Mass Target layoffs are about to push Canada’s jobless rate higher

Katherine McLeod is one of the thousands of employees let go by Target Canada this spring as the retailer turned out the lights on her store at the Grant Park Shopping Centre in Winnipeg on April 2.

As an assistant manager, the 26-year-old is getting severance payments from Target, and she’s in no hurry to jump back into a job like the one she just had. Besides, retail is a war zone right now, with names like Future Shop, Bootlegger and Bikini Village the latest casualties to fall victim to a brutally competitive environment.

“I want to wait it out. There’s not a whole lot of retail management jobs out there right now,” McLeod said.

Target’s nationwide closure though is by far the biggest crater left by the recently departed on Canada’s retail landscape. And its impact will likely be seen this week when Statistics Canada reports monthly employment numbers for April.

Target’s impact

As many as half of the 17,600 or so Canadian employees Target laid off were let go in April as the chain was shutting down the last of its 133 stores. The job losses are expected to see employment in the retail sector drop by about 12,000 jobs, according to RBC Economics.

RBC still expects Statscan to show a gain of 3,000 net new jobs across the economy in April, but “the monthly increase is expected to be restrained by the layoff of Target workers,” Paul Ferley, assistant chief economist said.

Others aren’t as optimistic. BMO believes the economy shed 15,000 jobs last month – half of which can be attributed to the Target layoff, an event that could be the single-largest one-time purge of jobs in Canadian workforce history, BMO chief economist Doug Porter said. With thousands of retail workers suddenly without work, the jobless rate is expected to climb a tick to 6.9 per cent.

MORE: Complete coverage of Target’s collapse in Canada

Many of those workers will be able to find work again in the retail sector as Target’s competitors fill the void, some experts say. Canadian Tire, for example, said this week it would move into 12 former Target locations.

“I wouldn’t say comfortably, but I think they can be reabsorbed. There are plenty of domestic competitors that are probably looking to expand as a result of Target’s loss. So I suspect a lot of those people might end up getting absorbed elsewhere in the retail world,” BMO’s Porter said.

MORE: Loblaw plays down interest in former Target stores

One location on Canadian Tire’s list is Grant Park Shopping Centre in Winnipeg. McLeod won’t be among the people lining up for a job though.

Her time with Target – her first job out of school – has left its mark. Part of McLeod’s duties entailed chasing down workers to cover unscheduled shifts, or cancelling shifts at the last minute, she said.

McLeod said those decisions would come down from district management, who were brought in from Minneapolis where Target is based. One regional manager told her front line workers were “expendable.”

“The exact words were, ‘Team members are expendable. We can replace them within a day,’” McLeod said.

Severance payments

“I’m going to take a little time off and reflect on what I want to do – I don’t know if I want to go back and do retail after this experience, to be honest with you. There were days I left in tears.”

McLeod is collecting a cheque from Target Canada every two weeks. Target has promised her several severance payments, she says, having set aside millions of dollars to provide compensation for managers and other workers as it winds up affairs in Canada before bolting back across the border.

Asked if she was worried Target might seek to alter the agreement as a long list of creditors fight to be repaid, McLeod said:

“Yeah, I won’t lie. They probably will, they will probably find a way to discontinue it once all their location leases are sold or what not, once they’re fully out of Canada,” she said.

“I’m not desperate. I don’t have a lot of expenses, besides my rent.”