On the Move: Easing Restrictions Lead to Rebound in Tourism Employment

For the second month in a row, tourism employment increased in June, rising in all five of the industry groups that make up the tourism sector.

Highlights:

  • Tourism employment increased by 243,900 jobs between May and June
  • The tourism unemployment rate remains high at 25.0%
  • There were 668,300 fewer individuals employed in tourism in June 2020 than in June 2019
  • Employment for 15- to 24-year-olds remained 9.5% lower than it was in February—this remained the greatest decrease in employment by age group, alongside those over 65 (also down 9.5% since February)
  • The over-65 age group saw smaller percentage decreases in employment in March and April, but have also seen a much more tepid employment recovery in May and June

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 the tourism sector, the seasonally unadjusted labour force survey data shows that the number of employed individuals grew by 243,900 from May to June—an increase of 19.7%. Combined with the increase in May, tourism employment has risen by 327,800 jobs since its April nadir.

Despite the increase, the number of individuals employed in tourism was 27.2% lower than in February 2020, and 31.1% lower than in June 2019. There were 668,300 fewer people employed in tourism this June than there were one year prior.

In June, overall employment (unadjusted for seasonality), increased by over 1 million jobs. The increase in tourism employment accounted for 21.3% of that overall increase. In May, tourism had only accounted for 13.5% of the total employment increase.

Employment increased among all industry groups, ranging from 1,800 jobs added in travel services to almost 150,000 jobs in food and beverage services.

Of the added employment, 56.6% were full-time jobs. In the accommodations industry, employment increases were almost exclusively driven by the addition of full-time jobs. In food and beverage services, roughly half of the jobs added were full-time.

Part-time jobs in the travel services industry was the only employment category in which employment decreased this June.

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 has been affected. It also helps illustrate the size of the employment increases, relative to the employment decreases that occurred in past months.

Employment in all industry groups remains well below its pre-COVID level. The travel services industry group has the largest overall employment loss as a percent of the number of individuals employed in February, down by almost half. Despite an increase in employment of 27.3% between May and June, the food and beverage services industry has the second largest percentage employment loss since February (-30.2%).

As we enter the summer, usually a peak time in tourism demand and employment, the comparison to February’s employment levels becomes less important than year-over-year comparisons of employment. March is usually a low point for tourism employment during the year, with jobs steadily added until an August peak, after which employment drops again as the summer tourism season ends. In 2019, the tourism sector added over 230,000 jobs between March and July.

On a year-over-year basis, seasonally unadjusted employment across all Canadian industries was down 8.3% from June 2019. In comparison, tourism employment was down 31.1%. Year-over-year employment generally improved between May and June. Still, by industry group, year-over-year employment losses in June ranged from -30.8% in recreation and entertainment to -43.6% in travel services.

In June, tourism employment increased in all provinces. Employment increases ranged from an additional 2,300 jobs added in Prince Edward Island (an increase of 67.6% from May) to an additional 69,000 jobs in Ontario (an increase of 15.1% from the month prior).

Despite the increase in employment, these provincial increases in employment follow two months of massive employment losses, and employment levels remain well below those of 2019. New Brunswick’s tourism sector is the closest to normal employment levels being “only” -13.8% below the level of employment for June 2019. Saskatchewan, Ontario, and Prince Edward Island are the farthest from last year’s June employment level at -41.2%, -37.2%, and -36.7%, respectively.

Tourism Unemployment Rate

Both the overall and tourism unemployment rates decreased in June. Tourism unemployment fell to 25.0%. By industry, the unemployment rate was highest in accommodations, at 30.3%.

The tourism sector unemployment rate was 20.2 percentage points higher than the rate reported in June 2019, but lower than the previous month (May 2020), when the unemployment rate stood at 29.7%. At 25.0%, tourism’s unemployment rate is well above Canada’s seasonally unadjusted unemployment rate of 11.9%.

The unemployment rate dropped (albeit slightly) in four of the five industry groups that make up the tourism sector. In the transportation industry, despite an increase in employment, the unemployment rate rose due to more people starting to look for work.

Unemployment Rate
Tourism Industry Group[1]

June 2019

May 2020

June 2020

Tourism 4.8% 29.7% 25.0%
Accommodations 5.9% 34.1% 30.3%
Food & Beverage Services 5.2% 35.0% 25.8%
Recreation & Entertainment 6.5% 29.2% 27.8%
Transportation 1.4% 13.2% 14.3%
Travel Services N/A 29.6% 28.1%

On a provincial basis, tourism unemployment rates ranged from 17.0% in Manitoba to 32.1% in Prince Edward Island.

