Canadian economy lost 68,000 jobs in May, but lockdowns set to ease

OTTAWA — The Canadian economy lost 68,000 jobs last month and more dropped out of the labour force altogether, Statistics Canada said Friday, dampened by continued lockdowns that are now set to ease.

TD senior economist Sri Thanabalasingam said there should be jobs growth in the coming months as provinces prepare to rollback restrictions, which alongside rising vaccination rates may give employers’ hiring plans a shot of confidence that the reopening will last.

But he and others warned of potential problems on the path to recovery, including fewer people in the job market potentially leading to labour shortages as demand for workers rises.

Desjardins chief economist Jimmy Jean said once restrictions are lifted there will be pickup in sectors that are still deeply affected, but likely not to a return to the pre-pandemic level.

“That’s where the matching process will take time,” he said in an interview. “The low-hanging fruit will have been picked and the recovery that we’re after might be slower.”

The job losses in May, the majority of which were in part-time work, marked the second consecutive month of declines after 207,000 jobs were lost in April and brought overall declines in the third wave of the pandemic to roughly what was seen during the second wave.

The unemployment rate was 8.2 per cent in May, little changed from the 8.1 per cent in April because the number of unemployed people in Canada overall stayed relatively steady.

What changed is that more people dropped out of the labour force in May, including workers who simply got discouraged and gave up looking for work. 

Statistics Canada said there were 49,700 discouraged job-searchers last month, more than twice the average of 22,000 seen in 2019. The agency said the unemployment rate would have been 10.7 per cent in May had it included in calculations those people who wanted to work but didn’t search for a job.

The job losses in May put the country about 571,100 jobs, or three per cent, below pre-pandemic levels seen in February 2020. The actual gap may be larger once adjusting for population growth during the pandemic, which Statistics Canada said would put the gap at 763,000 jobs, or 3.9 per cent.

The data release Friday also noted that 28,000 more core-aged women, those between age 25 and 54, didn’t look for work in May as schools remained closed in Ontario, which with Nova Scotia were the only provinces with overall employment losses last month. 

Schools were closed in Nova Scotia in May. The had province planned to keep them closed for the rest of the school year, but later reversed that decision.

Ontario schools will remain closed in the province for the rest of this month, which Jean said would delay the recovery in employment for mothers.

Another hurdle will be the loss of more than 100,000 businesses through the pandemic, which will hurt the economy’s ability to create new jobs, said Leah Nord, senior director of workforce strategies with the Canadian Chamber of Commerce. 

A near-term rebound in hiring isn’t the same as a jobs recovery, Nord said, noting 478,000 workers are long-term unemployed, meaning they have been out of work for six months or longer.

Not only do those workers have a harder time finding work the longer they are unemployed, they may also see income losses even with government-backed training programs.

An October 2020 presentation to a group of top federal officials noted that employment insurance recipients who started retraining within their first month of a claim ended up with over $10,000 in cumulative gains in earnings five years post-program. 

The document, a copy of which was obtained by The Canadian Press under the Access to Information Act, noted that contrasted with cumulative losses in earnings of over $1,000 five years post-program for anyone starting training after six months of unemployment.

Angella MacEwen, senior economist with the Canadian Union of Public Employees, said many of those unemployed during the pandemic aren’t eligible for EI and wouldn’t have the usual connection to job-training services. 

She also said training often focuses on helping people back into a job immediately.

“Some of the jobs that are coming open, where there is hiring happening, are early childhood education, personal support workers, healthcare broadly, and some of that training (takes) a little bit longer,” she said in a recent interview.

“We don’t tend to support people in that longer training. We don’t tend to support people as much if they’re working part-time and training part-time. So thinking about how we can do that, I think, is going to be important.”

This report by The Canadian Press was first published June 4, 2021.

Jordan Press, The Canadian Press