One year into the pandemic, the state of Canada’s labour market is a matter of perspective.
For the mid-career professional in finance or technology, the situation is vastly better than last April and somewhat close to normal, notwithstanding the challenges of working from home for an extended period. For the young person embarking on a career in hospitality, opportunities remain thin.
During the health crisis, the country has learned a great deal about how to work safely, and from where. That helps explain why the second wave of COVID-19 was nowhere near as destructive for employment. As it stands, Canada has recovered about 80 per cent of its pandemic job losses.
Still, that leaves a big gap to fill. Around 600,000 fewer people are employed. And while the job market has greatly improved, that’s little consolation to those who are disportionately affected by layoffs and work disruptions: low-wage employees, women, the young and racialized.
“If you look close enough, there are still pockets of weakness,” said Royce Mendes, senior economist at CIBC Capital Markets. “We’ve seen some signs here of recovery, but there’s still a long way to go.”
The coming year will be one of economic revival. But the labour market does not operate in a tidy, orderly fashion. It’s not simply a matter of reclaiming jobs that were once available as health restrictions ease. Some companies have shut down for good, while others are close behind. And many businesses are taking a hard look at their operations – including which positions to phase out.
“I worry about individuals in service jobs that are more routine, [and] their jobs never coming back,” said Elizabeth Dhuey, an economics professor at the University of Toronto. Some companies have likely sped up their automation plans, she said, noting “that’s a real concern” when it comes to jobs.
What does a full recovery look like? The simple view is that 600,000 fewer people are employed than when the crisis started. But the country is growing. The adult population (aged 15 and up) has increased by roughly 270,000. People continue to immigrate to Canada, while others have aged into their working years. And hundreds of thousands have graduated from colleges and universities, now starting their careers.
“If I’m forced to focus on a single metric, it is the employment rate,” said Mikal Skuterud, a professor of labour economics at the University of Waterloo.
That rate has fallen to 59.4 per cent from 61.8 per cent in February, 2020. As the pandemic escalated last year, it tumbled by nearly 10 percentage points, before clawing back most ground.
“People will look at the difference [of 2.4 percentage points] … and say, ‘We’re awfully close,’” Prof. Skuterud said. “But in fact, that’s an awful lot of people.”
For a full recovery of the employment rate, around 764,000 more people would need to be employed, based on today’s population. That’s quite a bit more than the 600,000 drop. As Canada looks to ramp up its immigration intake, it will be crucial to look beyond the raw number of employed.
The long-term jobless
As the pandemic drags on, it’s led to lengthy bouts of joblessness.
Around 2.3 million Canadians were jobless and wanted work in February, according to an analysis of Statistics Canada data by Prof. Skuterud. Of those, roughly 1.5 million were jobless for more than six months, an increase of 63 per cent from March, 2020.
That’s a potential hazard. The longer people are out of work, the tougher it can be to regain employment. Skills and connections fade, while industries undergo structural changes that affect their labour needs. In that case, “people need to seriously reconsider how they’re fitting into the labour market, and that’s much more challenging than a temporary layoff,” said Tammy Schirle, an economics professor at Wilfrid Laurier University.
There’s a possible upside scenario. The pandemic downturn is much different from past recessions, notably because some industries are effectively barred from operating at full capacity. Employers may be less bothered by lengthy gaps in résumés. Furthermore, the barrier to entry isn’t remarkably high for jobs currently on offer. Recent Statscan data suggest a slim majority of job vacancies require little experience (less than one year) or little education (high-school diploma or none).
Labour outcomes are wildly different across the wage spectrum.
As of February, there were nearly 800,000 fewer people earning $17.50 or less an hour, a decline of 20 per cent from a year ago. (Nearly two-thirds of those losses were among women, Statscan said.) At the other end, there were 410,000 more people earning greater than $36 an hour.
“Sustained work interruptions because of lockdowns have disproportionate impacts on financially vulnerable families and low-wage workers, potentially leading to sharp increases in earnings inequality,” Statscan said in a recent report. “This is particularly likely if temporary layoffs among low-wage workers become permanent job losses.”
In its analysis, Statscan said that racialized groups were dealing with higher levels of unemployment and financial difficulties, and also had higher representation in low-wage jobs. “Greater financial impacts on [racialized] groups could threaten an inclusive recovery.”
Just about every industry was shedding workers last spring. Not any more. Compared with a year ago, employment is firmly higher in education, technology, finance and others. Despite big disruptions, white-collar industries were able to cope – and even thrive – with a dispersed work force.
