The Fraser Institute

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 28, 2008) - Quebec has the second-worst performing labour market in Canada and one of the worst in North America, according to a new study comparing the performance of labour markets in all 10 provinces and 50 U.S. states released today by independent research organization the Fraser Institute.

"Quebec suffers from high unemployment rates, lengthy spells of unemployment and the province has one of the worst records for worker productivity in all of North America," said Jean Francois Minardi, Fraser Institute senior policy analyst.

The peer reviewed study, Measuring Labour Markets in Canada and the United States: 2008 Report, assesses the performance of labour markets and examines characteristics which impact performance. The study includes an overall measure of labour market performance based on five indicators: total employment growth, private sector employment growth, unemployment rates, duration of unemployment, and labour productivity over the years 2003-2007.

The complete study and rankings are available at www.fraserinstitute.org.

Quebec's unemployment rate and the duration of unemployment along with its worker productivity and middling performance in creating private sector jobs weighed negatively on the province's overall performance.

Alberta had the best performing labour market in all of North America while British Columbia has the second-best labour market in Canada and ranked 11th in North America. Saskatchewan finished third in Canada and 14th among all 10 provinces and 50 U.S. states. Neighbouring Ontario was ranked 25th overall.

The study also examines four aspects of labour markets that directly affect labour market performance: unionization, public sector employment, minimum wages, and labour relations laws.

A gap emerges between Canadian provinces and U.S. states when public sector employment is considered. Quebec was ranked 51st out of 60 for its high rate of public sector employment, 19.8 per cent of total employment.

"The split between private and public sector employment is an important aspect of labour market performance since the incentives, productivity, and performance of labour activity in the private sector is different from that in the public sector," said Niels Veldhuis, co-author of the study and Fraser Institute director of fiscal studies.

"Lower labour productivity in the public sector is particularly problematic given that workers in the public sector tend to receive a wage premium compared to their private sector counterparts."

Quebec also ranked dead last in North America for its high rate of unionization, 40.2 per cent of its workforce.

One reason for Quebec's high unionization rate is its pro-union labour relations laws. Evidence shows that labour relations laws biasing one group at the expense of another, or which are overly prescriptive, reduce labour market performance. On this measure, Quebec was again ranked last in North America for its restrictive set of labour laws.

In addition, Quebec maintains one of the highest minimum wages among the 60 jurisdictions. High minimum wages have been proven to reduce employment and on-the-job training, especially for young people seeking to enter the job market.

"If Quebec wants to create a more vibrant and stronger labour market, it needs to pursue a more balanced and less prescriptive set of labour laws. The province should also consider reducing public sector employment and avoid increasing its minimum wage," Minardi said.

The Fraser Institute is an independent research and educational organization with locations across North America and partnerships in more than 70 countries. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org.