Impacts of COVID-19 on Employment in Canada by Sector

25 June 2020, 9:20 a.m.

(Disponible en français : Impacts de la COVID-19 sur l’emploi au Canada par secteur d’activité)

COVID-19 lockdown restrictions have reduced Canadian economic activity, particularly in certain sectors, as discussed in the HillNote Impacts of COVID-19 on Selected Sectors of Canada’s Economy. The employment impacts in March (week of 15−21), April (week of 12–18) and May (week of 10–16) are now known; this HillNote outlines the negative impacts of the pandemic on various sectors.

Major Impacts on the Labour Market As a Whole

Canadian output, as measured by gross domestic product (GDP), fell 7.2% in March and is expected to continue its decline in April. This is reflected in the labour market in a number of ways:

  • drop in employment – Canada’s economy lost 1 million jobs from February to March (−5%), then 2 million from March to April (−11%), for a total of 3 million jobs (−16%). Job losses ended in May with the creation of 290,000 new jobs compared to April (2%).
  • lower hours worked – in April, 2.2 million more people than in February were employed, but absent from work as they did not report any hours worked, either in the workplace or at home. In May, this number dropped to 1.8 million. As well, 314,000 more people worked less than half their usual hours in May than in February.
  • increase in telework – in April, of the 12 million Canadians still working at least half of their usual hours, 5 million did so from home, including 3.3 million who had not worked from home before. This remained relatively unchanged in May.

Varying Employment Impacts in Different Sectors of Canada’s Economy

Goods Sector

While the drop in employment was moderate in the goods sector from February to March (−1%), it accelerated from March to April (−16%). From April to May, employment grew by 5%. Figure 1 shows that the decline from February to April was most pronounced in construction (−21%) and manufacturing (−17%). These were also the two industries where the jobs recovery was strongest from April to May (6% each). Employment in agriculture continued to decline in May (−1%).

Figure 1 – Change in Employment, Goods Sector, By Industry, Canada
February to April and April to May 2020

Figure 1 shows the change in employment in Canada, by industry and as a percentage, in the goods sector. For example, employment in the natural resources sector decreased by 7% from February to April, then increased by 5% from April to May.

Source: Figure prepared by the author using data obtained from Statistics Canada. Table 14-10-0355-02, Employment by industry, monthly, seasonally adjusted.

Construction

In construction, employment remained almost unchanged in March (−0.1% or 2,000 lost jobs) compared to February. The drop in employment occurred between March and April (−21% or 314,000 lost jobs). In May, employment grew by 6% (74,000 jobs). In March and April, the drop in employment is reflected by a decline in activity in construction. For example, the value of building permits fell 28% between February and April. As well, in March, construction industry GDP declined by 4%, and investment in residential and non-residential construction shrank by 3% and 4% respectively.

Manufacturing

In manufacturing, the cumulative decline in employment from February to April (−17%) was followed by an increase from April to May (6%). This did not occur in all sub-industries. For example, in transportation equipment manufacturing, employment fell 34% from February to April and then rose 17% in May. In contrast, in food processing, the decline in employment from February to April (−6%) continued from April to May (−13%), representing a cumulative loss of 48,000 jobs.

As well, in March, along with the decline in employment was a drop in manufacturing output and sales of 7% and 9% respectively. More than three-quarters of manufacturing establishments reported that their operations had been affected by COVID-19.

Services Sector

In the services sector, the cumulative decline in employment from February to April (−15%) was followed by a weaker jobs recovery than in the goods sector (1% compared to 5%). Figure 2 shows that some industries lost a very large share of their jobs from February to April, such as accommodation and food services (−50%), while others were relatively unscathed, such as public administration (−2%). The jobs recovery in May also did not occur in all industries; for example, employment in trade rose by 5%, but continued to decline in business services (−5%).

