Job market begins to heat up

Job market begins to heat up

COVID-19 snake-bit the economy one year ago, infecting most sectors instantly with its venom. Labour markets typically react to such a shock with a lag; the poison taking longer to take effect. Not this time; the job count swooned in synch with the rest of the economy, and remained groggy for a lot longer. February brought welcome news: two months of employment declines were erased as the job count surged by an outsized 259,000. Is this just a lucky one-off, or is this a down payment on a more fulsome recovery?

Days before the pandemic hit, industry was complaining loudly about the lack of labour in the Canadian economy. Not just the skilled stuff—pretty much everything. The unemployment rate was flying below the treetops, hitting 5.6% in January 2020, which aside from its momentary 2008 dip into the same airspace, was last seen there in the early 1970s. 

Normally, a clutch-and-grab labour market doesn’t let folks go too easily. After all, it took a lot of effort to recruit people only to show them the door—and risk losing them to a competitor. Not so this time; COVID-19’s existential threat saw the doors flung wide open. Nobody was taking any chances.

Naturally, part-timers were hit a lot harder than the full-time set, in relative terms. Their ranks fell by almost 30%, against the 12% hit to full-timers. However, in terms of absolute losses, at the trough, there were 1.9 million fewer full-time jobs against the one million drop in part-time posts. 

Total hours worked paints a starker picture of the scene. At the trough, across the economy on-the-job hours were down 28%. In light of that, total hours have made a remarkable comeback, currently at 97% of pre-pandemic levels.

Not every industry is basking in the glow of this achievement; manufacturing, construction, finance, wholesale and retail trade are all posting hours worked close to or above this average marker. However, the pandemic’s most affected industries are well-below, with accommodation and food still down 28%; of pre-COVID-19 levels; information and cultural still down 12%; and in spite of a revival in shipments of goods, transportation is being held back by air carriers, still off the previous peak by 11%.

Peek below the surface and the personal toll gets starker. Shorter-duration unemployment spiked, but quickly returned to a more reasonable level. The longer the tenure, the stickier the deterioration. In fact, the long-term unemployed—those at 27 weeks or more—are at a share of unemployment not seen for about 25 years, with no improvement thus far.

Not surprisingly, youth are more affected than the rest of the labour force. Unemployment rates are always much higher for youth, and what happened after COVID-19 hit was diabolical. For the 15-24 age range, the unemployment rate more than doubled, spiking at 31.4%. Depression-level, by any measure.

The February job market result is a strong indication of the economy’s ability to rebound. In terms of hours worked, services dominated. That’s a big shift, and a welcome one. Even the accommodation and food sector gave a big bottom line boost. Part-timers were the huge mover in the job count numbers, but the full-timers added a hefty number of jobs as well.

How labour returns will have a big impact on the smoothness of transition back to normal. On this score, there are a number of factors to consider. We could be back into tight labour conditions before we know it—there are already constraints in particular sectors, notably manufacturing. Although job openings are increasing, workers may be reticent about a physical return to work where no digital substitutes exist. In addition, COVID-19 frustrations may lead to greater-than-normal turnover, and the need for talent could well encourage this. Finally, if there’s a rapid resurfacing of deeply-submerged industries, it will exacerbate the tensions the labour market is already anticipating.

The bottom line?

One great month does not a trend make. But it’s quite clear from the outsized February number that there’s resilience in Canada’s job scene. Industry is crystal clear that the need for talent is still critical, a reality that suggests that when the venom runs its course, the market will be fit as a fiddle and good to go. We’re likely close to the point where Canadian firms need to consider staffing-up options really seriously—if they’re not already at it.

Learn more here: https://www.edc.ca/en/weekly-commentary/job-market-heats-up.html

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