Unemployment Hits 50-year High in Canada

Lock-downs, quarantine, and pandemics seem to have been the theme for the last 2 months. Now that the April jobs report is published we can add business closures and unemployment to the list.

The pandemic has long stopped being a concern for just the old and unhealthy. The economic effects are now becoming apparent. With mandated business closures more and more people are losing their livelihoods.

The longer the business closures and self-isolating measures continue the greater the long-term effects will be.

We would just like to clarify that we are not casting shade onto the measures our government has taken. Our provincial and federal governments have done what they seem reasonable. We are merely trying to point out the long-term economic effects that need to be considered, especially when planning out our personal finances.

In the article below we are summarizing the April jobs report and discuss the probability of unemployment remaining high.

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April Unemployment

The April jobs report was dismal, to say the least. Although the COVID-19 pandemic started late February, the effects weren’t immediate. Closures and social distancing measures only started in late March.

The March jobs report took into account March 15-21. At that point a lot of measures that have now been put in force were not yet implemented. As such the unemployment rate in march increased only 2.2%, up to 7.8% unemployment.

April was a different story. The reference week for the April jobs report was the 12-18. At this point, COVID had already reared its ugly face. As such, Canadian unemployment rose 5.2% to finish at 11%. According to the April report, Canada lost 1,994,000 jobs. That’s a decrease of 11% in a single month.

Of the combined roughly 3 million jobs lost about 2 million were full-time positions, and about 1 million were part-time. This is a reduction of 12.5% and 29.6% respectively.

In addition to the 3 million jobs that were lost in March and April, another 2.5 million have had their hours reduced. This means that more than a quarter of all those employed in February have been directly affected.

According to the report, if the unemployment report had taken into account people unemployed for reasons specific to COVID economic shutdown, it would be 17.8%. The only time that unemployment has ever been higher than that is during the 1930s recession. These people were not counted as unemployed because they were not actively seeking work even though they had recently been working.

The April jobs report also states that unemployment has grown by 113.3% from February to April. For comparison, during the early 80s, unemployment grew 88.6% over 16 months. One positive is, that nearly all (97%) people believe they will be returning to the jobs they were laid off from.

Unemployment Spares No One

Employment across all provinces decreased by more than 10%. This was lead by Quebec with a decline of -18.7%. This is not a coincidence if you look at how COVID cases are concentrated in Canada. And yet, Quebec is the only province to open up their schools?

Although unemployment has been felt across the country, it seems to have affected urban/metro areas more significantly. The three largest cities in Canada were hit the hardest; Montreal -18%, Vancouver -17.4%, Toronto -15.2%.

If you are one of the 2 million self-employed people in Canada, you may not have lost your job (no one can fire you at least). However, the amount of hours this group has worked has been drastically cut. According to the report, nearly 60% have worked less than half the hours they normally work. Additionally, nearly 40% surveyed said they didn’t work at all.

In all more than one-third of the potential labor force worked less than half their normal hours or did not work at all in April. With less work comes less pay. Less pay means less consumer spending. This trickle-down of less spending will continue to be felt in other parts of the economy that are fortunate enough to continue working.

Prolonged Unemployment

After 2 months the economy is now slowly reopening in stages. A full reopening isn’t guaranteed yet and there is always a chance of a reversion back to more strict lock-downs. So what happens if unemployment is prolonged? Is there a high probability of prolonged unemployment?

It seems as though many believe that they will have jobs to go back to. This is definitely a positive as it gives everyone some hope. However, this may not be the reality.

After nearly two months, we as humans have changed. Our habits and our desires have changed. We are more accustomed to spending time alone, or with family at home. Due to this, there is a chance that once the economy is fully open people won’t return to regular routines, or at least may not be as active in the economy as they used to.

We also have to think about what types of jobs were lost. Firstly, about 33% of the jobs lost were part-time. If people aren’t going out as much, shopping as much, traveling as much, are these part-time jobs still necessary?

Secondly, the businesses that have closed and the people laid of were primarily deemed ‘non-essential’. With people having less money in their pockets, either due to not working or a recession, money is likely to be spent mainly on essentials. These non-essential businesses may take significantly longer to recover.

Another point to consider is the potential reluctance of people to travel. Now that there has been a global pandemic, people may be reluctant to go to unfamiliar areas or locations. A lot of businesses associated with travel (airlines, cruise, travel agencies, etc.) have been hit hard and don’t foresee that changing quickly. Airlines and cruise ships look as though they will be parked for the foreseeable future.

Travelling generates a sizable amount of economic activity. Whether that is due to the actual travel (i.e., flights), or tourism and accommodations (i.e., tourist destinations, hotels, etc.). If and when these businesses reopen, there is a good chance that they will have reduced traffic compared to pre-COVID. Due to this, there may not be 3 million travel jobs to return to once everything is said and done.


Although the majority of Canada (other than ON and QC) hasn’t had a lot of COVID cases, the economy has still been hit hard. Job loss has affected a lot of households and nearly every industry. Even those that have kept their job, operations have been adjusted and hours may have been slashed.

The longer the shutdown lasts, the great number of businesses will close, and the fewer jobs there will be to go back to. If we look at a survey done by Facebook, one-third of small businesses in the US say they won’t reopen and 55% say they won’t be able to hire everyone back. That means only 45% are planning on hiring everyone back. That will equate to millions of permanently lost jobs in the US.

Yes, the US has been hit harder so far, but even if the effects aren’t as bad in Canada, they will still be bad. Small businesses employ nearly 70% of the private labor market in Canada, and they too are being hit.

Only time can tell how the economy will recover. The post COVID job market may go back to normal but there is a chance it looks significantly different.

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