The restrictions on international, domestic, and local travel are having a severe negative impact on Canadian tourism businesses and workers. Leading indicators of traveller volume show that the number of international visitors to Canada arriving by air fell 61% in March 2020 compared to March 2019 and the number of Americans crossing into Canada at land borders fell 60%.1
In addition to essentially non-existent tourism, the global event dubbed “the Great Lockdown” by the International Monetary Fund has shuttered many tourism businesses and severely limited local demand for those that remain open. Weekly surveys of tourism businesses by industry associations across Canada have shown that up to half of their members are closed, while seasonal businesses have delayed opening. Many have laid off a large percentage of their staff, and their responses suggest that the effect of COVID-19 is running ahead of the ability of official statistics to track unemployment.
The data in the most recent Labour Force Survey (LFS) was collected the week of March 15 to 21. That week, most provinces were in the process of restricting the types of businesses—such as dine-in restaurants—that could be open. Although restrictions such as limiting restaurant capacity to 50% had been put in place earlier by some municipalities, LFS data collected that week would only have captured some of the impact, as a full lockdown across the entire country was not yet in place.
Despite this, the March data offers insights into how large the effect on the tourism sector will become in the months ahead.
There were over one million fewer Canadians employed in March than there were just one month prior. The seasonally adjusted unemployment rate jumped 2.2 percentage points to 7.8%. However, these topline numbers are only part of the story as it pertains to the tourism sector.
Tourism HR Canada’s customized Labour Force Survey data shows the full impact on the tourism sector, relative to the overall economy. To do this, we rely on seasonally unadjusted data. The remainder of this article uses this seasonally unadjusted data and therefore some data points may differ from those reported elsewhere. For example, while the seasonally adjusted unemployment rate for March was 7.8%, the unadjusted unemployment rate was 8.4%.
Using this data, the number of employed Canadians dropped by 1,060,500 individuals from February to March. Almost half of that decrease (448,600) was in the tourism sector. There were 167,100 fewer full-time and 281,400 fewer part-time workers employed in tourism-related jobs. These represent drops of -13.9% in full-time tourism employment and -33.7% in part-time.
The largest employment drop occurred in the food and beverage services industry; it had 242,900 fewer people employed in March than in February (see Figure 1). As the food and beverage services industry has the largest labour force of all the tourism industry groups, it is not surprising that the largest drop in employment occurred here. To account for the size of each industry group’s labour force, we can examine the percentage decrease in employment between February and March. By this measure, food and beverage services (-25.2%) was only slightly more affected than the recreation and entertainment (-23.9%) and the accommodations (-21.0%) industry groups in terms of the share of employment shed.
The drop in tourism employment was severe across all provinces. The greatest drops were seen in Ontario, Quebec, and British Columbia, reflecting the size of their population and labour force (see Figure 2). When comparing the employment drops as a percentage of February employment levels, the largest impacts are seen in Alberta (-28.5%), Prince Edward Island (-25.0%), and Ontario (-23.5%). There were small drops in employment from February to March in 2019 as well, reflecting the fact that March is generally a yearly low point for tourism employment; however, these yearly reductions in employment are negligible compared to 2020 (see Figure 3).
Tourism Unemployment Rate
The monthly unemployment rate also illustrates how quickly tourism’s employment landscape has changed. The overall seasonally unadjusted unemployment rate for Canada jumped from 5.9% to 8.4%. The tourism unemployment rate, which has been lower than the overall unemployment rate since 2008 surged from 5.7% to 15.8%. To illustrate the suddenness of this change, during the 2008-09 recession, it took the tourism unemployment rate eight months to rise from its pre-recession low of 5.3% (September 2008) to its height of 8.9% (see Figure 4).
All tourism industry groups have reported higher unemployment rates than the same month last year.
|Tourism Industry Group2||Unemployment Rate –
|Unemployment Rate –
|Food & Beverage Services||6.2%||18.5%|
|Recreation & Entertainment||7.7%||18.4%|
By province, the unemployment rate for March 2020 was greatest in PEI, at 22.7%, and lowest in Saskatchewan (albeit at 9.9%). In every province, the seasonally unadjusted unemployment rates for tourism were above the rates reported for the provincial economy (see Figure 5).
The tourism unemployment rates were also much higher in March 2020 than in March 2019, with the biggest unemployment jumps occurring in Quebec, which was 13.2 percentage points higher than the year prior, and New Brunswick, which was 10.9 percentage points higher than March 2019 (see Figure 6).
