A Long Road to Recovery: September Tourism Employment and Fall Outlook

In September, tourism employment increased slightly by 4,200 jobs. This was the fifth month of increased employment since it began to recover in May.

It is very unusual to see tourism employment increase in September. Since 2001, when our customized tourism labour force survey data began, there has never been an increase in tourism employment from August to September. In fact, since 2001, tourism employment has decreased 5.5% on average in September.

Tourism has gained back 576,400 of the 881,700 jobs lost in March and April. The increase in September probably occurred because tourism employment started from such a low point in May. Increasing demand continued to drive employment upwards. But tourism employment was also 360,500 jobs lower than it was in September 2019, showing that tourism employment has a long road to recovery yet.

It is also important to note that the data was collected for the week of September 13 to 19. At that time, an upward trend in COVID infections was occurring, with over 800 new cases in Canada announced on the 19th. The data does not capture any change caused by the reimplementation of restrictions in Montreal, Toronto, Quebec City, Ottawa, Peel, and York. Nor does it reflect any changes announced in Winnipeg this week.

Highlights:

  • Tourism added 4,200 jobs in September.
  • Only Ontario and British Columbia added jobs—tourism employment decreased in all other provinces.
  • The tourism unemployment rate has fallen to 13.4%, which remains 5.0 percentage points higher than the overall unemployment rate.
  • On a year-over-year basis, seasonally unadjusted employment across all Canadian industries was down 3.6% from September 2019. In comparison, tourism employment was down 19.8% from the same month a year ago.

Please note: To allow comparisons with tourism sector data, which sees significant employment fluctuations over the year, we use seasonally unadjusted data for both tourism employment and overall employment.

Tourism Employment Rate

In September, employment (unadjusted for seasonality) across the entire Canadian economy increased by 275,000 jobs. Tourism employment increased slightly in September, a highly unusual trend. Tourism employment usually drops as student workers return to school and demand for tourism drops.

This slight increase hides a significant shift in the share of full-time and part-time employment. The sector lost 92,600 full-time jobs while gaining 96,900 part-time jobs, for a total increase of 4,200 jobs.

The small overall increase also masks some significant changes in employment levels at the industry and regional level. Most of the overall employment increase (regardless of whether it was part-time or full-time) occurred in Ontario, which gained 25,300 jobs. British Columbia recorded a small gain of 1,300 jobs. All other provinces shed jobs.

There were significant shifts by industry group as well. Employment gains of 19,900 jobs in food and beverage services and 41,500 jobs in the transportation industry group offset employment losses elsewhere.

Last September, tourism employed over 2 million Canadians. This September, just over 1.7 million Canadians worked in the tourism sector.

Employment decreased in the accommodations, recreation and entertainment, and travel services industry groups in September. The transportation industry saw a large jump in employment, following two months of losses, and the food and beverage services industry continued to add employment. Most employment gains were in part-time work, except for 13,300 full-time jobs in transportation.

Because the industry groups that make up tourism are different sizes, looking at the monthly change in employment as a percentage change relative to the previous month provides a more equitable picture of how each industry is doing. It also helps illustrate the size of the employment increases relative to the employment decreases that occurred in past months.

In all industry groups, employment remains below its pre-COVID level. Travel services has lost the most employment, with less than half the workers it had in February. Employment in the recreation and entertainment industry, which had almost recovered to February levels in August, fell back, losing 8.5% employment in September. Despite a significant gain in employment in September, the transportation industry remains 20.7% below February employment levels, after losing employment in July and August.

On a year-over-year basis, seasonally unadjusted employment across all Canadian industries was down 3.6% from September 2019. In comparison, tourism employment was down 19.8% from the same month a year ago, although it is an improvement over July and August, when employment was down 25.0% and 21.2% year over year. By industry group, year-over-year employment losses in September ranged from -58.7% in travel services to -14.0% in food and beverage services.

Ontario was the main source of additional employment, adding 25,300 jobs. British Columbia also added jobs in September. All other provinces saw a reduction in tourism employment ranging from a loss of 7,400 jobs in Quebec to a loss of 800 jobs in Prince Edward Island.

These employment decreases would be expected as part of the usual seasonal trend. It is the increase in Ontario that is unusual and is probably driven by the fact that some large population centres only reached Stage 3 of that province’s reopening in late July and may still have been in the process of rehiring in early September.

Employment in all provinces remains well short of 2019 levels. In September, Prince Edward Island and Manitoba were closest to last September’s employment levels, being 12.3% and 12.4% below the employment levels of September 2019, respectively. In Saskatchewan, employment was 30.1% lower than in September 2019, with 42,200 individuals employed in tourism compared to 60,400 a year earlier.

