Economic inequality has soared in Canada amid the pandemic, a new analysis from CIBC shows.
Canada’s job market will take until 2022 to recover the jobs lost in pandemic, according to a report published Monday by economists Benjamin Tal and Katherine Judge.
Tal and Judge described the country’s labour market as “asymmetrical” ― some parts are doing very well, while others are doing very poorly.
The report comes ahead of Statistics Canada’s release of September jobs data on Friday, which economists largely agree will show a slowdown in job growth following rapid rehiring in the summer.
Watch: Women are dropping out of the workforce. Story continues below.
In fact, CIBC expects job growth to slow to 50,000 jobs a month going forward ― a solid pace in normal economic times, but very slow under current circumstances, considering Canada has 1.1 million jobs to recover. In essence, it will be 2022 before jobs are back to pre-pandemic levels, Tal and Judge predicted.
And “the lower the wage, the more dramatic is the remaining jobs gap,” Tal and Judge wrote.
High earners have been doing well since the pandemic began, they found ― so well, in fact, that there are more jobs paying $40 per hour or more than there were before the crisis. But one in five jobs paying $16 per hour or less has disappeared.
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With fewer things to spend on, higher earners have seen their savings soar in the pandemic, helping to explain why home sales are hitting record highs and house prices have accelerated.
“In fact, in a survey conducted by CIBC in April, in the darkest hour of the crisis, no less than 25 per cent of homeowners suggested that they might consider purchasing an investment unit in order to take advantage of the combination of a stable income and historically low interest rates,” the CIBC economists noted.
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But those who are buying investment properties may want to consider what’s happening in the rental market, where rates are falling amid low demand from young people and low-income workers. Toronto and Vancouver are now seeing some of the fastest-falling rents on the continent, with apartments renting for hundreds of dollars less per month than at the start of the year.
Hard times for grads, moms
University graduates have been hit harder than most, Tal and Judge said. Grads accounted for one in five unemployed people before the pandemic, and that share has nearly doubled since the lockdowns, they noted.
“That is evidence of a job-skills mismatch in the labour market before the Covid crisis, in which university graduates had been slotted disproportionately into lower-paying fields that have deteriorated rapidly during the crisis,” the CIBC economists wrote.
The found the pandemic has “dialled back” some of the progress women have made in the labour force, particularly for those with children.
Women were 14 times more likely than men to drop out of the labour force during the pandemic, which the CIBC economists linked to women’s role as primary caregivers in many households. Women with children have seen their work hours shrink by the most of any group.
“However, men have seen more jobs evaporate, leaving the total impact for women and men in absolute terms for the drop in the labour force and employment, roughly even,” they noted.
COVID-19’s second wave could take a bite
Despite the slowdown in job growth ahead, the experts are still calling for the jobless rate to drop in the Statistics Canada’s report this Friday. That’s because that’s many post-secondary students headed back to class in September.
“As these students head back to school in September and a portion of them stop looking for work, the pool of unemployed workers will shrink as well,” Royal Bank of Canada economist Nathan Janzen wrote in a client note Friday.
And beyond that, there is a risk of unpleasant surprises because of the second wave of COVID-19 that has taken hold in Canada, Janzen wrote.
“The recent resurgence of COVID-19 infections in some provinces may lead to additional containment measures (Quebec has already done so in some cities) leaving the more vulnerable industries at higher risk heading into the final quarter of 2020.”