COVID-19’s impact on Canada’s job market

[Music] hello and welcome to episode two of panomics a series exploring the economic impact of the covid-19 pandemic and what the coming months May hold for Canadians my name is Steven Maurice I'm the editor of Scotia Bank perspectives today I'm talking to Rebecca Young director of Economic and fiscal policy at Scotia Bank and we're talking about jobs Rebecca thanks for joining me today thanks for having me so let's jump right into these relatively new numbers from statistics Canada last week they released their job numbers for September and on the face of it it looks like really good news something like 378,000 jobs created in that month the unemployment rate down to 9% Rebecca can you break those numbers down for us a little bit talk about the trend line how how far back we've come from the worst of the impacts of the pandemic on employment so I guess that would take us back to May can you can you put those numbers into some context for us yeah absolutely and you know as you mentioned September numbers they came in strong no doubt and so we saw 380,000 jobs gained that brings the total to 2 and A4 million but importantly three4 of the jobs lost since the pandemic hit have now been recruited in a very short few five months so that is very impressive and if you look at that unemployment number at 9% it's even more impressive if you consider that what we saw in statistics Canada data was that another 164,000 Canadians re-entered the labor market so they were looking for jobs so bringing the unemployment down to 9% that that is pretty impressive and so overall I would say these numbers um really by far exceeded what forecasters were expecting for September and the gains were across the board so whether you looked at you know by and large most sectors most graphies um you know across the board they were heading in the right direction obviously some stronger or weaker than others um and then also we saw Canadians working more hours so it wasn't just more jobs being gained and more Canadians entering the labor force but we saw more hours worked and that's particularly important for GDP because that is measured as the number of hours worked times the productivity of those workers so by and large you know September's strong but that really rounds off what we've seen as an exceptionally strong trend of job recovery since that uh really the nadier of the pandemic in March April May as things were shut down and so you know at that Peak what we saw from February unemployment was at a historic low of 5.6% it shot up to 13.7% by May and so to come have come all the way down to 9% in Just 4 months is really pretty phenomenal when you think of even the global financial crisis the Peak at Peak unemployment at that point was 8.7% and it took N9 years to recover um back to pre- um crisis levels so what we have seen in Trends very strong but I guess I would finish just with a word of caution and so you know we should really um you know be happy with the numbers we've seen in September but there are a number of reasons to um be cautious about what we could expect going forward and so the first is obvious is 9% unemployment is still very high it's come you know we've come a long way but we still have a long way to go and the second aspect of those jobs that we still have to recover the vast majority of the burn sectors that are about to be hit again by uh second waves and we're already seeing since polling for these September data went out we've seen Toronto um parts of Quebec um we're seeing increasingly major parts of the Canadian economy having more restrictive measures in sectors such as food restaurants accommodation so we really you know again underscoring great numbers in September great Trend but big word of caution for sure those are great numbers for September I think uh in talking about those numbers uh your Scotia Bank economics colleague Derek Holt warned that he thought this might be the last of the great job reports so we'll come back to sort of the the forward-looking uh Outlook but maybe we'll just get a little bit deeper into the numbers that just came out um is there you would think that September with back to school and so on uh that would be that might be one of the drivers of the increase in employment was that a factor overall in the almost 380,000 jobs that came back yes absolutely that was a very big factor so September back to school and quite frankly we didn't know whether that would or wouldn't be a drive quite frankly in US numbers what we saw is that we saw a loss of employment in education as a result of Shifting to online so there were big question marks as to how what would happen in Canada so we not only saw the education sector so people um getting more jobs in education that went up by about 70,000 but even more importantly we saw about 175,000 parents go back into the workforce in September alone and about 34 of those were women or mothers and so this really underscores what we've known intuitively all along is that not having your kids in school impedes um parents and mothers in particular inability to go back to work and so I think as we look at how governments are responding to Second waves you really see why they are trying to keep schools open at all cost even if it means selectively shutting down other sectors temporarily right in that respect I we've heard the word she session used over the course of the last few months as women appeared to have been disproportionately affected or at least affected in a in a more significant way than they have in previous recessions um but do you think she session is an accurate reflection of what has taken place and with these new numbers are we starting to bounce back from that if in fact we were in a so-called X session well let me first start by unpacking the term she session and where it really came from early in this pandemic and so the first is that in a typical recession you could say past recessions are more like he sessions because in typical recessions it's jobs in construction