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Spring slowdown obscures sunnier outlook for B.C. jobs market

Statistics Canada’s latest Labour Force Survey confirms that the rebound in employment from the COVID shock stalled over the spring. Nationally, the labour market shed 275,000 jobs in April and May combined.

Statistics Canada’s latest Labour Force Survey confirms that the rebound in employment from the COVID shock stalled over the spring.

Nationally, the labour market shed 275,000 jobs in April and May combined. As a result, employment in Canada is still 3% below the level recorded in February 2020.

Like the country as a whole, B.C. also saw two straight months of job losses. Employment edged down by 1,900 in May, following a 43,000 decline in April. Dwindling employment in the April-May period mainly reflects the impact of “circuit breaker” restrictions introduced by B.C.’s public health authorities amid the third wave the virus.

Below the headline number, there are elements of a more positive picture for B.C. Employment among the core working age (25-54) population, for example, is above pre-pandemic levels. Some industry sectors, such as professional services (including computer and technology-related occupations) and resource extraction (forestry, mining and oil and gas), have seen double-digit job growth over the past 15 months. At the other end of the scale, employment in the food and accommodation sector remains well shy of last February’s level. And employment among young females sits 15% below where it stood before COVID-19.

Looking ahead, solid employment gains are expected through the summer months as the vaccination program continues to advance, health restrictions are eased, the food services and entertainment industries come back online and both intraprovincial and interprovincial travel resume. (The outlook for international travel remains uncertain.)

But we also believe there will be some lasting effects on the labour market from the many months spent living with COVID-19.

As life gets back to normal, we forecast a big jump in labour demand, especially in the most negatively affected consumer-facing industries. This will spell hiring challenges as well as sector-specific labour shortages for employers. Recall that before COVID, the unemployment rate was hovering at a 45-year low, and many employers were struggling to find qualified workers. As businesses reopen while more baby boomers age out of the work force, the tight labour market conditions of 2015-19 could quickly return. Already in some provinces, restaurants and hotels are discovering they can’t easily re-staff their operations as COVID restrictions are removed. And in the United States, the U.S. Chamber of Commerce just published a report claiming that shortages of workers amount to a “national economic emergency” – even though total U.S. employment is about eight million below where it was at the start of 2020.

The industrial composition of employment is also apt to shift in the post-pandemic economy, a process that could both ameliorate and intensify labour shortages across different sectors. Even as the economy reopens, some consumers may continue to dine out and travel less frequently – while also continuing to rely on e-commerce for many purchases. Recent sizable employment increases in the distribution and logistics sector are likely to persist. In contrast, proportionately fewer people could end up working in retail and hospitality occupations. Estimates show that 10% to 15% of hotels and motels in Canada closed their doors last year. And the trade association Restaurants Canada predicts an even bigger loss of businesses in that sector.

The pandemic has accelerated digitization across a range of industries, with implications for future labour demand. Employers in areas ranging from finance to manufacturing, retail trade, transportation, professional services and government – to say nothing of the advanced technology sector itself – are hungry for digital talent at all levels. This will drive up compensation for people with digital-related credentials and experience, and possibly depress demand for workers with other skills.

Finally, as governments dial back the extraordinary measures taken since February 2020 to assist workers and businesses, pressure will build to expand income support programs like employment insurance (EI) and revisit legislative and regulatory frameworks that govern workplaces. Nationally, EI premiums are certain to be pushed higher in 2022 and beyond to help pay for hefty pandemic-related costs. Here in B.C., the November 2020 mandate letter from Premier John Horgan to Minister of Labour Harry Bains offers clues to the planned policy directions of the re-elected BC NDP majority government. In addition to instituting mandatory paid sick leave, we expect the province will undertake a second set of reforms to the Employment Standards Act and initiate another review of the B.C. Labour Code. More government-driven changes are also likely at WorkSafeBC.

As the pandemic recedes, the business community needs to be alert to the risk that governments will be advancing labour and social policy agendas that are driving payroll costs higher and creating a considerably more complicated economic environment. •

Jock Finlayson is the Business Council of British Columbia’s senior policy adviser; Ken Peacock is the council’s senior vice-president and chief economist.