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Worried about layoffs? How to protect your job, finances amid recession fears

Click to play video: 'Majority of Canadians believe country will be in recession by 2023, poll finds'
Majority of Canadians believe country will be in recession by 2023, poll finds
WATCH: Majority of Canadians believe country will be in recession by 2023, poll finds – Nov 1, 2022

In the event of a potential recession in Canada, some financial planning experts say the key to job security is becoming indispensable in the workplace and to have an emergency fund on the side at a time when “the economy is changing.”

“A lot of tech companies have done major layoffs and I think that’s a sort of a signal of the times we are in … the economy is changing … businesses are contending with higher prices for oil and supply-chain issues that are increasing costs for employers,” Jackie Porter, a certified financial planner and adviser, told Global News.

“So, I think these pressures … are making people feel less secure in their jobs and wondering if some of the tech spillovers as far as layoffs will end up in their laps,” Porter said.

READ MORE: Inflation will chart Canada’s economic fate, Ottawa’s fiscal update shows

A slew of startups and tech giants as prominent as Netflix, Shopify, and Wealthsimple have slashed their workforces in the past few months as the sector grapples with fading investor exuberance and a potential recession.

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On Thursday, the federal government did not state outright in its projections whether it believes Canada will fall into a recession, but a chorus of voices predicting such a downturn continues to grow louder.

A consensus of economists polled back in September projected “significantly weaker growth” in the economy than predicted in Ottawa’s budget this past spring. According to the 2022 Fall Economic Statement, the new baseline forecast sees overall gross domestic product (GDP) growth of “just above zero for the next several quarters” and unemployment rising to 6.3 per cent by the end of 2023.

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The fall projection statement put the odds of a recession in Canada at 40 per cent.

Impact of recession on the job market

According to Investopedia, a financial media website, at the start of a recession, “as companies cope with diminished demand, declining profits and elevated debt, many start to lay off workers in order to cut costs.”

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The company explains that as the number of unemployed workers increases “while demand and output decline further as a result, newly unemployed workers find it harder to find new jobs and the average length of unemployment increases.”

“Rising unemployment is one in a number of indicators that define a recession, and it exacerbates the downturn,” Investopedia states on its website.

Read more: Canadian businesses think a recession is coming. What does that mean for jobs?

However, recent data from Statistics Canada’s labour force survey stands at odds with fears of possible recession — showing a jobs gain.

Employment rose by 1 “08,000 (+0.6 per cent) in October, recouping losses observed from May to September.” The unemployment rate held steady at 5.2 per cent in October as more Canadians looked for work, according to the survey.

The jobs gain comes after four months of job losses or little growth in employment.

According to StatCan, employment rose across a broad range of sectors in October, led by manufacturing, construction, accommodation and food services. At the same time, it fell in wholesale and retail trade, as well as in natural resources.

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How to avoid a layoff

Even if a recession does happen, Porter says people should only worry about the things they can control.

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“One of the things employees need to think about is there’s been this movement around ‘quiet quitting’ … and it basically means doing just the minimum at your job and that’s actually putting you at risk for losing your job,” she said.

Porter explains that if a person is quiet quitting in a workplace where an employer is “tightening their belt and seeing you’re kind (of) taking up space, then it makes you more vulnerable to job loss.”

Read more: Conservatives, NDP slam government’s ‘out of touch’ fall economic statement

Instead of quiet quitting, Porter says people need to demonstrate that they’re adding value and building a brand for themselves inside the company they work for.

“Can you (show) some tangible things you did to improve the company’s bottom line?” Building a personal brand can help employees know what their value is, how they add value and what they represent to the company, she said.

“That can make you more employable and resilient in the job market,” she said.

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In addition, networking can be beneficial during this time, according to Porter. This can be done by building a strong profile on job networks like LinkedIn or by just reaching out to employers, she said.

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“You need to make sure you’re seen and heard,” Porter added.

Another financial planning expert, Rick Robertson, says people should always be somewhat mentally and financially prepared for the loss of a job, and that it happens in good times as well as bad.

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“There are certainly strong warning signs of a recession and in recessions, people do get laid off, but I think it would depend dramatically on what kind of you job you have,” said Robertson.

“If I was a nurse, I wouldn’t be worried … but I think the key thing to avoid being laid off is to ultimately become indispensable because there’s just not enough of you around,” he said.

According to Roberston, the health-care sector would be safe as well as paramedics and firefighters who are in huge demand.

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“It depends … on how important that particular sector is at the moment,” he said.

Regardless of the sector, Robertson says there’s still nothing a person can do to stop or guarantee not getting laid off, but he says becoming indispensable does help a person’s odds on keeping their job.

“Be more supportive. Be a team player. Anticipate what things need to be done,” he said.

'Make your money go further'

When it comes to handling finances after a layoff, Porter says people need to build up an emergency fund and make sure that, in case they lose their job, they have enough money for a minimum of six months until they find another job.

“This is a good time to see how much cash you have in the bank account and start to pay attention to your expenses … and do a budget,” said Porter.

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“Be a little bit more fiscally responsible — think about your needs and wants carefully because the money you spend today might be money you regret spending tomorrow,” she added.

READ MORE: Student loan interest relief and more: What’s new in the fall economic statement?

What can also help in cutting down expenses is to look for cards that help reward a person’s spending.

“You can actually make some money on your spending … so getting as much mileage as you can out of the credit cards,” Porter said.

For people who are less good with budgeting, Porter says, many reward cards act like debit cards, so a person can load it with money and use it while earning points on their spending.

READ MORE: Canada projected to see balanced budget by 2027, Freeland says in fiscal update

“I also recommend people who are not good with saving or budgeting to use gift cards … so when that’s done, it’s done,” she said.

Porter says Canadians need to remember that they have choices with where they bank.

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“Look for places (that) make it easier for you to keep track of your money because this is an important time to do that,” she said, “and also to just become a little smarter with money by making your money go further with something like a points card … because it means you’re not going into your own cash as much.”

– with files from The Canadian Press and Global News’ Craig Lord 

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