manufacturing more of these industries that are male dominated and so typically you see 80% of job losses and recessions uh happening to men and so what we saw when the lockdowns ini started to take hold in March the First Data that we saw that first month of March print about 60% of job losses were women so and this was because it was um retail shops shutting down it was restaurants it was all these industries that were more female dominated that were hit in that very first month so I think she session really caught on there but men weren't spared fast forward a month from you know from that merch data is that men in construction and in manufacturing these jobs were also hit um you know by the time we got through April and May uh we did see a bit of a faster recovery initially for these M dominated sectors but I would say with September print we we know we saw a bit of an evening out so we did see um you know now both levels of male and female participation um you know more on par with each other um but I think that that doesn't necessarily mean that we shouldn't be worried about uh the impacts on on women because what we did see also in the September data is even though the job numbers are up um mothers are still working less and I say mothers in particular as a a subcategory of women but the data on September really looked that mothers were working less than half their usual hours that statistic was up by 70% relative to February so they may be going back to the job market but they're certainly not working anywhere close to the hours that they were before the pandemic so I think that that is a concern both at a household level and their income level but also at an Aggregate and the impact that will have on the economy and I guess you know if I can add just one other point um you know we did see some interesting data and you'll probably be surprised to hear an economist talk about this but we saw from statistics Canada data on Canadians mental health and how they've perceived their mental health over the course of the pandemic and we you know there was a gap that women were more stressed or had more Health mental health challenges prior to the pandemic but we did see um from two weeks ago statistics Canada data saying that that has widened and what I would say though is overall for women and for men the sort of the mental health impact um you know is concerning from you know from an economic and a social perspective on what that you know what that really does to uh ability to work and productivity in the workplace absolutely can we just maybe look at a couple of the other uh demographic sectors that appeared to have been more deeply affected by uh uh by job losses so uh youth in particular and I think they probably still make up a disproportionate amount and their unemployment numbers were always higher than others but I think they were even more disproportionately affected people working multiple jobs the so-called gig economy and and all of that there's probably uh a lot less money being made by Uber drivers right now but maybe more by Uber Eats cyclists or whatever so those you know there are maybe some different opportunities there now but it does seem like uh younger people as well as newer Canadians I imagine because they tend to at least in their earlier time in the country to work in lower wage jobs which also seem to have been disproportionately affected uh any thoughts about those two particular sectors yeah yeah no absolutely and so so what we did see that was quite unique um to job losses over the course of the pandemic relative to past recessions is that the bulk of job losses were focused on low wage sectors and so statistics Canada defines low wage as 2third of the mean wage and so they've pegged that at anyone earning $16 an hour or less and so what we saw was about three4 of all the job losses were for Canadians earning um what's defined as low wage and so um you know as you as you point out these tend to be uh new Canadians these tend to be um uh part-time these tend to be um sector specific whether it's in retail whether it's in restaurant food accommodation um and it's also um hitting uh you know different um um uh more minority populations whether it's black or Aboriginal so we really have seen um you know Canadians um you know it hasn't been an equal impact on all Canadians in in the workforce and if you consider the impact on low wage Canadians in particular they likely would have entered the pandemic already with household um Financial vulnerabilities and stresses so it really put has put many Canadian households in a precarious situation to suddenly be facing down either hours lost or jobs lost we saw on uh the same day that the jobs numbers came out last week uh the federal government also announcing that it's extending I understand the wage subsidy what role broadly would you say the the uh income supports provided by the government have played have they um kept particularly those people lower wage earners uh more or less whole during that period and what happens I mean there are there have been there are Replacements the Serb uh is in the process of expiring but hasn't already um there are new programs including a sort of reformulated EI um how important are those going to be going forward and how long do you think they're going to need to last can you can you look down the road and you know when when will that 9% get back to something more historically normal whether that's five or six or whatever well so first you know the first part of your question really on you know what has been done so far and I would uh quote Governor mecham I think that the federal government is really crushing it when it comes to income supports in that first phase of the pandemic and we did see uh data from statistics Canada saying that in the second quarter so basically April through June uh the amount that the government paid to Canadian households exceeded wages lost by about 30 billion so on aggregate Canadians were receiving more money than they were losing as a result of