Through April, continuing lockdowns created major economic hardships across a number of industries. With indicators of tourism activity at a standstill throughout the month of April, the tourism sector suffered significant employment losses, just slightly fewer than those seen in March.
Seasonally unadjusted employment decreased by 1,845,200 in April, of which 433,100 (almost a quarter) was in the tourism sector. This followed a tourism employment decrease of 448,600 from February to March.
Since February, the tourism sector—which employs 10% of Canadians—has accounted for 30.3% of the almost 3 million jobs that have been shed (see Figure 1). Within tourism itself, 43.3% of employment has been lost since February—that’s 881,700 jobs. Of those losses, 56.1% were in part-time employment and 43.9% were full-time jobs.
In April, the largest monthly employment losses occurred in the food and beverage services industry group. Employment was reduced by 244,800 between March and April, following a drop in employment of 487,700 in March. The majority of employment reductions in the food and beverage services industry were in part-time jobs. In all other industry groups, the majority of April employment losses came in full-time jobs.
Because the industry groups in tourism vary in size, looking at the percentage decrease in employment gives a more equitable picture of how hard each industry has been hit. In April, employment in food and beverage services decreased 33.9% from March, followed by accommodations (-32.8%), travel services (-23.2%), recreation and entertainment (-20.1%), and transportation (-18.9%).
As a percentage, employment losses since February have been greatest in the food and beverage services industry, followed by the accommodations industry, both of which have seen employment levels cut in half.
Tourism employment continued to drop in all provinces in April. Employment decreases in Ontario and Alberta were smaller than those seen in March, but in all other provinces, employment losses were equal to or exceeded those seen the month prior.
As a percentage of the previous month’s tourism employment, the greatest decreases were seen in Nova Scotia (-39.2%), Prince Edward Island (-37.2%), and British Columbia (-37.1%).
Tourism Unemployment Rate
In April 2020, the unemployment rate in the tourism sector was at 28.8%, which is 23.3 percentage points higher than the rate reported in April 2019, and higher than the previous month (March 2020) when the unemployment rate stood at 15.8%. At 28.8%, tourism’s unemployment rate was well above Canada’s seasonally unadjusted unemployment rate of 13.5%. Unsurprisingly, all tourism industry groups have reported higher unemployment rates than the same month last year.
| Tourism Industry Group1 | Unemployment Rate – April 2019 |
Unemployment Rate – April 2020 |
|---|---|---|
| Tourism | 5.5% | 28.8% |
| Accommodations | 8.0% | 35.5% |
| Food & Beverage Services | 5.4% | 34.3% |
| Recreation & Entertainment | 7.7% | 28.0% |
| Transportation | 2.7% | 14.8% |
| Travel Services | N/A | 22.3% |
On a provincial basis, tourism unemployment rates ranged from 21.5% in Newfoundland and Labrador to 36.1% in Quebec. The seasonally unadjusted unemployment rates for tourism in each province were well above the rates reported for the provincial economy.
While the number of Canadians employed in tourism has fallen 880,000, the number considered unemployed only increased by 342,800 since February. As Canadians are only counted as unemployed if they are actively seeking another job, this gap shows that many who were employed are waiting for signals that the job market is recovering before seeking work.
Total Actual Hours Worked by Sector
The current labour market dynamics mean employment and unemployment rates need to be supplemented with an understanding of the hours of work that are occurring within different industries. Although employment has dropped drastically, some businesses are still retaining employees thanks to the Canada Emergency Wage Subsidy (CEWS); however, these employees may not be working the full number of hours they normally would.
Figure 8 shows the percentage decrease in total actual hours worked by sector relative to the percentage decrease in employment by sector from February to April. Agriculture is the least affected sector, showing a slight employment decline but an increase in hours worked. Aside from agriculture, all sectors have seen a greater percentage decline in total actual hours worked than in employment. The accommodation and food services sector (which differs slightly to the tourism industry groups noted above) has seen the largest decrease in both employment and actual hours worked as a percentage of February’s total. While employment decreased 49.3%, actual hours of worked declined 65.0%. In February, accommodation and food services employees worked over 31 million hours. In April, they worked just over 10.9 million hours.
