State of the Labour Market

June Labour Force Survey Preview: Tracking Permanent Layoffs

Near-term rebound vs. longer-term challenges.

The upcoming June Labour Force Survey (LFS) data is likely to show the Canadian labour market continued the initial progress shown in May, as some temporarily-shuttered businesses, especially in Ontario, have since opened their doors. However, as the temporary impacts of closures wane, attention is going to turn to labour market damage less easily repairable. 

One metric to watch is the number of Canadians who’ve been permanently laid off. The LFS asks those who are not currently employed, but were at some point in the past year, why they’re no longer at their previous job. Between February and May, the number of people out of work due to permanent layoffs has soared by nearly 1.4 million workers. That increase is similar to the growth in the ranks of workers still employed but not working any hours (which fell more pronouncedly in May), and a bit greater than the jump in those who indicated they were temporarily laid-off.

Job market still a long way to recovery 

The ranks of those permanently laid off will probably fall more slowly than other workers also affected by the COVID-19 crisis. Some furloughed workers might end up losing their jobs entirely, while others currently employed at struggling businesses could be laid off in the months ahead. 

On the flip side, how quickly these workers find new employment is going to depend on whether they’re searching for work, and how plentiful job opportunities are. We can distinguish between people on the job hunt and those not by tracking how much of the employment drop due to permanent layoffs shows up in unemployment (which requires someone to be both searching and available for work), relative to increases in those out of the labour force. As of May, only 29% of the net-increase in the ranks of permanent layoffs since February were considered unemployed, most exiting the labour force instead. However, the share considered unemployed was just 13% in April, suggesting their job search is rebounding. 

Those looking for work are facing a labour market where employer hiring appetite is gradually returning, but remains a long way from normal. New job postings on Indeed —a signal of momentum — were 24% below last year’s trend as of June 19th, midway through the LFS reference week, and making steady progress. However, the trend in total postings — the opportunities available to job seekers today — was still 38% below 2019 levels. The job market is showing signs of recovery after its unprecedented plummet, but it’s going to take time to reverse all the damage. 

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