Canada lost 200,000 jobs in January as the omicron variant led to tightened restrictions across the country, according to data released by Statistics Canada on Friday.
Unemployment rose for the first time in nine months by 0.5 percentage points to 6.5%.
Unemployment rose for the first time in nine months by 0.5 percentage points to 6.5%. Workers who had to quarantine without adequate paid sick leave and those affected by COVID-19 related closures or temporary layoffs could file for employment insurance and were counted as unemployed.
The drop in youth employment was the most prominent, with part-time employment decreasing by 93,000 to 7.1% and full-time employment decreasing by 46,000 to 3.5%.
Part-time employment among core-aged women fell by 43,000 to 4.3%.
These are the groups more likely to work service jobs at restaurants, hotels, arenas and in retail stores, businesses that had to impose restrictions or closed altogether in January.
A record 10% of employees were absent from their job for at least part of January because of illness. Most employee absences occurred in accommodation and food services, retail and health care, industries with a lot of in-person contact.
The decrease in employment was driven entirely by the services-producing sector, which lost 223,000 jobs, while the goods-producing sector gained 23,000 jobs.
Everything tells us that the decrease in employment in January, while it was expected, will be temporary. That number was made worse by the fact that sick workers were counted as unemployed. Those who had to file for employment insurance in January are likely to be employed again once in-person services can open and with higher capacity.
In January, there were 120,000 more people on temporary layoff or scheduled to start a job in the near future compared to December.
February, though, is a different story. Provinces are loosening restrictions, establishments are reopening and workers are getting back to work. Employment will rebound, with a full reversal by the end of the first quarter.
The bigger concern for businesses, however, are the persistent worker shortages that are hampering economic activity.
Wage gains remain steady at 2.4% on a year-over-year basis, and Canada still has just under 1 million job vacancies. It is not a coincidence that there are a staggering 1.8 million applications in Canada’s immigration backlog. If the backlog is not soon cleared, Canada risks losing talent to other countries.
The loss of talent will weaken population growth and decrease labour force participation, dampening economic growth this year and beyond.