Update: After 65 years, Sears Canada is closing. The retailer obtained court approval on Friday to liquidate its remaining stores, a move that will affect around 12,000 jobs.
Twelve-thousand people across Canada will lose their jobs, if Sears Canada gets court approval to start liquidating its remaining stores. That’s more jobs than the whole economy created in the month of September this year, when the labour market created 10,000 net new positions.
Indeed, 12,000 is “in the neighbourhood” of the amount of jobs that Canada tends to add on a typical month, said Douglas Porter, chief economist at BMO Financial Group.
In other words, it’s a number big enough that it could tip the labour market balance from a net job gain to a net job loss in a particular month, especially if most of the layoffs happen at once.
Twelve-thousand doesn’t seem quite as big when compared to the total number of jobs the economy creates and destroys every month, noted Avery Shenfeld, chief economist at CIBC Capital Markets. But even in that context, it’s not insignificant.
In September, for example, the economy added 112,000 jobs and erased 102,000 positions. The Sears job losses would amount to about 10 per cent of each – not a huge share, but potentially big enough to make a difference.
Still, both Shenfeld and Porter cautioned that Canada’s labour force survey could fail to capture the impact of the Sears layoffs, depending on the samples of Canadians surveyed by Statistics Canada every month. If the samples happen to include few unemployed former Sears employees, the effect on Canada’s official job stats would be small or non-existent.
WATCH: Retail expert weighs in on Sears Canada’s troubles
The less bad news for Sears employees is that unemployment is low
What might soften the impact of the employment losses on the Canadian economy and the lives of laid-off Sears employees is the fact that the job market is pretty strong right now.
The economy churned out as many as 55,000 and 45,000 net new jobs in May and June respectively, far above Canada’s long-run average. And although things have slowed down a bit since then, there are plenty of jobs to be had right now.
“If there’s a less bad news, it is that this is happening at a time when the overall job market is relatively robust,” said Porter.
In Ontario and Quebec, in particular, “we’re seeing some of the lowest unemployment rates on record,” he noted.
Ontario, where the jobless rate has hit a 16-year low at 5.6 per cent, would see the closure of at least 35 Sears stores and shed nearly 5,500 jobs if Sears were to liquidate all its remaining assets. In Quebec, where the jobless rate stands at a near-all time low of 6 per cent, the number of store closures would be least 18 and the jobs lost over 2,600.
Nationally, the current unemployment rate is 6.2 per cent.
It’s also important to note that if a number of traditional retail jobs seem to be disappearing, the sector is also creating new positions, said Shenfeld.
The industry’s shift toward online shopping is creating a demand for manpower in the giant warehouses that Amazon and other online retailers use to store the goods that will be shipped to customers’ front doors, he noted.
And while failing department stores are leaving storefronts empty, a new breed of retailers is taking over much of that floor space.
As more and more consumers buy things online, brick-and-mortar stores are focusing on providing services – like painting your nails or cutting your hair – which you can’t purchase with the click of a mouse, said Shenfeld.
Also, as a larger share of the retail industry moves online, prices are coming down for consumers, which leaves more money in Canadians’ pockets for additional spending. That added consumer spending, in turn, creates new business that helps sustain new jobs, he noted.
The bottom line is that the economy should be able to absorb many of the job losses from Sears.
“This isn’t the equivalent of a factory closing in a factory town,” where no other employers are available to step in and hire laid-off workers, said Shenfeld.
Still, some former Sears employees will likely struggle to find work, Porter predicted.
Older workers who’ve been with the company for decades may have a hard time adapting to today’s labour market and may give up entirely on finding a new job.
“I would expect to see some net job losses,” Porter said.