Another facet of this story is that Canadians are only counted as unemployed if they are actively seeking another job. While the number of Canadians employed in tourism fell by 448,600 in March, the number who were considered “unemployed” only increased by 175,200 (albeit a 142% increase from the number of individuals considered unemployed in February).
This shows that under the current labour market circumstances, many have made the decision that actively looking for work is untenable. Many may also be waiting for their employer to reopen so they can be rehired rather than seek work elsewhere. The unemployment rate is part of the story, but a lagging indicator because of the suddenness of job losses and the unique circumstances of the current labour market. The unemployment rate will only fully tell the story once restrictions on which businesses can be open are lifted and Canadians start to actively look for work again.
Hours Worked in March
The reduction in employment and increase in unemployment rates also does not capture the slowdown in the amount of work that is occurring in the tourism sector. As of March 21, many tourism employees were still working but with reduced hours.
Data on hours worked for the tourism sector as a whole is not available, but data from the accommodation and food services sector and the information, culture, and recreation sector provide a good proxy for tourism (see Figure 7). As a percent, those two sectors saw the greatest monthly reduction in hours worked except for educational services, which was also impacted by the March Break. In February 2020, workers in accommodation and food services worked a total of over 31 million hours. In March, this dropped to just over 17 million hours, a decrease of -44.4%. The number of hours worked in the information, culture, and recreation sector decreased -32.2%.3
It is not uncommon for there to be a small decrease in hours worked during March, particularly for tourism-related industries. However, the scale of the decrease in hours compared to 2019 clearly shows the effect across a range of industries, with tourism standing out for the scale of its decrease.
While March is a low point in the tourism sector for both employment and hours of work, both usually start to increase at this time of year. Over 30% of the tourism workforce is filled by young people aged 15 to 24, many of whom look for part-year work for the summer. Using the accommodation and food services sector as an example, we can see that even during the years of the economic recession, the total number of actual hours worked by employees increased significantly starting in April or May. By comparing the total number of actual hours worked for the years 2007 through 2009, as well as last year (2019), when Canada received a record number of visitors, the effect on hours worked becomes clear (see Figure 8).4
In most years, the increase in hours is accompanied by increased hiring of workers. Businesses that are open year-round see increases in demand and seasonal businesses open up for the summer season. A recent national survey of tourism businesses conducted by Tourism HR Canada showed that about 11% of tourism businesses are only open for part of the year.
Regardless of whether they are open part-year or full-year, most tourism operators see their highest level of demand in the summer.
The spike in hiring that goes along with this seasonal spike in demand is under threat this year. Tourism employment usually peaks in July or August. The average increase in employment from the monthly low to monthly high for the years 2013 to 2019 was 217,000. Last year, 230,600 jobs were added between March and July. Not only does tourism add over 200,000 people to its workforce each year, the number of part-time workers drops, while the number of full-time workers increases as year-round workers shift from part-time to full-time hours. With local lockdowns still in place until at least the beginning of May and domestic and international travel likely to be restricted until much later, this hiring will not occur.
The March Labour Force Survey only shows us the beginning of COVID-19’s effect on tourism sector employment. The full impact in terms of lost employment will be shown by April’s Labour Force Survey, although thanks to government programs like the Canada Emergency Wage Subsidy, some workers will have been rehired—such as the 20,000 individuals being rehired by Air Canada and WestJet. Actual hours worked will be a key indicator of demand levels, however, as some of these workers may be employed but working very few hours due to limited demand.
Some provinces may begin lifting restrictions starting in May. While it remains to be seen to what extent, the first tourism businesses able to begin recovering will be those drawing significant revenue from local sources, such as restaurants and recreation businesses. However, these businesses will still miss the spike from tourist demand over the summer months. Tourism businesses that rely heavily on demand from tourists, such as accommodation, transportation, and travel services, face longer-lasting impacts as they await the return of domestic and international travel.
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1 Statistics Canada, Leading indicator of cross-border traveller volume, March 2020 Reports of entries and re-entries from offices of the Canada Border Services Agency & Leading indicator of international arrivals to Canada by air, first quarter 2020.
2 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.
3 Statistics Canada. Table 14-10-0036-01 Actual hours worked by industry, monthly, unadjusted for seasonality (x 1,000).
4 Statistics Canada. Table 14-10-0036-01 Actual hours worked by industry, monthly, unadjusted for seasonality (x 1,000).
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