People queue to collect COVID-19 antigen test kits at the Hazeldean Mall in Ottawa on Jan. 7.PATRICK DOYLE/Reuters
In the Omicron wave of the COVID-19 pandemic, our big economic concern may not be a new surge of unemployed. We should be more worried about the rise of the un-unemployed.
Over the near term, at least, Omicron – a variant of the coronavirus that spreads more quickly and in greater numbers than previous forms – has the potential to give rise to a zombie labour force: Canadian workers who are employed, but are not actually working. Even before some provincial governments began to reimpose restrictions that have forced some businesses to (again) temporarily close, work absences were rising rapidly in many sectors amid surging numbers of illnesses, positive tests, and contact-related self-isolations.
Those work absences won’t show up in the employment count. But the economy will feel an impact of the growing number of employed people who can’t go to their jobs and produce goods and services.
Last Friday’s December employment report dropped a hint of what may be in store as Omicron sinks its teeth into the Canadian work force. Total employment posted another strong gain, 55,000 jobs, despite the rising impact of the variant last month. Yet total hours worked fell, for the first time in five months.
Granted, those numbers came from a Statistics Canada survey conducted in the second week of December, when the Omicron threat was nowhere near what it had become by the end of the month. Nevertheless, they are a harbinger of what we can expect to see in January. Regardless of what happens to the national job count – which may well decline, amid new restrictions, especially in Ontario and Quebec – it will substantially underestimate the amount of labour being lost to the coronavirus.
Indeed, we have seen employment remain pretty resilient, overall, in the face of previous waves of this pandemic. At the beginning of 2021 and again last spring, when case counts surged and containment measures were tightened, job losses were short-lived, and largely confined to sectors directly hit by restrictions.
But those previous waves of the pandemic did not feature anything like the spread and case counts that we are seeing with Omicron – which, unlike government-imposed restrictions, doesn’t pick and choose which workers and industries to send home. The impact on worker absences has the potential to be much more widely spread.
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Stephen Brown, senior Canada economist for Capital Economics, says the hours-worked numbers will be the key for assessing the impact on the broader economy, as they will tell a much more complete tale than the employment count. He figures that we may well see a drop of 1.5 per cent to 2 per cent in hours worked for January, based on the rate of absences implied by the COVID-19 data.
“It is tough to put a precise figure on that because the surge in infections has overwhelmed testing capacity, which means even the record-breaking case numbers understate the true scale of disruption,” Mr. Brown wrote in a report last week.
This, obviously, is not a problem unique to Canada. Omicron, and its economic impact, are very much global issues.
“The cost of the massive isolation of large segments of our population all at the same time is the next big threat to our economies,” said Carl Weinberg, chief economist at independent research firm High Frequency Economics, in a note to clients last week.
“We fear the global economy is about to suffer wide-ranging shutdowns due to staffing shortages that will last until the Omicron surge passes. We do not know when that will be.”
Still, we should keep in mind that illness-related work absences – even widespread ones – are hardly unique to Omicron, or the COVID-19 pandemic. Every annual influenza season takes its toll on the labour supply, and the economy generally finds ways to roll with it. We even have precedents to suggest that even large-scale worker absences don’t spell economic calamity.
In early 2010, Statistics Canada published an analysis of the impact of the 2009 H1N1 (swine flu) pandemic, drawing on labour market data from November, 2009. It found that 1.5 million workers – about 9 per cent of the labour force – reported being absent from work at some point during the month because of either H1N1 or seasonal flu, causing a net 21 million hours lost (after accounting for increased overtime that offset nearly one-third of the time lost to sick days). That represented about a 1-per-cent hit to total hours worked.
But the notorious H1N1 bug did little to derail that year’s recovery from the Great Recession. Gross domestic product rose for seven consecutive months from August, 2009, to March, 2010 – including that flu-riddled November.
Granted, as serious as H1N1 was, it was no COVID-19. Isolation requirements for infected and exposed people look likely to impose much longer absences than we saw even in that particularly brutal 2009 flu season. Then again, the lack of isolation requirements in 2009 probably caused much greater spread than if infected workers had stayed home.
Today’s isolations are certainly preferable to the much broader shutdowns that governments imposed at the beginning of the pandemic, which were economically devastating, though entirely defensible from a public-health perspective. If a few lost hours over the next month or so protects our health and keeps the recovery on track, the short-term pain will be worth it.
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