The seasonally unadjusted unemployment rates for tourism in each province were above the rates reported for the provincial economy.

The number of unemployed tourism workers dropped slightly in June from a peak of 521,800 in May to 493,300 in June. This decrease of 28,500 is only about 10% of the increase in employment, which suggests that many of those hired in June were not looking for work—and therefore not considered unemployed—in May.

In March and April, there was a large gap between the cumulative number of jobs lost since February and the number of unemployed individuals. During those months, the unemployment rate presented an inaccurate picture of tourism labour trends as it only counts people who are actively looking for work. Now that the number of jobs lost since February and the number of unemployed individuals is somewhat closer (a gap of 60,600 remains), the unemployment rate is a more accurate metric of the share of tourism employees who are seeking work but unable to find a job.

As we move forward, it will become important to track the total number of individuals in the tourism labour force (the number of individuals employed and unemployed). If this number drops it is an indicator that individuals are either dropping out of the labour force entirely (not seeking work), or leaving the tourism sector and finding work in other industries.

Total Actual Hours Worked by Sector

The number of actual hours worked in tourism-related sectors increased significantly in June. From May to June, the number of actual hours worked increased by 54.6% in the accommodation and food services sector and by 23.4% in the information, culture and recreation sector. In February, accommodation and food services employees worked over 31 million hours. In April, they worked just over 10.9 million hours, while in June, actual hours worked increased to 20.2 million hours.

Workers in the information, culture and recreation sector worked 22.3 million hours in February. By April, actual hours of work had dropped to 13.6 million, but rebounded to 18.7 million in June.

The reduction in hours worked in these two sectors continues to be greater than the reduction in employment. This suggests that there are still individuals employed but not working to full capacity. However, the gap is narrowing. The number of hours worked rose more quickly in both sectors than employment did from May to June.

 

Employment by Age Group and Gender

In June, employment continued to rebound for all age groups, with a particularly strong rebound for those 15 to 24 years of age. Employment increased by 398,700 jobs for this age group (a 22.5% increase from May). Despite two months of increases however, employment for 15- to 24-year-olds remained 9.5% lower than it was in February. This remained the greatest decrease in employment by age group, alongside those over 65 (also down 9.5% since February). The over-65 age group saw smaller percentage decreases in employment in March and April, but have also seen a much more tepid employment recovery in May and June.

Employment levels for male and female workers increased by roughly the same percentage in June. For females who were under the age of 25, however, the rebound in employment was much stronger than it was for males of the same age.

Moving Forward

Employment has increased significantly since April, and will continue to rise in July as restrictions on businesses continue to be lifted. However, employment will still fall short of pre-COVID levels and well short of the usual employment peaks that are seen over the summer. Importantly, with international travel into Canada remaining at a standstill, the tourism sector is entirely reliant on a mix of demand from local residents and Canadians travelling domestically this summer. With many restrictions lifting but others (such as physical distancing) still in place for the foreseeable future, the question is how much of the usual summer demand will businesses receive from locals and domestic tourists. Many businesses are reliant on the summer season to make the year profitable.

Some signs are hopeful: a recent survey by Leger, a Canadian market research company, found that 64% of Canadians plan to take more staycations in the coming year[2].

Of concern is what happens this fall. Tourism employment will continue to rebound over the summer, but it has always dropped slightly come September. Whether it does so this year will depend on whether domestic demand continues to sustain businesses over the summer and whether by fall tourism businesses have received enough revenue that they are comfortable sustaining operations until next year.

Anecdotally, businesses such as golf courses, cottages, and campgrounds have been able to capitalize on being seen as a safe activity, receiving a significant boost in demand. Restaurants have been able to take advantage of bylaw amendments allowing them to expand their patios, making up for the loss of indoor seating capacity.

But not all businesses have been able to do so. Restaurants are not always located in an area where a patio can be set up. The cancellation of large festivals, events, and conferences has had a knock-on effect on a wide range of tourism businesses. Businesses in regions that were heavily dependent on international and long-distance domestic tourism cannot rely on local demand to fully replace lost tourists.

A survey of business conditions by Statistics Canada found that in May, 34.7% of businesses in the accommodation and food services sector, 34.7% in the information and cultural industries sector, and over one-quarter of businesses in the arts, entertainment and recreation sector (26.8%) reported they could continue to operate at their current level of revenue and expenditures for less than six months before considering further staffing actions, closure, or bankruptcy.

Since then, business conditions have improved. September will tell if they have improved enough.


[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.

[2] https://leger360.com/surveys/assessing-impact-covid-19-tourism-north-america/