 8.2% in 2016. There were two big increases during this period , one corresponding to the Great Recession of 2008-2009.
Data from the federal agency also shows that self-employment increased by 3.9% in Canada between October 2008 and October 2009 — an increase of more than 100,000 self-employed workers, while the number of employed workers fell by nearly half a million.
Of course, the 2023 downturn would be the first major recession where app-based work, like driving for a rideshare service, is a widely available option, Yalnizayn pointed out.
In fact, the expected slowdown in 2023 will be different from past recessions in several important ways.
Although the economy is showing signs of slowing down, the labor market remains tight, Yalnizyan said. The unemployment rate remains low, at 5.0% in December, and the market gained 104,000 additional jobs last month.
Employers in many industries are struggling to hire the workers they need. This means workers have more full-time work options available to them.
These two factors, which normally lead to an increase in gig labor during a recession, are not present this time compared to previous recessions, Ms Block pointed out.
“We haven’t seen an increase in self-employment yet this time around,” Yalnizyan noted.
The baby boomer generation also continues to leave the workforce, leaving more jobs available. This could continue to keep the labor market strong in 2023, she continued.
“As long as this demographic phenomenon continues, we may not see a huge increase in gig work. And even the promised increase in immigration is unlikely to be a game-changer unless Canada does a better job of quickly matching new immigrants with jobs that match their skills,” she added.
It is not normal to see labor market demand and supply changing at the same time, Yalnizyan said.
“What will the recession look like? Well, it will be like no other recession we have ever seen. »
Small jobs that pay less
Higher inflation also means app-based odd jobs will pay even less when costs like gas are factored in, Block said, making it a less attractive option for many.
However, she adds that several elements will depend on the depth of the recession in 2023, and it should be relatively mild, according to experts’ forecasts so far. If this were not to be the case, the job market could start to look more like previous recessions, with widespread job losses, fewer full-time jobs available – and an increase in gig work.
But regardless of whether gig work increases dramatically in 2023, there are already a large number of workers in Canada who are self-employed, many of whom are gig workers associated with apps, or other types of jobs. independent contractors.
And if these people lose hours or income due to a recession, they will find it harder than other workers to get back on their feet due to a lack of protection from labor regulations and health insurance. job, Ms. Block warned.
“Whether there is an increase or not, the lack of protection for these low-wage workers will continue to be a huge problem,” she said.