Labour market imbalance sees both 'growth mode' and layoffs

There is an odd labour situation happening in Canada. Unemployment is the lowest it’s been since 1970, sitting at 4.9%, which is 2.2% higher than the pre-pandemic peak. At the same time, job vacancies are growing. In Q2 of this year, Statistics Canada reports that employers were seeking to fill 977,000 empty positions, the highest quarterly number on record.

In a tight labour market, companies are hungry to fill in vacant positions, giving potential employees, specifically those with sought after skills, more leverage to bargain for better pay or remote work. Yet, as employers seek to fill nearly a million vacant positions, some industries are letting people go. The Canadian tech sector is one of them.

We’ll send you top stories and timely tips every week.

On June 15, Wealthsimple — the fintech company managing about $15 billion –- laid off 159 employees, Shopify let go of 1,000 employees on July 26 and VC startup Clearco cut [125 employees (a quarter of its staff)] (https://betakit.com/clearco-cuts-a-quarter-of-staff-amid-significant-headwinds/) on July 29.

Big American companies are also making wide ripples in Canada. In August, Ford Motors laid off 3,000 employees globally, translating to 120 jobs being cut in Canada. After seeing its shares plunge 20% in August, Bed Bath & Beyond Inc. decided to cut down on jobs and close stores around the world.

“There's always a churn in the labour market, and there’s sectors and companies that end up not doing well, and having to lay off workers,” says Pedro Antunes, chief economist and primary spokesperson at The Conference Board of Canada.

Good credit is important for your financial health, and Borrowell can help you take a turn for the better. Sign up for Borrowell to get your credit score and credit report for free!

In early September, Statistics Canada reported that the nation lost 39,700 jobs in August, the third straight month of job loss, surprising some economists. Educational services and the construction sectors were the main drivers of this decline.

While education services might experience changes due to its seasonality, the effects seen in the construction sector suggest that the economy is starting to slow. This is to be expected due to repeated interest hikes by the Bank of Canada this year, in an effort to slow inflation.

Statistics Canada also said that the decline was offset by employment gains in professional, scientific and technical services.

“In residential construction, I think we are starting to see things really ease up because essentially, I would say, home sales are returning back to normal,” said Antunes.

“In a way, it's not a bad bad news story,” he added, keeping in mind that monthly numbers “can be very volatile, especially when we start to get down into the industry reporting.”

For the job loss in educational services, Antunes said he would wait “a month or two” to see if there is a trend emerging in that sector.

At the climax of the pandemic, sectors with e-commerce services, or those offering durable goods, really took off. As the pandemic waned and the world opened up, demand for experiences and in-person services rebounded, and the demand for e-commerce services declined.

“Things are normalizing,” added Antunes. “So some of those segments are starting to see some softening.”

The same can be said about the real estate market, which reached new highs, but is now seeing a correction with one report from TD Economics speculating that Canadian homes prices could plummet up to 25% in 2023.

At the same time, there are sectors and companies that are doing well and are looking for workers, Antunes added.

Get a $25 bonus when you open and fund your first Wealthsimple Investment account* (min. $500 initial deposit). Trade and Cash accounts are not eligible. Sign up now to take advantage of this special offer.

The news of thousands losing their tech jobs isn’t reflective of the entire industry.

Michael Contento, managing partner and business innovation executive at the IT service management company F12.net, says extrapolating trends from events such as tech layoffs leads to inaccurate conclusions.

“To say the tech sector, it's a very broad, very vague language,” says Contento.

“We're hiring,” adds Contento. “We're in a growth mode.”

Job search site Indeed also confirms there are “many companies hiring for tech positions over the past six months.”

Positions such as cloud engineer and python developer are currently most common with big banks and financial service companies, according to Indeed.

Other areas in high demand include healthcare and social assistance. Statistics Canada reports that these areas have record high job vacancies in Q2 of 2022. Vacancies in accommodation and food services sector are also on the rise, with 12.7% increase quarter-over-quarter.

Aside from market forces, there are also some cultural and demographic factors in play.

“We're still going through the post pandemic’s ‘great resignation’ and we're still having, not an extremely difficult time to find talent, but it's not as easy as it used to be,” Contento said.

Despite the economic indicators pointing to a potential “mild” recession, speculated to start officially in early 2023 it could possibly be one of the best times to land a job.

A survey by Robert Half Canada indicates that 47% of managers are reporting an increase in voluntary turnover in their departments in the last year. In response, two in five managers say they are increasing starting salaries.

They also report that more than more than 30% are offering remote options or providing signing bonuses. Another 31% are loosening education, skills or experience requirements. Remote work is still a strong appeal, with 30% a employers looking at candidates outside their company’s geographic area.

To add fuel to the fire, Canada’s labour market is seeing more people retiring or on the verge of retirement.

Statistics Canada reported that as of August 307,000 Canadians retired from their jobs within the last year. That’s a 31.8% increase from the year before, and 12.5% more than 2019.

“We had always assumed that the natural rate of unemployment in Canada was probably somewhere around 6%, even in a tight labour market in the past,” Antunes said. “We've never kind of seen it go below that in a sustained way.”

“I think what we're seeing is essentially the pressure of people leaving the workforce, the baby boomer cohort is really ramping up its retirement now.”

And it appears that early retirement may continue to be a trend in the near future. A survey by RBC Insurance indicated that a more than third of new retirees decided to retire earlier than planned and another 30% of pre-retirees intend to change their retirement date because of the coronavirus pandemic.

To add another twist to the labour situation, it seems more Canadians are choosing to add an extra part-time job. This could be a result of rising cost of goods and services due to inflation.

“Gig employment has helped supplement incomes for many Canadians over the last number of years and certainly in the years prior to the pandemic,” Antunes said.

“And perhaps that's a trend that's been continuing; there's no doubt about it, that there is a lot of pressure on incomes for households right now.”

The trend appears to be continuing and even growing for Uber.

“People signing up to drive on the Uber platform in Canada is at one of the highest points since the pandemic started,” says Keerthana Rang, Corporate Communications Lead, Uber Canada.

Searching for your perfect mortgage shouldn’t be hard.

Homewise is an online brokerage that will negotiate on your behalf with more than 30 big banks and other lenders, completely free, and it only takes five minutes to apply.

If you're in the market for a new mortgage, or if you're looking to refinance before interest rates rise again, go to Homewise now and answer a few simple questions to get started.

Dina Al-Shibeeb is an award-winning journalist with hyperlocal and international experience in various news formats. She began her reporting career covering the Arab Spring and its aftermath for a Dubai-based news station. She has since worked in Canadian media, covering municipal affairs in Vaughan, Ont., for Metroland Media. Her work has also appeared at the Toronto Star.

While freelancing full-time offers increased flexibility, there are costs that would-be entrepreneurs may not be aware of.

$1,000 for a Barbie doll? Savvy sellers are capitalizing on the Queen's death.

If the price of an EV seems too steep, consider applying for these rebates to cut down on your costs.

Start saving on your winter travel now.

The content provided on MoneyWise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.

The Financial Post trademark is used under license from Postmedia Network Inc. All Rights Reserved.

Information and timely news from our team of trusted money experts.