OPINION: Canada has some reason for optimism on the jobs front

Statistics Canada’s June employment report confirms that the unprecedented pandemic-induced job losses recorded in March and April are now firmly in the rear-view mirror. B.C. saw a massive 118,000 increase in employment last month, on the heels of May’s 43,000 gain. These back to back increases erase a decent slice of the almost 400,000 jobs that disappeared between mid-March and the end of April, when much of the province’s economy was in lock-down. However, total employment is still 235,000 lower than it was in early 2020. And the unemployment rate sits at a painfully high 13 per cent, versus less than 5 per cent in late 2019. For younger people (under age 25) who are counted as being in the labour force, the rate of unemployment is close to 30 per cent.

It is encouraging to see the labour market healing, but the province is by no means in the clear. For one thing, part-time positions accounted for the lion’s share of June’s jobs rebound. Of 118,000 net job gains, just 16,000 were full-time. And more than half of the additional jobs reported in the May-June period were in retail, personal services, accommodation and food services – the sectors hit hardest by the lockdown and business closures in March and April. Recall that the B.C. government began to restart the economy in May, with most shuttered business open by June. This suggests that most of the jobs that have come on stream since the end of April are not “new” positions; instead, they are previously furloughed employees who have been called back to work.

It’s a safe bet that June’s employment bump was a high-water mark in what is likely to be a long and uneven labour market recovery following the carnage of March and April. The summer should see more laid-off workers recalled, as more business and non-profit organizations fully open their doors. But the numbers won’t be anywhere near enough to make up for the remaining 235,000 lost jobs – equivalent to 4-5 years of job growth for the province in normal economic times.

Moreover, the labour market will be fighting some significant headwinds in the coming months. We would point to three that merit careful monitoring by analysts and policy-makers.

First, some B.C. businesses that haven’t yet re-opened will end up permanently closed, meaning the jobs supported by these organizations won’t be returning.

Second, some businesses that have reopened will discover they can’t survive given the impact of new health and safety protocols, shifts in consumer preferences and purchasing behaviour, or both. In this category one thinks of the many restaurants, personal service businesses and retailers that were barely viable before COVID-19 and now face a much less favourable operating environment.

Third, a number of B.C. industries are being hammered by the onset of a steep global economic downturn, lower commodity prices, the near-collapse of air travel, the closure of the Canada-U.S. border, and a dwindling population of international students. These developments are sure to take a further bite out of B.C.’s economy over the rest of 2020 and into next year, further slowing job creation.

Add it all up, and we expect tough labour market conditions to persist for some time. It is hard to imagine a return to the world of 5 per cent unemployment rates, widespread labour shortages, and a near record high employment-to-population ratio within the next couple of years.

Jock Finlayson is the Business Council of British Columbia’s Executive Vice-President and chief policy officer; Ken Peacock is the council’s Chief Economist.

As published in Business in Vancouver.