Elsewhere, the situation is grim. Employment is down 17 per cent in “lockdown” industries that are closely tied to public-health measures: accommodation and food services; culture and recreation; and other services, which include barbers and dry cleaners. The retail industry, another focus of restrictions, has dropped 5.4 per cent.
Tony Bonen, director of research, data and analytics at the Labour Market Information Council, suspects there will be a “relatively quick snapback” in tourism and hospitality jobs, once those industries can return. That’s because many lost positions require little experience or education. However, “the big question is whether businesses can stay afloat” until reopening, he added. “The logistics of getting vaccines into arms is the most crucial thing right now.”
Young people have been hit hard, accounting for close to half of the country’s drop in employment. It’s been especially tough for young women between the ages of 15 and 24. Compared with their male peers, they’ve lost about twice as many jobs and exited the labour force at higher rates. Part-time job losses for young women are about three times greater.
The industry mix plays a big role. Statscan recently noted that half of young women are employed in hospitality and retail. Combined with culture and recreation, those industries accounted for nearly all of the part-time job losses. Young women typically have a lower unemployment rate than young men, but that reversed at the height of first- and second-wave lockdowns, as their go-to industries for gaining work experience were restricted.
“I’m worried about young people and the differential learning loss that they’ve had coming out of high school and university, and how that’s going to affect their long-term career trajectories,” Prof. Dhuey said.
“The big risk and concern is young people,” Mr. Bonen added. “A year of missed employment has a huge impact on the development of skills. ... That’s going to be where we see the biggest labour scarring.”
Since the first wave of COVID-19, the labour market has improved substantially. But there is one group that is continually falling behind: the self-employed.
The number of self-employed is down 7.4 per cent from a year ago, compared with a 2.4-per-cent drop for employees. Making matters worse, the self-employed have lost considerably more work hours, while their job losses are widespread – everything from construction to finance, agriculture to health care.
It’s a troubling trend, but also one that’s short on explanations. To start the pandemic, self-employment losses were actually more muted. A Statscan analyst suggested last fall that entrepreneurs – with more power over their job status – may be slower to wind down operations. (Recent surveys have shown that a large percentage of small-business owners are reluctant or unable to take on more debt.) Furthermore, large companies have generally fared better in the pandemic. It’s possible that entrepreneurship has lost some appeal.
“The number of active businesses has declined substantially in most sectors, largely reflecting closures among small firms,” Statscan said recently.
The self-employed will be a key group to watch, said Mr. Mendes of CIBC. They’re a “very important part of the work force – because, of course, entrepreneurs can create jobs for other people.”
The labour market hit a milestone last month: The number of job postings had fully recovered to prepandemic levels.
Over the health crisis, the job-listing site Indeed has closely tracked postings on its platform, including for Canada. Unsurprisingly, most companies were in no mood to hire a year ago, resulting in a plunge of job postings. The ugly trend turned a corner in late May. Some 10 months later, and notwithstanding a post-holiday blip, job postings are roughly 12.5 per cent stronger than just before the pandemic.
The company’s analysis points to broad-based improvement. Postings have turned positive in all provinces, while outside of lockdown industries, most sectors are showing momentum. Postings are particularly strong in nursing, warehousing, construction and software development.
“It appears many employers are looking through the second wave’s hit to the economy, and ahead to a brighter outlook,” wrote Brendon Bernard, economist at Indeed Canada, in a recent report.
Newfoundland and Labrador stands out – in more ways than one. At the end of January, the province had only seen around 400 confirmed cases of COVID-19, and its success in controlling the virus was reflected in the job market. Although job losses were rough to start, Newfoundland quickly improved over the summer, and as of late 2020, it was the sole province where employment had actually grown over the pandemic.
Then infections got much worse. Within three weeks, total cases had more than doubled. The contagious British variant played a central role in the spike of cases. That forced the province into lockdown on Feb. 12 – and the labour impact was swift. As of February, employment is down 7.6 per cent from a year ago, putting Newfoundland well behind the other provinces. In short order, it went from best to worst. (Nova Scotia is the top province with a 0.4-per-cent drop in employment, followed closely by B.C. with a 0.6-per-cent decline.)
Presumably, the labour situation is improving again in Newfoundland. The lockdowns appear to have worked – daily caseloads are back in the single digits – and restrictions have been relaxed somewhat. Still, the province offers something of a cautionary tale: The virus is controlling the economy, and the best remedy for the labour market is keeping infections under control.