OTTAWA - Responding to another big drop in employment last month, Finance Minister Jim Flaherty is warning that Canadians are facing a tough 2009 with "substantial job losses" ahead.
Statistics Canada reported Friday the economy shed another 34,400 jobs in December -- following a 71,000 contraction the previous month -- and well above many forecasters' expectations.
The new job losses included a 70,700 drop in full-time employment, an important measure of economic strength. Only a gain of 36,200 part-time jobs kept December from replicating the previous month's losses, which were the deepest since 1982.
But Flaherty and economists agree that 2009 -- particularly the first half -- may be worse for workers.
"We're in for a difficult year," Flaherty said at a press conference in Thornhill, north of Toronto.
"We regrettably are going to have to expect continuing job losses in Canada. We are going to have substantial job losses (this year)."
Flaherty said the government will need to respond to the needs of people who are laid off in the upcoming Jan. 27 "to help Canadians get through a difficult year," and suggested Ottawa is likely to expand job training and work sharing measures.
The minister, who was in Thornhill for a pre-budget consultation, said he has been listening to Canadians about what the budget should include, naming infrastructure spending and tax cuts as the two most often-heard recommendations he has received.
But he repeated assurances that Canada was better positioned to respond to the recession that many others, including the United States, given Ottawa's sound fiscal position and the relative strength of the economy.
Canada's job losses pale in comparison to the carnage in the U.S., which lost another 524,000 jobs in December for a total of 2.6 million for the year.
But given that Canada's labour contraction has come in the past two months, the time for boasting is over, said Derek Holt, vice-president of economics at Scotia Capital.
"The U.S. is in a very deep recession, the worst downturn they've experienced in the post World War II period ... in Canada, my fear is this will be the worse downturn we'll be facing since the early `80s recession," he said.
"One hundred thousand jobs have been lost in only two months, which now almost fully reverses the large late summer employment gains, and puts Canadian job losses proportionately more in line with the U.S. experience."
Holt added that a lot of Canadians have also been taken from full-time work to part-time.
As worrying for Canadians was that the private sector shed 59,400 jobs, partially offset by 20,500 hires in government jobs.
Aside from waiting for the Flaherty stimulus package in late January, economists have already pencilled in a 50-basis point reduction in the Bank of Canada rate on Jan. 20 to bring the trend-setting rate to a record one per cent.
Holt noted with interest rates crashing toward zero, central bankers -- including Canada's -- will have to start resorting to more risky approaches to free up credit to boost borrowing and spending, including loan guarantees and even direct buys of non-government backed securities that lenders are having difficulty clearing from their books.
For the year as a whole, Friday's jobs numbers paint a picture of a weakening economy that had been bravely treading water before plunging in November.
Overall, Statistics Canada said the country managed to eke out a gain of 98,000 jobs, far fewer than the 358,000 gained in 2007 and all in part-time work.
Statistics Canada said manufacturing, forestry, building, information, culture and recreation, agriculture, fishing, mining, oil and gas and trade were net employment losers in 2008.
Hourly wages remained relatively robust last month, showing a 4.3 per cent year-to-year increase, double the current inflation rate.
But actual hours worked are declining, down four per cent for the last three months of 2008. And the last few months saw the unemployment rate soar from 5.8 per cent earlier in the year to 6.6 per cent.
CIBC economist Krishen Rangasamy agreed with Flaherty that the beginning of 2009 looks as weak as the end of 2008.
"With economic contractions in the cards over the first half of 2009, expect the unemployment rate to head towards eight per cent before coming back down as the economy stages a recovery in the latter part of the year," he said.
The latest sector to be hit by the economic tsunami was construction, which had previously seemed impervious to the recession.
In December, however, the construction industry lost 44,000 jobs as housing starts dipped in November to the lowest level in seven years.
"The sharp decline in construction employment reinforces the need for more public infrastructure investment," said labour economist Erin Weir of the United Steelworkers.
Also, with private capital drying up, Weir said the federal government should drop its requirement that projects receiving federal funds be organized as public-private partnerships.
With the price of oil tumbling, Alberta's economy also showed signs of slowing and actually recorded the sharpest employment decline of any province last month with 16,000 fewer jobs, all full-time. That pushed the jobless rate in the province up 0.7 percentage points to 4.1 per cent.
Quebec also shed a large number of jobs in December, losing 9,400 overall with gains in part time employment offset by the loss of 48,700 full-time jobs.