Figure 2 – Change in Employment, Services Sector, By Industry, Canada
February to April and April to May 2020

Figure 2 shows the change in employment in Canada, by industry and as a percentage, in the services sector. For example, employment in the educational services sector decreased by 12% from February to April, then increased by 2% from April to May.

Source: Figure prepared by the author using data obtained from Statistics Canada. Table 14-10-0355-02, Employment by industry, monthly, seasonally adjusted.

Trade

From February to April, employment in the trade sector fell by 20%, with 10% in wholesale trade and 23% in retail trade. In May, employment grew by 5% in both wholesale and retail trade. As shown in Figure 3, the decline in employment had little if any impact on some industries, such as food wholesalers (14% cumulative increase from February to May). In contrast, employment in clothing stores fell sharply from February to April (−60%), representing a loss of about 128,000 jobs. Employment rebounded significantly in May in sporting goods, hobby and book stores (37%). Surprisingly, employment also fell in food and beverage stores in March, April and May (a cumulative decline of 13%), but businesses in this industry may have increased their use of full-time (rather than part-time) work and overtime.

In March, job losses in the trade sector were accompanied by declines in retail and wholesale trade GDP of 5% and 10% respectively.

Figure 3 – Change in Employment, Trade Sector, By Industry, Canada
February to April and April to May 2020

Figure 3 shows the change in employment in Canada, by industry and as a percentage, in the trade sector. For example, employment in automobile dealers decreased by 38% from February to April, then increased by 18% from April to May.

Source: Figure prepared using unadjusted data from Statistics Canada; data have been seasonally adjusted by the author.

Transportation and Warehousing

Employment in the transportation and warehousing sector fell 14% from February to April. In May, the decline continued (−3%). This decline was not the same in all industries, as shown in Figure 4. For example, couriers saw employment growth in March, April and May (a cumulative total of 14%), while at the other end of the spectrum, employment in school and employee transportation continued its decline (−58% in total).

Compared to February, the employment decline in March reflects a 12% decline in transportation and warehousing GDP. This decline in output is illustrated by a 32% decrease in aircraft movements, a 35% decrease in rail shipments of jet fuel and a 48% decrease in motor vehicles shipped by rail in March 2020 compared with March 2019.

Figure 4 – Change in Employment, Transportation and Warehousing Sector, By Industry, Canada
February to April and April to May 2020

Figure 4 shows the change in employment in Canada, by industry and as a percentage, in the transportation and warehousing sector. For example, employment in the air transportation sector decreased by 30% from February to April, then increased by 2% from April to May.

Source: Figure prepared using unadjusted data from Statistics Canada; data have been seasonally adjusted by the author.

Miscellaneous Services

Employment varied in services other than trade and transportation between February and May, as shown in Figure 5. For example, employment in finance and insurance grew by 1%. In contrast, some industries experienced employment declines of more than 50% between February and April, followed by increases of 5 to 10% in May, such as dental offices, entertainment and recreation establishments, and restaurants and bars.

Figure 5 – Change in Employment, Miscellaneous Services, Canada
February to April and April to May 2020

Figure 5 shows the change in employment in Canada, by industry and as a percentage, in miscellaneous services. For example, employment in the accommodation sector decreased by 40% from February to April and by 1% from April to May.

Source: Figure prepared using unadjusted data from Statistics Canada; data have been seasonally adjusted by the author.

Telework

The phenomenon of telework was less common in sectors requiring either a greater physical presence in the workplace, or closer proximity to colleagues or clients. Lack of high-speed internet access, especially in remote areas, could also be a significant factor. In accommodation and food services, only 8% of employees teleworked; it was 19% in construction. In contrast, 76% of employees in professional, scientific and technical services and 63% in public administration teleworked.

Recovery

As governments announce the reopening of certain activities, jobs growth could resume rapidly in some industries, such as construction and manufacturing, while in others, such as air transportation, food and beverage, accommodation and cultural activities, the jobs recovery could be slower due to the risk of a longer period of time to reach the usual level of demand for these services.

Author: André Léonard, Library of Parliament

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.