Second wave of layoffs looms as COVID cases climb
Job losses likely to impact already struggling industries
It took only hours for September’s sparkling job numbers to become yesterday’s news.
Statistics Canada reported Friday morning that employment had jumped by a greater-than-expected 378,000 positions last month. The jobless rate had also fallen to nine per cent, high but far lower than May’s peak of 13.7 per cent.
Then Ontario, stung by a rising number of COVID-19 cases, announced in the afternoon that it would follow in Quebec’s footsteps by closing gyms, movie theatres and casinos in an attempt to turn back the virus. Indoor dining at restaurants and bars would be banned, Ontario said, with the measures going into effect on Saturday in Ottawa, Peel Region and Toronto.
The future of the economy had become pegged once again to the future spread of COVID-19. It wasn’t entirely unexpected either, as days earlier Canada’s chief public health officer, Dr. Theresa Tam, said daily reported COVID-19 cases continued to “increase steeply,” with numbers for the past seven days up approximately 40 per cent compared to the previous week.
“Not much can be extrapolated for the future trajectory of employment from the release,” Canadian Imperial Bank of Commerce economist Royce Mendes wrote of StatsCan’s job numbers. “The country is now faced with new virus cases clearly trending in the wrong direction, threatening to upend the labour market recovery and any momentum that was gained in September.”
Friday’s news indeed served to hammer home the point that a second wave of COVID-19 has arrived in Canada, or at the very least in its most populous provinces.
What’s worse, though, is that case numbers are rising as Canada’s economic recovery has lost some of its velocity, and it could lose more still if an increasing number of coronavirus cases keeps wary customers at home and forces the need for more government-imposed restrictions on people and businesses. Further compounding the problem is that winter is drawing near, causing concern for businesses that may have been finding additional revenue by operating outdoors.
Put it all together and the second wave of the virus could mean a second wave of layoffs for some firms. And although these job losses may not be as breathtaking in scale as in the early days of the pandemic, it would start by hitting industries that have already been hit plenty hard, straining the alreadystrained.
“Despite the strong September jobs report, the path of employment in the coming months is still very uncertain and we expect October to be a much-weaker month of job growth, potentially even showing job losses as a number of activities have been restricted again in Quebec,” Citigroup Inc. economist Veronica Clark said in a note to clients.
Some businesses have been already hit by layoffs, or anticipate having to cut jobs in the future. Air-traffic controller Nav Canada in September announced it has cut more than 720 jobs, or 14 per cent of its workforce. And travel company Transat A.T. Inc. last month said it expected it would need to lay off at least 2,000 employees, or 40 per cent of its workers.
More job cuts could follow. Polling of business leaders done in September for the Chartered Professional Accountants of Canada discovered 31 per cent were predicting a decrease in the number of their employees in the coming year, compared to 28 per cent who were projecting an increase and 39 per cent who anticipated no change.
“A substantial increase in COVID-19 caseloads could see provincial governments re-impose social distancing guidelines that could weaken the pace of employment gains or worse, lead to another decline,” TorontoDominion Bank economist Sri Thanabalasingam wrote on Sept. 23.
More recently, Restaurants Canada said a survey had found around half of tableservice establishments expect to let employees go over the next three to four months. Shortly after Ontario’s new restrictions were announced, the industry group declared the ban on indoor dining in the province’s hot spots “will result in tens of thousands of lost jobs that will require government help to recover.”
Those job losses would damage an engine of Canada’s recent job growth, as the accommodation and food services sector added 72,000 positions in September, StatsCan said. Another vulnerable sector, information, culture and recreation, added 56,000 jobs. There was also an increase of 68,000 educational jobs as the school year began, which is a pop that may not be repeated in October.
September’s growth put Canada’s workforce within 720,000 jobs of where it was in pre-pandemic February. However, in the months to come, the Bank of Canada and other forecasters anticipate that additional economic gains will be harder fought, coming at a far less rapid rate than the feel-good summer days of declining COVID-19 cases and soaring jobs numbers.