Layoffs can have lingering consequences

The economic fallout from Covid-19 has generated extensive layoffs, and the proportion of laid-off workers who become permanently jobless will be critical in determining the long-run effects of the pandemic, Statistics Canada says.

According to a new StatsCan study, on average, 12.4% of Canadian workers have faced monthly layoffs since February.

By comparison, average monthly layoff rates during previous labour market downturns varied between 2.5% and 3.5%, it said.

StatsCan also reported that in the last three recessions (1981–1982, 1990–1992 and 2008–2009), about 45% of layoffs were permanent, and another 15% of workers subjected to temporary layoffs lost their jobs within the following year.

“The degree to which the Covid-19 pandemic will result in permanent layoffs is crucial to understanding how it might affect Canadian workers in the longer term,” StatsCan said.

From the late 1970s to early 2010s, at least one in five permanently laid-off workers saw their real earnings decline by at least 25% even five years after job loss, the study said.

Numerous other factors will play into the long-term impact on workers, including shifting work habits (greater automation and remote working), increased operating costs due to public health requirements, reduced household spending and the impact on business investment, the study said.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.