job losses and quite substantially and so that you know has been and and consequently we also saw household savings rate L literally shoot through the roof for many Canadian households and that was admittedly a combination of not being able to spend during lockdowns but it was also getting these whether it was the uh the Serb the Canada emergency response benefit or whether it was some of the other transfers and that you know so you know again the crushing it part is that that's what it was intended to do it was intended to provide this you know massive and very quick injection of cash to Canadians so they go out and spend it and avoid a worse case economic scenario and we really did see that in the rapid rebound say of retail sales or more specifically Auto Sales over the summer they really took off and so you know by and large I think that we can say um you know about 9 million Canadians out of a Workforce of 19 million tapped into the Serb over the course of its duration and it just it did just Sunset as you as you point out at the end of September um but looking forward now what the government has done is they have replaced the serve but with something commensurate in a number of ways so Canadians can still get the same 500 a week for up to 26 weeks over the next year but what what they can do additionally now is they can actually get a job um and still earn 38,000 before these benefits are clawed back so this is actually a positive in the sense it is intended to encourage Canadians to either go back to the workforce or um or stay in the workforce in second wave pandemics uh without having the fear that a clawback or a disincentive from these government supports would you know would otherwise maybe the calculation would be that they're better off staying home and so I think that the positive that gives us a sight line both as Canadians and as economists that there is a benefit out there if you lose your job in the coming year that we have more clarity on what sort of back stop uh there will be and I think that will be an important part of you know this next phase as we brace for second waves and as we brace for potential shutdowns and what we hope are very targeted sector specific shutdowns but it clearly will be an important aspect of um of of the next um you know the next uh 6 to 12 to 18 months and quite frankly you know to your point of when will we return to Historic lows of unemployment certainly not any time soon in the horizons that we're forecasting is that I think that we have seen a structural shift in unemployment in uh in in Canada for some time and so I think that we will still see you know we'll be getting back to the sixes by the 2022 time frame but you know still a long way off to seeing the you know the five high five perents that we saw last year so just one last question and I think it's connected to sort of those larger structural issues that you talked about and this would be around um sort of immigration and what obviously we're not facing labor shortages right now when you've got unemployment close to double digits um but over the last decade and we were assuming looking forward uh labor shortages were a bigger problem or a potential potentially bigger problem on the horizon for Canada with an aging demographic and immigration played a significant role in terms of policy in trying to address that problem I guess there's you know you can talk about productivity as sort of the flip side of that uh of answering that equation but in terms of Labor shortages and and what the the labor market looks like more broadly during covid um I assume the significant numbers of of immigrants that the Canada has been taking in over the last few years has been reduced because of restrictions on travel and so on uh and presumably will go on for another who knows 6 months or longer um is that something we can bounce back from is it going to require changes in Immigration policy where we'll be looking at taking in 500,000 two years from now instead of the whatever it is 325 or 350 that I think we have been over the last over the last few years yes absolutely you know the Canadian economy has really been fueled by by population growth which in turn has been new Canadians and new Canadians not only coming to Canada but integrating quickly into the workforce and so you know that's been a clear distinction between regions and provinces and cities that have you know had benefited from strong growth and strong um strong um housing sales um you know are those that you know have benefited from strong immigrant inflows and obviously the pandemic has you know has stopped but we do see that the government has continued to extend invitations uh but there has been a Slowdown in the number of immigrants that have come into Canada so clearly that has to start up quickly but we also have to focus on you know not just but during the pandemic but prior to the pandemic um U making sure that we're training both existing Canadians and future Canadians with the right skill set of the jobs of the future and that has changed radically but the premise has not around reskilling and retraining and so I think that has to be a part of the next phase of job recovery as well absolutely I think we could spend another 20 minutes talking about Innovation and training for for the new economy and the jobs of the future but we don't have another 20 minutes right now uh we're at our at the end of our time uh Rebecca Young um director of Economic and fiscal policy at scoa bank thank you so much for joining us today at that was really interesting and I appreciate you coming and talking to us thank you you've been listening to panomics we'll be back next week next week we're going to be talking about small business and Retail and what does all this mean for your corner store or your barber shop or uh the other favorite places that you like to go what's the outlook for for those businesses and how you go about your retail shopping we'll be back next week with that episode of panomics thanks so much for joining us [Music]