Labour market challenges to persist

By Michelle Schriver | November 2, 2020 | Last updated on December 19, 2023
2 min read
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The economic recovery from the Covid-19 pandemic has been uneven, leaving some industries struggling more than others. Labour market statistics highlight the troubling divergence, which could persist beyond next year.

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“The theme of the labour market has been asymmetry since the reopening,” said Katherine Judge, economist at CIBC World Markets, in an Oct. 23 interview.

“About 40% of employment is within industries that are stuck in an L-shaped recovery trajectory.”

Service-oriented industries and natural resources are among those hardest hit. Employment in accommodation and food services is down by about 15% since February, Judge said. Retail, along with mining, oil and gas, is down about 7%.

In comparison, total employment is down about 4%.

“We are seeing this dichotomy in the labour market, where there are some industries that need to operate with social distancing in place until there’s a vaccine available,” Judge said.

“In others, we’re seeing more of an adaptation of wearing PPE and being able to function without going back into the scale of lockdown that we saw in the spring.”

Smaller companies have also been disproportionately affected by Covid-19.

“Those with about 20 to 99 employees account for only about 30% of pre-pandemic employment but almost 80% of job losses since February,” Judge said.

Some positive news is that another widespread lockdown isn’t likely, despite the virus’s second wave.

“Closures have been a lot more targeted this time around, because businesses and consumers have adapted to operating with PPE and social distancing,” Judge said.

“There are examples of countries abroad that have contained [Covid-19] with just localized lockdowns, as well as intense contact tracing.”

While targeted lockdowns lessen the negative economic impact during the second wave, the pace of job gains is expected to be “choppy” over the next six months, Judge said, until a vaccine is widely available — perhaps in the latter half of 2021.

“Job gains certainly will slow, and the ones that we’ve seen in recent months are at stake,” she said.

Five straight months of job gains from May to September saw three-quarters of jobs lost early in the pandemic return. That streak could end Friday when the labour force survey for October is released.

CIBC Capital Markets is forecasting a flat month-over-month unemployment rate of 9% based on renewed restrictions — a figure that may portend the choppier path ahead.

“The October reading is likely just the beginning of what will be a rocky period for the Canadian economy,” CIBC Capital Markets said in a weekly economics report.

In the first quarter of 2020, unemployment was 6.3%, and CIBC Capital Markets forecasts an unemployment rate of 8.9% in the first quarter of next year.

“We’re recovering into this very weak environment — a recessionary recovery,” Judge said.

“We don’t think it will be until 2022 when we see a full recovery in the labour market.”

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Michelle Schriver

Michelle is’s managing editor. She has worked with the team since 2015 and been recognized by the National Magazine Awards and SABEW for her reporting. Email her at