2 million face layoff in Canada, report says

Low-paid workers most at risk as unemployment rate heads toward highest level in 70 years

Two million Canadian workers have been laid off or are at “immediate risk” of layoff as a result of the public health measures to combat COVID-19, according to an analysis of employment data by the Canadian Centre for Policy Alternatives.

Toronto alone could have 260,564 newly unemployed people — translating into an unemployment rate of 12.4 per cent, up from 5.4 per cent in February. Ontario, meanwhile, could have 564,174 newly unemployed people.

“The unemployment rate in March is on track to be the highest in 70 years, and we’re only at the beginning of the economic fallout,” said David Macdonald, the report’s author and a senior economist at the CCPA. He said the national unemployment rate, which was 5.9 per cent in February, has likely doubled in the last week. “You can see pretty quickly how cataclysmic this all is.” Women, low-wage workers and young people have been hardest hit, according to Macdonald’s analysis, which found that 13 per cent of all working women in Canada are at risk of layoff, compared to nine per cent of working men.

It also found that two out of every five workers making $14/hour or less and one out of every three workers making $14 to $16/hour are at risk of “immediate” job loss. By comparison, just one per cent of workers making $40/hour are at risk of losing their job.

Youth unemployment is likely to at least double from 10.4 per cent to 25.5 per cent, but could reach as high as 33 per cent.

Macdonald used Labour Force Survey data from February to forecast the “best” and “probable” cases for unemployment rates by identifying workers at the greatest risk of layoff. He focused on the following sectors: retail, food and hospitality; airlines; and culture, sport and recreation.

He specifically looked at workers in “front-line” occupations, who are most at risk of layoff due to forced closures, and excluded workers in grocery stores and drug stores, which have been allowed to remain open, as well as online retailers (he did not project how the unemployment rate might be offset by additional hiring in these sectors).

He assumed that all other Canadian workers would be unaffected in this initial wave of layoffs.

A precise accounting of the economic carnage that has occurred as the country tries to contain the coronavirus won’t be known for weeks, but Macdonald said the unemployment rate would rise from 5.9 to 13.9 per cent in his “probable” scenario.

“It’s shocking, but it’s backed by the EI claim data,” he said.

A record one million people filed for employment insurance last week, Prime Minister Justin Trudeau said on Wednesday.

“We’ve never laid off a million people in Canada in a week and we’ll likely hit 1.5 (million) if not more by the end of this month,” Macdonald said. “There’s just no precedent for this.”

On Wednesday the federal government proposed new legislation for delivering financial assistance to Canadians. The Canada Emergency Response Benefit would provide $2,000 per month, for up to four months, to any workers who lose their income as a result of the COVID-19 pandemic, whether or not they’re eligible for employment insurance. The government describes it as a “simpler and more accessible combination” of the previously announced Emergency Care Benefit and Emergency Support Benefit.

Macdonald called Wednesday’s announcement a “critical step toward supporting workers,” adding that it highlights “how inadequate and bureaucratic the employment insurance system was in normal times.”

His analysis found that 27 per cent of workers at risk of immediate layoff would have been denied EI due to inadequate hours, and more than threequarters of workers in major cities at risk of being laid off would be better off with the new benefit than they would have been under EI.

Macdonald stressed his projections are only for the “first round” of layoffs, concerning workers on the “front lines” of affected occupations facing the most immediate risk of layoffs.

“We haven’t even got to the knock-on effects of those folks not spending in the economy.”