March 17, 2021

The beginning of the beginning: Alberta’s labour market takes a step towards recovery

Last Friday’s Labour Force update for the month of February was a hopeful one. Across Canada, employment rose with the easing of restrictions on non-essential businesses such as in-person dining and cultural and recreational facilities. Around 260,000 more individuals reported working in February than in January (an increase of 1.4%), erasing two months of decline and blowing jobs expectations out of the water.

Overall, job growth was largely in part-time positions as restrictions were loosened in many provinces in response to lower COVID case counts. All provinces saw gains except for three: Newfoundland and Labrador, Prince Edward Island, and New Brunswick.  

What the February Labour Force Update tells us

The biggest takeaway from the recent update is a reminder that the current recession is not a typical one, and in some ways that is good news.

The abrupt changes we are seeing in the labour force from month to month are not typical of a more conventional economic downturn: changes in consumer behaviour due to loss of income or changes in employment due to lack of business confidence. Instead, employment reflects and moves sharply with the spread of the virus and virus-related restrictions. This month is further evidence of that—but this time in a positive way.

This is hopeful in that it points to what could be a strong recovery as vaccination gains steam. In other words, there seem to be minimal structural problems at play beyond the virus itself.

At the same time, what is most concerning for Alberta is the uptick in Albertans who have been unemployed for more than a year and the dismal employment record for young women compared with before the crisis. With every additional month individuals are out of work, opportunities for development and professional growth are missed, skills are forgotten, confidence is lost, and the glaring gap in employment experience on future job applications grows.

This means the speed and pace of vaccination is not without consequence. Every month of delay in vaccine access to the full population could mean another month of muted hiring in restaurants, bars, hotels, fitness centres, and theatres, weighing particularly heavily on young women, minorities, and low-wage workers.

The good news is with each month we are likely to see improvements, and many economists have already shifted to a tone of optimism. To ensure we realize the potential of a fast and inclusive recovery, it will be important as we move forward for recovery strategy to be vigilant to contain the spread of the virus as new variants emerge and to ensure the reintegration of groups most severely impacted by COVID. As the Bank of Canada recently noted, without this, we cannot expect to see a full recovery.

The details

Despite widely held assumptions that the US has had a stronger economic recovery, gains in Canada outpaced those in the US in February. Though they were at a similar level in January, the recent easing of restrictions across Canada sparked a larger jump in employment. Canada is now 3.4% below its pre-pandemic level while the US is 5.4% below its baseline jobs number. Given the relative pace of vaccination in the US versus Canada, however, this could quickly change.   

In Alberta, 17,000 more Albertans reported working, which represents an increase of 0.8% over January. At the same time, the unemployment rate fell from 10.7% to 9.9%, its lowest level since the pandemic began. Not only did the unemployment rate dip below 10%, but a broader measure of unemployment known as the R8—which includes an estimate of people who are underemployed—fell as well. However, it’s worth noting that this broader measure of unemployment remains at a record high, roughly double the level before the oil price collapse and COVID. To be sure, there is a long way to go.

Not surprisingly, essentially all employment gains in Alberta in February came in the industries related to tourism, food, and recreation—those most directly impacted by COVID. Directly impacted industries added +18k jobs (or 13%) last month. However, employment in these industries remains extraordinarily low compared with pre-COVID levels. Despite February’s gains, they still employ 30% fewer people than they did before the pandemic. It’s also worth noting that those industries are lagging in Alberta more than in Canada overall; employment at the national level is down 22%.

Specifically, employment in restaurants, cafes, bars (“accommodation and food services”) increased by 22.5% in Feb. Just one week before the Labour Force survey, the province entered Step 2 of its easing of public health measures, which allowed restaurants to open for in-person service, albeit with restrictions.

A key concern since the beginning of the pandemic has been the disproportionate impact on certain groups, especially women. As of early December, the jobs recovery for women and men were tracking similarly to one another. However, that gap started to open again with the last round of tighter restrictions. The partial easing in February helped close the gap a little, but there is still work to be done to ensure a speedy and inclusive recovery.

Most concerning is the large gender gap among the youngest age group (15 – 24): young men are 6% below their pre-COVID employment level while young women are 14% below. Young women have clearly been the most negatively impacted by restrictions, as we see a strong negative relationship between stringency of restrictions and the employment of this group. On the flip side, this also translated to greater jobs gains among young women as restrictions were eased in February. As mentioned above, a key concern is the duration of time for which they are out of work. While one month may be inconsequential, several months out of work can come with serious consequence.   

On a related note, one concerning indicator we’ve identified previously is long-term unemployment in Alberta. February shows a large uptick in the percentage of Albertans who have been continuously unemployed for at least a full year. This aligns with the abrupt oil price collapse last February and is something to watch in the coming months as energy prices recover.

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