In a series of IZA Newsroom interviews, renowned international labor market experts comment on how their country has been coping with the COVID-19 labor market crisis and how they expect the situation to evolve. The IZA Crisis Response Monitoring provides a detailed assessment of different policy measures in selected countries, so far not including Canada. To learn more about the Canadian experience, we asked Steven Tobin from Canada’s Labour Market Information Council to share his inside views.
How do you assess the current labor market situation in Canada and the role that government policies have played so far?
In terms of the initial impact on the job market, we haven’t seen anything like this in recent history. In March and April of 2020, Canada lost more than three million jobs. That’s more total job losses than the three previous recessions combined, and over a much shorter period. For context, in 2008–2009, employment in Canada fell by half a million over eight months.
Since May we have quickly regained much of this ground. In fact, between May and September employment grew by nearly 2.3 million. In other words, employment is now within 720,000 (–3.7%) of its pre-COVID (February 2020) peak.
The federal government’s response to date has been swift and aggressive, introducing new programs and expanding existing ones for both individuals and businesses. Of particular note are the Canada Emergency Response Benefit (CERB) and the Canada Emergency Wage Subsidy (CEWS). CERB ran for 28 weeks (to the end of September) and provided a taxable benefit of $2,000 every four weeks for eligible workers — those who stopped working or whose work hours were reduced due to COVID-19. For eligible businesses, CEWS provides up to 75% of a worker’s wages, to a maximum of $847 per week. More details on these and other programs have been made available to the public in the Federal Government’s COVID-19 Economic Response Plan.
How did the Canadian approach differ from other countries, especially the U.S.?
A few things stand out in terms of Canada’s response. First is the speed with which relief measures were put in place. Most programs were up and running by April. And while there were a few glitches along the way, given that many of these measures were entirely new, the fact that programs were in place so quickly was quite remarkable. Second is the breadth of measures introduced. The government recognized that the crisis was hitting households and small businesses alike. The introduction of both CERB and CEWS, among other responses, acknowledged the importance of providing an income bridge to both people and firms.
What would you consider the most probable labor market scenario in six to twelve months from now?
The strong job gains of the past four months are largely attributable to the re-opening of provincial economies across the country. And as impressive as those gains have been, we remain well below pre-crisis levels with employment levels still down by just over 1 million. The pace of gains has also slowed in recent months.
Moreover, since we are now in a second wave of COVID-19, restrictions on mobility and gatherings have returned. The most likely short-term outlook is that gains will continue to slow or even reverse and thus it will take some time to recuperate the remaining third of jobs lost.
Which aspects of the crisis response in Canada do you find most remarkable?
Most remarkable to me has been the important interplay between politicians and public health authorities. Across federal, provincial and territorial governments — regardless of the political party in power — the advice of public health authorities was consistently at the forefront. Politicians of all stripes largely based their responses to the pandemic on the evidence presented to them by unelected officials.
This evidence-based response has been a great strength. I began to wonder whether this could be a sign that politicians would increasingly defer to experts, even in areas such as (labour) economics, which is often considered “the dismal science.”
What policies would be best suited to support the recovery of employment?
Our priority must continue to be protecting the health and safety of people. As we grapple with the implications of the second wave and consider economic recovery efforts, we must recognize that this crisis is unlike past ones.
To do so, first we must focus our job recovery strategies on supporting those individuals and businesses most affected by job losses and business closures. Otherwise, we run the risk of worsening long-term inequality and social outcomes.
Take for instance, the “shovel-ready” infrastructure projects that proved so successful during the 2008–2009 “Great Recession.” While such programs can provide a much-needed boost with positive spillover effects, they have not traditionally been structured to benefit women and youth — two groups particularly hard hit by the current pandemic. Building public infrastructure should, of course, be part of our recovery efforts (and our ambitions of an environmentally stable recovery); however, policies and programs designed to help those most affected return to meaningful employment should take center stage.
Second, several structural weaknesses in our economy and our workforce have been revealed by this pandemic. In other words, simply helping people back to their previous jobs will not be enough. Many of the jobs affected by COVID-19 could change or disappear altogether. The pandemic has revealed, for instance, that many jobs are associated with a certain level of vulnerability, such as essential workers with limited access to benefits. One of our overall strategies must be to improve the working conditions of these jobs. Essentially, we must reconsider the value of work itself.
Third, since many jobs will disappear and others will shift dramatically, we must develop a workforce strategy that helps workers transition to more sustainable, higher-quality jobs. Upskilling and re-skilling workers to take advantage of these evolving opportunities — while providing much needed income support to bridge the gap — must be the heart of this initiative. Easier said than done, but not impossible. Such an approach requires the following key elements — data, skills and training:
- We need better data about the skills requirements of emerging jobs. We must improve our understanding of the needs of employers and how they evolve in near real-time.
- We must support initiatives that help workers, employment service providers and career practitioners to evaluate existing skills and how they can be applied, as well as what new skills training might be needed.
- We must provide schools and training institutions with the knowledge and capacity to help people transition effectively through demand-driven skills and training, toward meaningful, quality, sustainable employment.
Overall — and I cannot stress this enough — we must shake off the notion that we can get back to “business as usual” as we seek out our “new normal.” Instead, we need to understand that this pandemic can teach us critical lessons about how to re-imagine our economy and our society, and how to do better. Better for seniors, better for workers, better for businesses, better for the environment, better for our own economic stability, better for public health, better for all. If we ignore these lessons, then to paraphrase Albert Einstein, we will have missed the opportunity that lies within this crisis.
How has COVID-19 personally affected you?
With COVID-19 primarily being a health crisis, my initial concern focused on the well-being of family, friends and colleagues. My loved ones were mostly unaffected, so I feel extremely lucky, especially considering that over one million people have lost their lives to the pandemic as of October 2020. As the second wave starts to take hold in Canada, I am hopeful that we have learned some important lessons from the first wave. By following the recommendations of public health authorities, we can limit the health-related (and knock-on) effects of this virus.
From a professional perspective, our organization was able to respond quickly and have been working from home since early March. As an organization, we adopted new ways of working that ensured that staff were both engaged and safe. We also had the opportunity to work on several projects that helped Canadians navigate the crisis, such as our Now of Work Annotated Bibliography, which synthesizes the latest research findings related to work and COVID-19. We were – and remain – highly motivated to make a difference.
I would give myself a passing grade in terms of my success in working from home. Call me old school, or maybe just old, but I miss the daily interactions with my colleagues. I also realize that, as much as I missed them — and often struggled with this new virtual way of working — I never forgot that I am one of the privileged workers who managed to keep their job throughout the crisis. Millions of other Canadians were not so lucky.