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The sales economy: Canada now has more workers in retail than factories

May 29, 2008 Ottawa – For the first time ever, more Canadians are involved in selling products than producing them.

For the first time ever, more Canadians are involved in selling products than producing them.

A
Statistics Canada report Monday showing retail sales rose 5.8 per cent
last year contained the added curiosity that for the first time, more
people were employed in retail sales than in manufacturing.

The
sales increase was the second strongest in five years and underlined
the growing importance of domestic demand as the lynch pin of Canadian
growth, with the red-hot West, particularly Saskatchewan and Alberta,
leading the wave.

But the flip side of the coin is that as the
service sector has shone, manufacturing – especially the auto and
forestry sectors – has gone from bad to worse, so much so that there
are now more people working in car dealerships, and at the local
supermarket or department store than in factories and mills.

Statistics
Canada said Monday that there were 1,790,000 retail jobs on average
last year, compared to 1,784,700 in manufacturing.

But it's the
trend that matters. Starting the century, 2,036,700 were employed in
manufacturing, compared to only 1,441,000 in retail sales. The gap
narrowed steadily each year until 2007, when retail overtook
manufacturing.

Although the report only covers 2007, manufacturing has continued to shed jobs this year, dropping another 15,000 in April.

"It's
not surprising when you consider manufacturing has been in a decline in
recent years and probably over the past few decades," said Aron Gampel,
deputy chief economist with the Bank of Nova Scotia.

And it's not
about to turn around, he added. "As our economy has grown from a
population standpoint and wealth standpoint, we are becoming much more
service oriented and retail oriented."

But Canadian Auto Workers
economist Jim Stanford says the numbers are disturbing nevertheless,
and bodes ill for the Canadian economy. He said retail jobs tend to be
lower paying, less stable and less productive.

"That's a shocking
statement of the structural decline of our economy that we employ more
people at lousy wages selling stuff than we employ at good wages making
the stuff that we sell," he said.

According to the federal
agency, the average hourly wage for retail workers last year was
$14.87, compared with $21.66 in the manufacturing sector. But Stanford
said the discrepancy in average weekly wages is larger – $486 compared
to $900 a week – probably because there is more part-time workers in
retail.

"The loss of manufacturing jobs and their replacement
with retail jobs still leaves a huge loss of income and productivity in
Canada," he said.

Although some of the job losses in
manufacturing were caused by cyclical factors such as the appreciation
of the Canadian dollar and lower demand in the U.S., the major factor
is what economists call secular, which means they are not likely to
come back.

In forestry, one of the hardest hit industries, 36,421
jobs have vanished since 2003, bringing total employment in the sector
under 300,000.

And more will likely disappear before the industry
has a turnaround, says Avrim Lazar, the chief executive with the Forest
Products Association of Canada.

The good news is that with demand
in China and other emerging economies growing, and producing countries
such as Brazil and Chile turning more to planting food and biofuels
than trees, the point will come when Canadian forest products will be
in great demand, he says.

But the mills will be larger, leaner and more efficient, and less labour intensive.

"We
have improved our productivity more than Canadian manufacturing and
more than the U.S. consistently," Lazar said. "So I'm not going to say
employment is going to be increased, but I will say employment will be
saved."

Gampel said the same dynamic is at work in the auto
sector, where companies are replacing inefficient plants and with more
productive, less labour-intensive facilities. Increased production and
a better economy may not mean more employment in the sector, he said.

"This
has been where our economy has been morphing to," he said. "If you add
business services, health services, education services, transportation
services, and whatever, you find the employment gains have been nothing
short of spectacular in the services sector."

The Canadian Press