Employment by Age Group and Gender
COVID-19 has had an outsized effect on youth employment. While there have been significant employment losses for all age groups, seasonally unadjusted employment for 15- to 24-year-olds decreased by 832,200 since February, an employment drop that exceeded that seen in any other age group by over 200,000.
In each of the last two months, the decrease in employment as percentage of the previous month’s employment level for those 15 to 24 was at least double that of any other age group, dropping 16.4% in March and 21.9% in April. The seasonally unadjusted unemployment rate in April was 27.7% for people aged 15 to 24, compared to 11.6% for those aged 25 and above2. The loss of youth employment is largely a function of the types of industries most affected by shutdowns. Over 30% of tourism jobs and 27% of retail jobs3 are staffed by young people and both industries have been hit hard by business closures.
Tourism often serves as a point of entry to the labour force for young people. Frontline tourism positions are a first job for many Canadians, whether they are beginning a career in the sector or seeking supplemental income through a job that is flexible enough to accommodate their school schedule. This reduction in tourism employment therefore leads to a couple longer-term concerns. On the one hand, it could delay entry into the labour force and reduce employment levels for young people for years to come. Alternately, if these young people seek and find employment elsewhere, it could create staffing difficulties for a labour-intensive industry once demand does return to pre-COVID levels.
This downturn has also hit female employment particularly hard compared to past economic downturns. In the last three recessions in Canada, men had significantly higher job losses than women4. Since February, however, the number of jobs held by women has decreased over 1.5 million, while the number of jobs held by men has decreased by just under 1.4 million. While the difference of 100,000 represents a small share of the 3 million jobs lost in the past two months, there were many more men employed in February than there were women. As a percentage decreased, which provides a more equitable assessment of employment losses among groups of differing size, men’s employment has decreased 14.1%, while women’s employment has decreased 16.7%. Among youth, the gender disparity is greater. Employment for women aged 15 to 24 has decreased 39.6% since February, compared to a decrease of 29.8% for men of the same age.
Going Forward
As restrictions started to be lifted in early May, the effect on employment will be seen in that month’s data, which will be available in June. Any increase in hours or employment are positive, but this will be a marathon, not a sprint.
Because the sector derives demand from local residents as well as tourists, an upward movement in employment levels may be seen as early as May or June, as restrictions on business closures are eased. However, demand for tourism services from locals will not return to pre-COVID levels in the near term, as businesses must comply with ongoing physical distancing rules that will limit the number of individuals at the business at a given time.
How soon demand from domestic tourism can return remains unknown. Travel across intraprovincial borders remains subject to restrictions. Even travel within provinces remains contentious due to fear of introducing COVID-19 from areas with a high number of cases to areas with low case counts. International travel will be the last source of demand for tourism goods and services to recover.
Because of the different demand source drivers, we can expect employment in the tourism sector to improve at different rates depending on the industry—locals are more likely to contribute to demand at restaurants than hotels, for example. But regardless of how much demand they get from locals, tourist demand is obviously a key revenue source for all tourism industries. Importantly, much of that demand occurs in the summer months
The potential for a “lost” summer season is a serious concern and, following that, the ongoing negative economic effects of COVID-19 will act as a drag on demand for several years. Although we hope to see some rebound in tourism employment in May and June, it is unlikely to return to 2019 levels for many years.
[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] Statistics Canada. Table 14-10-0017-01 Labour force characteristics by sex and detailed age group, monthly, unadjusted for seasonality (x 1,000)
[3] Seasonally unadjusted employment in the retail industry has declined 22.5% since February.
[4] Not Your Typical Recession: Analysis of the April Labour Force Survey, Moffat, Mike & McNally, John https://institute.smartprosperity.ca/content/Labour-Force-Survey