Thousands of employees out of work in May

The Canadian economy has lost tens and hundreds of thousands of jobs for the second month in a row, according to the latest figures from Statistics Canada. Provinces are already preparing to phase out the restrictions, but experts warn that pandemic cuts could translate into a summer labour shortage because hiring new workers won't be as fast.

"While the cuts in May were not as numerous as in April, the hole to get out of is now deeper," says Shri Thanabalasingam, senior economist at major financial holding company Toronto-Dominion Bank.

The number of jobs in Canada fell by 207,000 in April and by 68,000 in May. And 54,000 of those laid off in May were working part-time. Residents of British Columbia and Nova Scotia, where strict public health measures were in place to contain the third wave of COVID-19, were the hardest hit. Before the pandemic, Canada's unemployment rate was below 6%; now it's hovering around 8%. The country has a cumulative shortfall of about 571,100 jobs.

"With fewer people in the labour market, Canada could face labour shortages as labour demand recovers faster than supply," Tanabalasingam said.

He said the slowest progress will be in hiring part-time workers. Tanabalasingam believes that the sectors most affected by the pandemic will suffer the most from labour shortages: catering, retail and hospitality.

Mikal Scuterud, a professor of labor economics at the University of Waterloo, agreed that it's reasonable to expect labor shortages when the country begins to lift restrictions. He sees two reasons for this. First, workers may be slow to find work because of fears about the virus, lack of childcare and the generous benefits Canada pays to the unemployed. Second, demand for workers may grow in the wrong field from which workers were laid off, and retraining will take a long time.

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