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Most of Canada’s job losses are in part-time work. Why that may lead to labour shortages

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The Canadian economy saw a second straight month of job losses in May, and most of the positions shed were in part-time work, according to the latest data from Statistics Canada.

While provinces look to ease COVID-19 restrictions in the coming months, economists warn recouping these lost jobs may not happen so quickly, which could lead to a labour shortage this summer.

“While losses were not as large as what we saw in April, the hole to climb out of is now deeper,” TD Senior Economist Sri Thanabalasingam wrote in a report Friday.

Canada lost 68,000 jobs in May, adding to the drop of 207,000 in April.

The majority of jobs lost were in part-time work, where 54,000 positions were shed. Meanwhile, full-time employment was little changed in May following a decline of 129,000 jobs in April.

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Statistics Canada

The biggest job losses last month occurred in British Columbia and Nova Scotia, where there were strict public health measures in place to curb the third wave of COVID-19.

“If you lost your job, we’re here for you,” Prime Minister Just Trudeau said during a press conference Friday.

“The wage subsidy, the stronger and more flexible EI, the Canada Recovery Benefit – those were designed for you. We have your back as long as this crisis lasts.”

Canada remains 571,100 jobs shy of pre-pandemic levels, when the unemployment rate was just below six per cent.

Read more: Canadian economy lost 68,000 jobs in May as COVID-19 lockdowns continued

Thanabalasingam said that while employment gains are expected in the coming months as provinces reopen and employers boost hiring intentions in the wake of a robust vaccine rollout plan, May’s decline is “concerning.”

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“With fewer people engaged in the labour market, Canada could face labour shortages as demand for labour recovers faster than supply,” he said.

Thanabalasingam told Global News that the recovery in part-time work could be particularly slow.

“Given that students were an important segment of the population that left the labour force, they may not quickly return to the labour market as provinces reopen their economies and part-time jobs hiring ramps up,” he said.

“This could lead to a more gradual pick-up in employment, one that spans the summer months instead of it all occurring in June or July as provinces reopen.”

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Mikal Skuterud, a professor of labour economics at the University of Waterloo, said it’s reasonable to expect labour shortages to become an issue as public health measures are relaxed.

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“To what extent these part-time workers will fill those vacancies is an open question,” he told Global News.

He said there are two main issues of concern.

“First, workers may be reluctant to accept new jobs due to ongoing virus fears, generous income support programs and issues with finding child care,” Skuterud said.

“Second, the job growth may be in occupations that are different from the occupation where jobless workers have worked before. Making the transition to different occupations may require learning new skills, which takes time.”

Read more: Canada’s economy could grow by 6.1% this year as COVID-19 restrictions ease: OECD

Royce Mendes, senior economist at CIBC Capital Markets, agreed, noting Canada could see headwinds to the jobs recovery this summer, similar to the U.S., due to “the many discouraged workers and long-term unemployed, coupled with the ongoing government income supports.”

“That said, it’s likely not to be as acute an issue given the less generous subsidies and increased reliance on programs that keep the employer-employee connection intact north of the border,” he wrote in a report Friday.

Thanabalasingam said labour shortages could be most acute in the hardest-hit sectors such as food and accommodation services, recreation services and retail since these areas are likely to see the strongest rebound – similar to what we’re seeing south of the border.

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“That said, Canada is different from the U.S. in some ways,” he noted. “There is less vaccine hesitancy here, which could reduce health worries and enable more workers to return to the labour force.

“The better we deal with the pandemic, the stronger the employment recovery.”

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