Coronavirus Slams The Economy: Canada Lost 1 Million Jobs In March

Mirroring the emergency situation in the U.S., the Canadian economy lost more than one million jobs in March, shattering all previous records.

Statistics Canada, the national statistical agency, said on Thursday that the country’s workforce dropped by 1,011,000, or 5.3%. In tandem, the unemployment rate jumped by 2.2% to 7.8%, the biggest one-month spike since such record-keeping began in 1976.

The prior record for monthly job losses was 125,000 in January 2009 during the financial crisis.

As in the U.S., businesses have shut down across Canada.

"Almost all of the increase in unemployment was due to temporary layoffs, meaning that workers [are] expected to return to their job within six months," Statistics Canada said.

The largest employment declines were seen in industries which involve close contact with the public or those jobs that cannot be done from home -- including accommodation and food services (23.9% decline); information, culture and recreation (13.3%); educational services (9.1%); and wholesale and retail trade (7.2%).

Low wage workers and youths were hit hardest by job losses.

"The first workers to experience job losses as a result of COVID-19 are among those least able to withstand economic hardship," Statistics Canada said.

The provinces of Quebec, British Columbia, and Ontario suffered the biggest increases in unemployment.

Even among the working population, some 2.1 million worked at reduced hours due to limitations caused by the coronavirus pandemic.

“These 2.1 million Canadians who saw their hours dramatically reduced could be seen as at risk of losing their job in the months to come,” CIBC economist Royce Mendes wrote. “The economic reality of COVID-19 came into sharper focus this morning with absolutely massive job losses seen across Canada in the month of March.”

Moreover, Statistics Canada conceded these data may not depict the full picture of joblessness in the country since it relied on data taken before the full brunt of the coronavirus pandemic hit.

More than 5 million Canadians have applied for federal emergency unemployment help since Mar. 15, suggesting the real jobless rate might be much higher than currently reported.

“The data since mid-March has only deteriorated: employment insurance and emergency benefit claims have continued to climb, while job postings on [Indeed.com] have plunged compared to last year’s trend,” said Brendan Bernard, economist at Indeed Canada. “Conditions will eventually bottom out, but a rebound is going to require the confidence of Canadian society that the public health crisis is truly abating.”

The Liberal government’s Canada Emergency Response Benefit, or CERB, provides the jobless with 500 Canadian dollars ($359) a week for 16 weeks.

On Wednesday, Prime Minister Justin Trudeau warned: "We’re facing a unique challenge. But I know that if we pull together our economy will come roaring back after this crisis."

The Canadian Chamber of Commerce asked the government to provide further assistance to employers. "We ask parliament to rapidly approve the Canada Emergency Wage Subsidy and we urge the government to get these urgently-needed funds moving to businesses now," it said.

The Liberals and the opposition parties are working on an amended wage subsidy legislation and are expected to meet in Parliament over the next few days to pass it. But Trudeau and Finance Minister Bill Morneau said it may take up to six weeks for these funds to be distributed.

Qualifying businesses can also apply for a Canada Emergency Business Account for an interest-free loan of $40,000.

Hassan Yussuff, head of the Canadian Labour Congress, also said that government support must increase.

"Right now, working people need secure and adequate incomes, rent and mortgage relief, and a break on bank and credit card fees," he said. "The emergency benefits and wage subsidy programs are integral to preserving jobs and getting money to many of these workers, but coverage simply needs to be broadened."

Meanwhile the jobless crisis is likely to worsen.

“We still expect a further drop in employment of at least 1 million in April and, with some of the people that have lost their jobs likely to be counted as unemployed by then, we expect the unemployment rate to rise toward 15%,” said Stephen Brown, senior Canada economist at Capital Economics. (The previous monthly high for the unemployment rate was 13.1% in December 1982.)

BMO chief economist Douglas Porter warned: “As shocking as these numbers are, the big issue is how long do the shutdowns last, and thus how persistent is this spike in joblessness; that is still very much open for debate.”

The Bank of Canada cut its overnight interest rate three times in March to 0.25% to deal with the crisis.

“Interest rates will be at these levels for more than a year. The Bank of Canada will continue with the quantitative easing program until the recovery is well underway,” said Andrew Kelvin, chief Canada strategist at TD Securities.