A Look at The Job Market

Where are the jobs?

Most are in the service sector…

BC's economy isn't just less resource-dependent than it used to be. It's also becoming increasingly less dependent on goods industries as a source of employment and GDP.

For every person who's employed in the goods sector (both resource and non-resource-based), there are four British Columbians who have jobs in service industries.

This is quite a significant change. In the mid-1970s, nearly a third of all BC workers had jobs in goods industries.

In fact, BC has one of the most service-oriented economies in Canada , with services accounting for a bigger share of total GDP and employment than in virtually every other province. This is partly because BC is Canada 's gateway to the Pacific, and a lot of industries and activities have developed around the province's role as a transportation hub for goods and people entering or leaving the country from the west coast. However, it also reflects the increased role of some other types of services in the economy.

Four out of five jobs are in service industries

…which also generates the lion's share of the province's GDP

GDP, or value added, is the measure that's most often used to describe the economy. Do the GDP figures tell the same story about the relative importance of the goods and service sectors as the employment numbers? The answer to this question is that they do. In 2005, nearly three-quarters of the province's GDP came from the service sector.

Figure 3 shows how the basic structure of BC's economy has changed during the last fifteen years, as the province has continued a long-term trend of becoming less reliant on goods industries as a source of growth. In 1990, there were three service-sector workers for every person employed in goods production. By 2001, the ratio had increased to four to one, and it has remained at about that level since then. The sector's share of total GDP has also fallen, dropping from about 30% in 1990 to the 26-27% range in recent years. This phenomenon is not recent: the relative size of the goods sector has been shrinking steadily since the 1960s, the first year for which provincial estimates of GDP are available.

Just over a quarter of the province's GDP originates in the goods sector

Labour productivity is usually higher in goods industries

The graph also illustrates another interesting phenomenon. The goods sector's share of total GDP is consistently higher than its share of employment. This might seem puzzling. How can a fifth of the workforce produce more than a quarter of the economy's total GDP?

One explanation is that labour productivity (measured as GDP per worker) tends to be higher in the goods sector than in some service industries. Most goods industries use a lot of machinery and other specialized equipment to make their products. They can increase their output by using existing equipment more efficiently or by investing in new types of equipment. Productivity gains can also come from more efficient use of labour.

An industry's GDP reflects the value added by both the labour and the capital equipment that's used in production, so on a per worker basis it is often higher in the goods sector than in some service industries, where labour is the main input into production.

There are other factors at work too. In the goods sector, jobs are often physically demanding and may involve a certain degree of risk for the worker. This is reflected in pay scales, so an hour of a worker's time may be more highly valued, and thus makes a bigger contribution to total GDP, in the goods industries than in services. Labour income is one of the biggest components of an industry's GDP.

Another factor contributing to the goods sector's higher share of GDP is related to the way we measure employment. The employment numbers used in these comparisons are simple job counts, and they don't differentiate between full-time and part-time workers.

A person who has a part-time job in the service sector is counted as one employee, even though the number of hours worked may be significantly less than those put in by a full-time worker in the goods industry. This means that the relationship between GDP and employment can be a bit misleading as some industries, particularly those in the service sector, rely heavily on part-time or seasonal employment.

Thus, there are many reasons why labour productivity is usually higher in the goods sector than in services.  They relate more to the structure and nature of the goods sector than to any intrinsic differences in the efficiency with which work is done.