Ranks of long-term unemployed swell even as economy added 84,000 jobs in October

OTTAWA — Nearly one-quarter of unemployed Canadians have been without work for six months or more, with Statistics Canada reporting a spike in their numbers in October even as the economy eked out another month of overall job growth.

Almost 450,000 were considered long-term unemployed last month, meaning they had been without a job for 27 weeks or more, with their ranks swelling by 79,000 in September and then 151,000 more in October.

Those unemployed long-term now make up 24.8 per cent of Canada’s total, who numbered 1.8 million in October as the wave of short-term layoffs in March in April extended into the fall.

The jumps in September and October are the sharpest over more than 40 years of comparable data, and have pushed long-term unemployment beyond what it was just over a decade ago during the global financial crisis.

More men than women have been out of work for an extended period, and younger workers make up a larger share of the ranks of the country’s long-term unemployed than they did in the last recession.

Counting those who want to work but didn’t look for a job, a group not included in official unemployment figures, there are about 1.27 million Canadians who have been jobless for at least half a year, down from the 1.3 million in September.

“And they will continue to come down,” said Mikal Skuterud, a labour economist from the University of Waterloo, who has closely tracked long-term joblessness during the pandemic.

The worry, he said, is the drop down is not going be as sharp as the rise that it might resemble Nike’s famous swoosh logo.

The longer those people are out of work, the more difficult it will be for them to find a new job. Those that do are likely to earn less than before. 

Some older workers may simply decide to retire. Younger workers who just got their first job or had just established themselves in the workforce, will have to find new work as part of a reshuffling that could take years to play out.

“These kind of shocks have long-term, maybe even scarring, permanent effects,” Skuterud said. “Some segment of the workforce in Canada might be lost permanently.”

Policymakers are hoping to avoid that. 

The federal Liberals have vowed to create one million jobs, with recently reshuffled infrastructure spending accounting for 60,000 of that. As for the remainder, Prime Minister Justin Trudeau would only say Friday the government “looking at the investments we need to make in order to do that.”

“We have been there for Canadians and we will continue to because many, many Canadians have lost their jobs because of COVID-19. and are continuing to struggle,” he said.

Leah Nord, senior director of workforce strategies for the Canadian Chamber of Commerce, said governments need to roll out skills training programs, given the jobless figures, and do so soon.

“Lifelong learning, upskilling and reskilling were important before the pandemic, but the pandemic I would say has really accelerated the need for this,” she said.

The pace of job growth slowed in October as the economy added 83,600 jobs in the month. Overall gains were the smallest since economies were allowed to reopen earlier this year, noted TD senior economist Sri Thanabalasingam. 

The unemployment rate was little changed at 8.9 per cent compared with nine per cent in September. 

That would have risen to 11.3 per cent had it included in calculations the 540,000 Canadians who wanted to work but didn’t search for a job.

Most of the gains were in full-time work, with core-aged women benefiting the most to bring their unemployment rate to 6.6 per cent, the lowest among the major demographic groups tracked by Statistics Canada.

Overall gains might have been higher if not for a drop of 48,000 jobs in the accommodation and food services industry, largely in Quebec, Statistics Canada said.

“We saw Canadian employment growth ease off the gas, but thankfully, it didn’t go fully in reverse,” said Brendon Bernard, an economist with job-posting site Indeed. “What happened really was a tug-of-war between sectors.”

More Canadians were also working at home in October, coinciding with a rise in case counts of COVID-19, which prompted new rounds of restrictions in Ontario and Quebec.

Trudeau warned Friday about rolling back public health restrictions too quickly and potentially forcing widespread lockdowns anew like in the U.K., which would set back the pace of an economic recovery.

Employment readings are destined to ebb and flow over the coming months as governments try to to contain the pandemic, CIBC senior economist Royce Mendes said in a note.

This report by The Canadian Press was first published Nov. 6, 2020.

Jordan Press, The Canadian Press