COVID-19 Impact On The Canadian Labor Market

Today’s release of job numbers reveals the impact of the pandemic on Canadian workers to date. On a positive note, the labor force --- total of the employed and unemployed---- grew by 491,000 or 2.6%, indicating that job growth improved. This attracted individuals to re-enter the work force and seek out employment. While Canada had an increase in employment of 290,000 in May, it also had a simultaneous increase in unemployment of 201,000. Overall, the improvement in the labor force is a welcome sight, however it comes with a rise in the unemployed as jobs remain scarce and employers are reluctant to add to their payrolls while the economy remains restrained by the pandemic restrictions affecting the workplace. Hence, Canadian unemployment rates reached a record high in May of 13%.

 Canadian Unemployment Rate

Overall, of greatest importance is the measure ‘labor underutilization rate’. That measure, according to Statistics Canada: 

Combines those who were employed; those who were not in the labour force but who wanted a job and did not look for one; and those were employed but worked less than usual hours…..In May, more than one-third ( 34.8%) of the potential labourforce was fully or partially underutilized, down slightly from 36.6% in April, but considerably higher than the 11.9% observed in February.

Within the various age groups, the underutilization rate for youth aged 15-24 is excessively high at 51%; ages 25-54, at 31% ; and 55 and older at 35%.Put differently, every age category is way underutilized, sign of how far the Canadian economy has fallen from its potential and how much faster it has to grow to regain potential growth rates.