Tourism Unemployment Rate

In September 2020, the unemployment rate in the tourism sector was at 13.4%, which is 8.9 percentage points higher than the rate reported in September 2019, but lower than the previous month (August 2020), when the unemployment rate stood at 17.1%. Although this drop in the unemployment rate is good, it would have partially been driven by the fact that students are less likely to report that they are looking for work if they are back at school. If they do not report that they are looking for work, they are not considered unemployed. Some individuals who looked but never found work over the summer will also be among this group.

At 13.4%, tourism’s unemployment rate was above Canada’s seasonally unadjusted unemployment rate of 8.4%.

The unemployment rate dropped in four of the five industry groups that make up the tourism sector, rising only in transportation.

Unemployment Rate
Tourism Industry Group[1]

September 2019

August 2020

September 2020

Tourism 4.5% 17.1% 13.4%
Accommodations 8.1% 21.3% 18.7%
Food & Beverage Services 5.3% 16.2% 12.8%
Recreation & Entertainment 4.6% 18.1% 14.6%
Transportation 1.2% 15.0% 8.2%
Travel Services N/A 21.7% 30.1%

On a provincial basis, tourism unemployment rates ranged from 6.6% in Prince Edward Island to 14.4% in British Columbia.

The seasonally unadjusted unemployment rates for tourism in each province, with the exceptions of Newfoundland and Labrador, Prince Edward Island, and Nova Scotia, were above the rates reported for the provincial economy.

Total Actual Hours Worked by Sector

The number of actual hours worked increased in all sectors, including a small increase in accommodation and food services, which recorded a 1.1% increase in hours worked relative to August. Early in the pandemic, hours of work were reduced much more drastically than employment. As of April, actual hours of work in the accommodation and food services sector were down 65.0%, while employment was down 49.3%. Similar gaps were seen in most sectors. The gap between hours and employment has narrowed in most industries, suggesting that there are fewer people employed but not working compared to the early months of the pandemic.

 

Employment by Occupation and Average Annual Earnings

The following chart groups occupations by the average annual earnings of those working in the occupational group. Occupations are grouped into those earning less than $30,000, $30,000 to $50,000, $50,000 to $80,000, and over $80,000.

Initial employment losses (March and April) were heavily concentrated in occupations where workers earn less than $50,000 a year on average. By April, employment dropped by 992,000 jobs in occupations that earn less than $30,000 per year, and by over 1.2 million in occupations earning between $30,000 and $50,000. The two highest earning categories lost a total of 707,600 between them.

While initial employment losses were mostly in lower-earning occupations, those occupations have also seen a greater recovery in the initial months of May and June, but that rally stalled for lower earners while continuing for higher earners. By July, the number of people employed in the highest earnings category exceeded February levels. For the second highest group of earners, it took until September to exceed February employment.

The lowest two earnings categories still lag behind. As of September, employment in those two earnings categories is 295,300 and 208,200 jobs below February levels, respectively. While this is an overall improvement compared to August, it is only an additional 27,000 jobs in the lowest earnings group and in fact a slight loss of employment in the second lowest earnings group. The highest two earnings groups added 248,000 jobs between them. It may be that those who lost jobs due to COVID are in fact finding work in higher paying occupations. More research is required to determine if this is the case.

The Fall Outlook

September’s employment increase was mostly driven by a single province and was the result of a mix of employment gains and losses in different industries. The answers to several question will determine where employment goes from here. How large will the effect of the limited shutdowns be? Tourism businesses are among those targeted. Will there be a second employment dip beyond what is normally expected in the fall? To what degree is the Canadian Emergency Wage Subsidy (CEWS) maintaining employment that would otherwise be shed? Applications for CEWS had declined in July and August, but 12,240 businesses in the accommodation and food services sector were still using the program at the end of the summer.

Longer term, there is a risk that tourism permanently loses a significant part of its labour force. Tourism was the hardest-hit sector and demand is not likely to recover significantly until the beginning of the summer season after travel restrictions can be fully lifted—hopefully in 2021. In the meantime, former tourism workers will seek employment elsewhere. The immediate focus for businesses is finding a way to sustain themselves until demand increases. But when it comes, businesses may find that demand surges more rapidly than the labour market can accommodate.


[1] As defined by the Canadian Tourism Satellite Account. The NAICS industries included in the tourism sector are those that would cease to exist or operate at a significantly reduced level of activity as a direct result of an absence of tourism.

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