A reduction in potential future earnings is one consequence of being laid off, according to a new Statistics Canada report.
People who found employment after being laid off between 2002 and 2006 were 60% more likely to make less money than they did at their previous job. The statistic is similar to layoffs observed from 1993 to 1997, the report said.
In the majority of cases, the reduction amounted to more than 20% of a person’s hourly wage. However, few workers sunk into low-income brackets after being laid off.
The study compared the probability of being laid off between the two time periods.
StatsCan said low employment growth and weak global demand were prevailing trends from 1993 to 1997, while employment growth coupled with a downturn in the manufacturing sector defined the 2002 to 2006 period.
The study also found that 20% of workers during both periods lost their pension plan coverage when they switched jobs, although 57% never had coverage to begin with.
The upside for the latest period of layoffs was that there was an 81% chance workers found a new job within one year after being let go compared with a 73% probability in the 1990s.
StatsCan said the increased chance of finding a job was the result of more favourable economic conditions in the 2000s, but that was before the global economic crash in late 2008.