COVID-19 wipes nearly 1 million jobs from Canada’s economy

COVID-19 wipes nearly 1 million jobs from Canada’s economy

As of April 19th, Canada had 36,800 confirmed cases of COVID-19 and nearly 1,700 deaths. As the virus continued to spread across Canada and the world, on April 9th we were offered a glimpse of its impact on Canadian labour markets as Statistics Canada released the March Labour Force Survey (LFS). These are crazy times and with all the extra time on my hands now that I’m working from home, homeschooling my 4-year old, and transposing my social interactions to an online setting, I thought I’d have a look at the latest release of the LFS. So, what are the key things that stick out like a sore thumb? Canadian labour markets shed 808,100 (-4.3%) jobs in March 2020 compared to the same month a year ago, marking the first decline in employment since The Great Recession of 2008-09. On a month-over-month, the decline was much sharper as over one million workers who were employed in February found themselves amongst the realm of the unemployed in March. The unemployment rate, which had been hovering near 6% for the month of March over the past couple of years shot up to 8.4%, breaking a 10-year trend of declining unemployment. These figures and more can be explored in the dashboard below.

Following the advice of health and government officials, some Canadians traded their work desks for kitchen tables, sofas and the-like. Others found themselves unemployed as businesses deemed non-essential were asked to freeze operations and other businesses adjusted their staff count to cope with lower demands. These trends led to some industries being hit harder than others. Strongest declines in demand were seen in the accommodation and food services industry, which saw employment decline by 263,000 jobs and unemployment rate rise to 18.4% (from 6.6% in March 2019), the highest level ever recorded in the LFS dating back to 1976.

Similarly, other industries that are highly susceptible to shifting trends in tourism also experienced significant adjustments in the number of workers employed. The information, culture and recreation industry shed 94,300 jobs and saw unemployment rates escalate to 12.8%, while retail trade experienced employment declines of 162,200 jobs and unemployment rates increased to 7.7%.

Strongest declines in demand were seen in the accommodation and food services industry, which saw employment decline by 263,000 jobs and unemployment rate rise to 18.4% (from 6.6% in March 2019), the highest level ever recorded in the LFS dating back to 1976.

Together, these 3 industries (accommodation and food services; information, culture, and recreation; retail trade) accounted for over 64% of the total decline in employment in Canada in the month of March.

Some industries saw little or no impact in March 2020 from the pandemic. These included the construction, agriculture, professional, scientific, and technical, and wholesale trade industries, which actually saw employment levels rise from the same month last year, and public administration and manufacturing, which saw more modest declines.

Looking at the impacts across provinces, British Columbia, Newfoundland and Labrador, and Alberta showed the most significant employment declines although the declines in some of these regions may be more driven by the adverse shock of oil prices rather than COVID-19. Quebec and Ontario, the provinces that were hit the hardest by the virus spread, saw employment declines of 4.6% and 3.2%, respectively.

Canada’s youth and women have seen the sharpest declines in labour market activity, as these groups of workers tend to be highly concentrated in the industries that were hit the hardest.

As can be seen in the first page of the dashboard below, the unemployment rate for younger workers (15 to 24 years old) spiked to 17.7% from 11.2% last year while the unemployment rate for workers in their prime working age (25 to 54 years old) increased to 7% and that for older workers (55 years and over) increased only modestly to 7.3%.

The unemployment rate for women surpassed the rate for men for the first time since 1980 as the number of unemployed women rose to 784,800 compared to 508,500 in March 2019, as can be seen from the second page of the dashboard above. While unemployment for men increased, it did so by less than the rise for women due to women’s high participation in industries that were hardest hit, such as accommodation and food services and retail trade. Meanwhile, a higher concentration of men work in industries where the impact were more modest, such as construction and agriculture. 

There is more that can be said about the latest LFS release but my daughter has a conference call with her classmates, so my iPad time is over and I’ll have to wrap it up here.

There is no doubt that these are historic times we are living and while it is too early to tell the full impact that COVID-19 will have on Canada’s labour markets, the early signs paint a dark picture, with less people working and increased levels of workers unemployed. As Canadians continue to stay put through April in efforts to flatten the curve, and more businesses were put in the non-essential list, the April numbers may show further declines in employment levels and further increases in the unemployment rate. These impacts, although temporary, will have long-lasting impacts on Canada’s financial position and we will stay tuned to see what next month brings.

— Statistics Canada released the latest version of the Labour Force Survey on May 8, 2020. For insights into April labour market data, see my latest blog post “2.5 Million Canadians unemployed“. —

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