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July Labour Force Survey Preview: Will Reopening Help the Long-Term Jobless?

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Labour market weakness increasingly led by those who have been out of work over a year.

The June Labour Force Survey gave a first snapshot of the job gains from Canada’s vaccine-led reopening. Additional sectors have come online since, while the number of fully-vaccinated Canadians has soared. This probably drove further progress in July, especially in pandemic-exposed industries. There remains room for quick labour market improvement, with temporary unemployment still elevated, and the potential for further momentum among youth, who led job growth in June

Looking ahead, the pace of recovery could increasingly hinge on the long-term jobless returning to work. In June, 2.8% of Canadians wanted a job, but had been out of work for over twelve months (not seasonally adjusted), up 1.5 percentage points from June 2019. Returning the overall employment rate 𑁋 still down 1.7 percentage points from February 2020 𑁋 to its pre-pandemic level in a timely fashion will likely require a solid pace of re-employment among this group. 

There are reasons for both optimism and concern. On the downside, some who have been out of work since the initial wave of pandemic layoffs have likely grown discouraged, and potentially detached from the labour market during a particularly trying time. At the same time, with Canadian job postings strong across a wide range of areas, employers might be more likely than otherwise to take on workers who’ve been out of work for long periods. Moreover, shuttered sectors returning will expand the options for those with specialized skills in these areas who have been waiting to return. The greater the reopening bounceback, the less daunting the challenges facing the Canadian labour market on the road ahead.