How the capital regained lost jobs
Region is unique in recovering employment in spite of pandemic
It took exactly one year, but the capital region in June finally recouped the jobs it shed during the early stages of the pandemic last year. It's the only one of the country's 10 biggest cities to do so.
Statistics Canada on Friday estimated total employment in Ottawa-Gatineau reached nearly 776,000 in June — surpassing the mark of 771,500 recorded for February 2020, the month before the economy began shutting down.
During the worst of the pandemic last year, the capital region shed 81,000 jobs, of which 58,400 were Ottawa-based and 22,700 anchored in Gatineau. The losses were slightly disproportionate in favour of the Quebec side, which accounts for 24 per cent of the combined population.
Since the trough, the recovery has been much stronger in Ottawa, where the economy has added nearly 69,000 net new jobs, while Gatineau gained just 16,700. (Data is adjusted for seasonal influences.)
Indeed, Ottawa is just one of a handful of Canadian cities where employment levels surpassed February 2020 levels.
The towns that have managed it are smaller and widely scattered. They include: Peterborough, Guelph and London in Ontario; Moncton, N.B.; Abbotsford, B.C.; and Regina.
One thing these cities have in common is an employment surge in either government or health services, or, in the case of London, both.
Ottawa, oddly, owes its resilience largely to the goods-producing side of its economy, not its dominant public sector.
The city's construction industry alone has added 12,600 net new jobs during the pandemic thanks to a slew of projects ranging from Kinaxis headquarters and new warehouses to the latest stage of the light rail transit system. (Industry data is not adjusted for seasonal influences, but is averaged over the three most recent months.)
High-tech, on steroids for much of the past year, has added 7,300 workers in Ottawa since February 2020 along with another 1,400 in Gatineau. The region's core high-tech workforce is now 51,000-strong, the highest total in nearly seven years.
The big losers in Ottawa, as is the case for nearly all cities, are the sectors that depend most heavily on in-person activities.
■ Employment in Ottawa's hotels and restaurants was 26,500 in June — down 24 per cent from February 2020. However, even that is a considerable improvement over the worst of the lockdown a year ago, when just 15,300 were clinging to jobs.
■ The number of jobs in and wholesale approached 72,000 in June, representing a 16-month decline of 10 per cent. This compares to 62,400 a year ago, reflecting the gradual reopening of the economy.
■ The transportation sector, which includes transit workers and employees of railways and airlines, has been especially hard hit by restrictions. It employed just shy of 13,000 in June, down 34 per cent from February 2020.
In Gatineau, where the economy reopened earlier, the patterns not only differ, but also offer a glimpse of how these sectors are likely to behave in Ottawa as COVID-19 restrictions abate. Employment in both retailing and transportation in Gatineau is already higher than it was during pre-pandemic months. On the other hand, the number of jobs supported by hotels and restaurants remains depressed: just 5,000 workers compared to 9,400 in February 2020.
An industry niche that performed well in both Ottawa and Gatineau involves business services, defined to include call centres, desktop publishing and credit bureaus. Confronted with an inability to sell directly to customers, many companies beefed up online operations and customer support centres. Employment in this sector across the region jumped 8,700.
A puzzle in the region's overall mix is government employment which gave rise to opposing trends during the past 16 months. In Ottawa, the number of government jobs — overwhelmingly federal — increased by 5,000. In Quebec, the tally went the other way — a loss of just a shade more than 5,000 — for a zero net gain across the region. That's in sharp contrast with the experience of Montreal, Toronto, Edmonton and Vancouver, which have all seen dramatic gains in government employment.
A factor here may be that the provinces bear the lion's share of the responsibility for waging the front-line war against COVID-19.
During the early months of the pandemic, the federal government's heavy concentration here — 23 per cent of the workforce in Ottawa and 27 per cent in Gatineau — was a blessing. (Only Victoria comes within shouting distance, with less than 15 per cent of its workforce in government. In Montreal, Toronto, Vancouver and Calgary, the ratio is less than five per cent.)
When total employment in Toronto, Edmonton and Vancouver shrank 15 per cent or more, Ottawa shed a relatively modest 10 per cent of its jobs. Government, which kept its workers on full salary, was an important stabilizer. More recently, though, something odd has been happening. Despite the rapid employment gains, the region's jobless rate has been deteriorating and at a faster rate than elsewhere.
Recall that, in the month before economic lockdowns changed our world, the capital region's jobless rate was 4.3 per cent, near a historic low. Just three other cities among the top 36 in the country could boast lower rates: Victoria, Lethbridge and Quebec City.
By the fourth month of the pandemic, when the capital region's jobless rate had more than doubled to 9.6 per cent, there were still just three cities with better records.
Fast forward to June 2021, when Statistics Canada estimated our region's jobless rate at 7.8 per cent. Suddenly 16 cities were outperforming the capital region, including, for the first time, Vancouver and Montreal.
The reason is straightforward. People are entering or returning to the labour force in the capital region at a faster rate than just about anywhere else in the country. And, really, this is a phenomenon restricted to Ottawa, where the labour force — including those looking for work — has increased 38,500 in the past 16 months, while Gatineau's shrank by 3,400.
The shift accelerated locally last February, when the jobless rate in Ottawa was 6.1 per cent. Since then, the city has added 21,300 jobs, which would normally produce a further drop in the unemployment rate. Except that Ottawa's labour force swelled by 37,200 and pushed the jobless rate to 8.2 per cent in June.
In Gatineau, employment increased by just 2,700 over the same period, yet the jobless rate fell to 6.3 per cent because the size of the labour force remained the same. The upshot: Gatineau's jobless rate is now nearly two full percentage points below that of Ottawa. Yet, it's not necessarily a sign that Gatineau has a stronger economy. When more people are seeking work, it's usually a sign that employers are starting to hire again.
Across the country, only three cities have seen their labour force grow faster than that of Ottawa since February 2020: Peterborough, Guelph and London. In the case of the latter two, jobless rates have also jumped even though employment is at least three per cent higher than before the pandemic.
There's a metric that captures the robustness of local economies. It's called the participation rate, which measures the size of a city's labour force against its working age population. When an economy is healthy and jobs appear available, people seek them out. If jobs aren't available, people get discouraged and don't bother.
In Ottawa, the number of people with jobs and seeking work in June tallied 656,200 against a working-age population of 922,900, producing a participation rate of 71.1, the highest in more than eight years. Remarkably, it's also the highest such ratio among the 36 largest cities. Pre-pandemic, Ottawa's participation rate was 68.4, sixth best in Canada.
In Gatineau, it was a much different story. Its labour force of 185,300 against a working-age population of 286,100 produced a participation rate of 64.8 in June, 20th among the group of cities.
It's a sign of how differently the pandemic has played out in Ottawa and Gatineau and why Ottawa's economy may be much stronger than its 8.2 per cent jobless rate suggests. That's especially true with another stage of economic reopening ahead, which should finally lift the few sectors still suffering the effects of lockdown.