BUSINESS
05/15/2020 16:16 EDT | Updated 05/15/2020 16:20 EDT

7 Out Of 10 Layoffs In Ontario Were In Low-Paid Work: FAO

This is not your typical recession, Ontario's budget watchdog says.

Talia Ali / EyeEm via Getty Images

A new study from Ontario’s budget watchdog shows Canada’s economic divide risks growing larger in the wake of the COVID-19 pandemic.

Vulnerable and low-wage workers have taken the brunt of Ontario’s layoffs in this crisis, the provincial Financial Accountability Office (FAO) said in a report issued Friday.

One-third of working Ontarians ― some 2.2 million people ― either lost their job or had their pay severely reduced in March and April, the report said.

But the burden wasn’t evenly shared across the workforce. Those in industries that pay below average accounted for 7 out of 10 job losses.

Watch: Indeed.com reveals where Canadian jobs have shifted during the pandemic. Story continues below.

 

That’s directly related to the fact these businesses were exactly the sort that had to shut down amid efforts to contain the spread of COVID-19.

“Industries that tend to be public-facing or require close contact have seen steep job losses, including wholesale and retail, and accommodation and food services,” the FAO report noted.

This divide was also reflected in data showing that people with lower education levels were far more likely to lose their jobs. Nearly 19 per cent of jobs held by people without a university or college education disappeared, compared to 10.4 per cent of jobs held by those with university degrees.

Women have been hit harder than men, losing 16.1 per cent of all jobs from February to April, while men lost 13 per cent of their jobs.

 

Vulnerable groups’ employment hit hardest in pandemic

Financial Accountability Office of Ontario
This chart shows the percentage change in the number of jobs in Ontario for each group. Younger workers, those in temp jobs and those with lower education levels were hit harder.

“It’s awful,” Financial Accountability Officer Peter Weltman told Canadian Press. “But it’s not surprising, really. This is different than the typical recession. This is a recession where the economy was effectively shut off by the government ... people were told to stay home and businesses were going to have to close and people were going to have to be without work.”

Ontario’s unemployment rate climbed to 11.3 per cent in April, the highest it has been since 1993. But the FAO says it would have been above 15 per cent, were it not for a large group of people who gave up looking for work, taking them out of the unemployment equation.

Canada’s federal government has enacted a series of emergency measures to help struggling households during the crisis, including the Canada Emergency Response Benefit (CERB), which gives those who have lost income in the pandemic $2,000 for up to four months.

In a recent report, Capital Economics estimated that CERB replaces about 60 per cent of income for the average person who lost their job in this crisis.

The FAO report also notes there is some reason for optimism: the province’s economy could experience a sharp bounce back provided COVID-19 cases don’t flare up requiring a second lockdown.

But the dangers of that scenario for the economy are also troubling, Weltman said.

“Anything that delays a reopening of the economy will have more lasting economic impacts,” he said. “The longer people go without work, the longer businesses go without cash flow, they become more in danger of shutting down permanently. So these are the sorts of things that hopefully can be avoided.”

Reopening begins

The report comes a day after the province unveiled its plan to start to reopen more parts of the economy Tuesday.

Premier Doug Ford announced that he was lifting restrictions on things like retail stores, tennis courts, surgeries and dog grooming.

Green party Leader Mike Schreiner said the FAO report highlights the need for the government to take urgent action to save small businesses.

Schreiner said the Progressive Conservatives should freeze commercial rent evictions until the end of the pandemic and provide grants of up to $5,000 to help with rent, utilities and compliance with public health measures.

“With one in three jobs in this province directly affected by the virus, the vulnerability of our economy and social safety net has been laid bare,” he said in a statement. “We must focus on immediate help for small businesses to prevent job losses and maintain the vibrancy of our downtowns and neighbourhoods.”

― With a file from The Canadian Press

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