Pandemic fuels positive changes for Canada’s workforce

If there’s a silver lining in the Covid-19 pandemic, it may be the impact on Canada’s labour market, suggests a new report from RBC Economics.

According to the report, the pandemic sparked changes in the job market that will leave Canada with a richer, more educated and productive workforce.

To start, the public health crisis generated strong demand for services with less direct personal contact, such as online shopping, banking and entertainment — which in turn drove demand for workers in these sectors.

“These jobs tend to pay significantly higher wages, demand more education and training and have higher productivity rates,” the report said.

The result has been a fundamental shift in the Canadian workforce.

For instance, the report noted that, while employment in the “high-contact” food and accommodation sectors remains down by 195,000 workers compared with pre-pandemic levels, this is more than offset by an increase in “low-contact” professional and technical services jobs (up by 215,000 from pre-pandemic levels).

“Wages in these occupations are double that of accommodation and food services on average. Output per hour (productivity) is also twice as high,” it said.

Additionally, within these more highly paid sectors, workers are moving into more lucrative jobs, the report said, “shifting out of sales and service positions for instance, and into business, finance and administrative roles.”

“The economic impact of this shakeup has been significant, accounting for 2% of total wage growth of 8% over two years of the pandemic. It’s also provided a $20-billion boost to annual household wage income,” it said.

RBC said the transformation is expected to continue, even as the pandemic itself recedes.

“With demand for low-contact services holding up, it’s difficult to see the large-scale shift in the labour market coming undone,” it said.

Moreover, it noted that school enrolment has increased during the pandemic, which will ensure a supply of educated workers to meet the growing demand — enabling continued productivity growth.

“In the meantime, high-contact services will continue to struggle to find workers,” the report said. “For these industries, the pandemic could act as an accelerator, pushing them to innovate by investing in automation.”

Overall, “The pandemic left Canada with a higher-paid, stronger, more productive workforce — and added a $20-billion boost to annual household wage income,” RBC concluded.

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.