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Sunday, May 31, 2020
Connecting Our Communities

Unemployment levels jump in Waterloo Region

Area remains below the national average

Unemployment levels in the region shot up less dramatically last month than the national average, but are still about 50 per cent higher than at the start of the year, April numbers from Statistics Canada show.

The April unemployment rate was 7.8 per cent in the Kitchener-Waterloo-Cambridge area, up from 5.4 per cent in January and six per cent in March. Nationally, the rate was 13 per cent, up 5.2 percentage points over the previous month.

“We’re doing much better than the national average,” said Charlene Hofbauer, executive director of the Workforce Planning Board of Waterloo Wellington Dufferin, noting the area still has the second-highest employment level in the province.

This month’s numbers, to be released in June, will likely be worse still, however, perhaps closer to 11 per cent, she predicted.

“They’re not going to be rosy.”

That sentiment was shared by University of Waterloo economics professor Joel Blit, who saw some worrying trends in Statistics Canada’s Labour Force Survey released May 8.

“One piece of news that just came out that’s not so positive is that in the first month, so basically at the end of March, it was mostly services that were being hit. And services tend to bounce back fairly quickly – in past recessions, they bounced back within about four months to the previous levels to pre-recessionary levels. In this past month, the areas have taken the biggest hit are basically goods producing, so manufacturing, construction, areas like that. And those in past recessions have taken anywhere from six years to 10 years to get back to normal levels,” he said.

The question with no answer yet is this downturn, the result of self-imposed measures to combat the spread of the novel coronavirus, going to see a different kind of recovery, Blit added.

In both the services and the goods-producing sectors, the employment decreases observed in the two months since February were proportionally larger than the losses observed during each of the three significant labour market downturns since 1980, Statistics Canada reports.

After a drop of more than a million in March, employment in Canada fell by nearly two million in April, bringing the total employment decline since the beginning of the COVID-19 economic shutdown to more than three million. Compounding that problem, some 2.5 million people were working less than half of the usual hours due the pandemic. The number of Canadians who were either not employed or working substantially reduced hours was 5.5 million, or more than one-quarter of February’s employment level.

“When you shut down an economy deliberately, it’s going to have a much faster and sharper drop than when it’s being driven by sort of internal factors within the economy,” explained UW economics professor Mikal Skuterud of the rapid spike in unemployment.

Where the Labour Force Survey typically shows minimal movement from month to month, last week’s release was dramatic, he said.

“This is a real drop, and people are calling it a recession … but it’s been imposed by this need to quarantine.”

Though there’s no past recession of this kind to draw data from, neither economist sees a quick, V-shaped recovery once the economy is reopened. But both see reasons to be optimistic about the changes that will emerge.

And Hofbauer notes many of the layoffs in the region are temporary, and the agency is seeing job postings even at this point in the shutdown.

As well, a local survey “did show 60 per cent of people were fairly optimistic.”


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