The tourism sector experienced a summer in which our ability to find workers was more difficult than ever. This was despite restricted demand from tourists, especially international travellers, and unemployment levels that remained above pre-pandemic levels. Many industries within the tourism sector are still waiting for demand to return, but for those that have started to reopen, demand for their services has outstripped their ability to find enough workers to meet that demand.
As the summer ends, we need to look at employment trends within the tourism sector, but we also need to consider broader employment trends that cross all sectors. These broad labour market trends have implications for the tourism sector’s ability to find staff when it is time to build capacity for the winter season, and for next summer.
Tourism HR Canada is also tracking the indicators that measure the economic health of our industry. The September editions of Tourism HR Insider will feature detailed information (summarized here) in a series of articles. One of these, Summer Employment Rises but Falls Short, is available today. You can also find all of our information on our website.
Key Findings
Tourism Employment
Tourism employment grew significantly over the summer of 2021. While employment in tourism exceeded last year’s employment numbers—at almost 1.9 million employed workers in August—it was still far short of 2019 levels.
Employment in the tourism industries most reliant on international travellers did not recover as much as those that can draw on locals. Compared to the same month two years ago, employment was down 27.9% in the accommodations industry this August. In the travel services industry, employment was down by almost half. Employment was down the least (-12.5%) in the food and beverage services industry, which faced significant challenges finding workers.
Tourism employment was down in all provinces. Compared to 2019, tourism employment in August ranged from -4.3% in Manitoba to -23.2% in Newfoundland and Labrador.
Hours Worked
Compared to pre-pandemic times, the number of hours tourism employees are working is even lower than employment levels. On average, each worker in our sector works fewer hours each week than they did in 2019. Lower hours could indicate the possibility of mitigating labour shortages in the sector by increasing the hours of the existing workforce. But it is also possible that full-time workers who lost their jobs did not return to the industry and have been replaced by part-time workers—who may not be seeking full-time hours. In August, full-time employment in tourism was down 16.4% compared to August 2019, while part-time employment (defined as under 30 hours per week) was down only 5.9%.
Student Employment
An important labour source during the summer months is students. The pandemic severely disrupted student employment in 2020. The number of students working was much lower than in 2019 and, conversely, the unemployment rate for students was much higher.
In 2021, overall student employment looked similar to pre-pandemic times—at least in the latter half of the summer. Student employment was down and unemployment was up in May and June. But by August, more students were working than in 2019. Although we cannot tell which industries those students worked in, a lack of student participation in the labour force was not the cause of summer labour shortages by itself.
Labour Supply and Demand
This summer was one of contradictions for the tourism sector. Demand for the sector’s products and services remained suppressed. The number of travellers entering Canada remained highly subdued. Many businesses still operated under some form of restrictions that limited capacity. At the start of the summer, sales in the food service industry were starting to get back to pre-pandemic levels. But this was largely driven by limited-service restaurants. Sales at limited-service establishments were down just 0.5% compared to June 2019. Other types of food service establishments were still seeing significant reductions in their sales: sales at full-service restaurants were down 24.7% compared to June 2019, and sales at drinking establishments were down 43.5%.
Despite low demand, the sector also entered the summer with an acute need for labour. In June, businesses reported over 815,000 vacant positions they were looking to fill. Almost 130,000 of those vacant positions were in the accommodation and food services sector. While that sector is not representative of the entire tourism sector, it does show what happens when restrictions lift and there are not enough people willing to fill the jobs needed to meet demand. In June, the vacancy rate for the accommodation and food services sector was 12.7%—more than one vacant position for every ten employed workers in the industry.
Despite the perception of labour shortages, people were available to work. As of August, the number of employed workers in Canada was still 0.4% lower than in August 2019. In seven sectors of the economy, employment was higher than it was two years ago. In nine sectors, employment remained suppressed.
Unemployment levels have been elevated since the pandemic struck. In the 14 months before the pandemic, 1.15 million people were unemployed each month, on average. In July 2021, there were 1.6 million unemployed workers. That increased 2.8% to 1.65 million unemployed workers in August, likely because more people started looking for work due to the lifting of health restrictions. August saw 461,400 more unemployed workers than in February 2020, the last month before the pandemic, and there were 327,000 more unemployed workers than in August 2019.
The number of people not in the labour force is also elevated compared to before the pandemic. The bad news for the tourism sector is that some of that increase is among 15- to 24-year-olds, a key source of labour for tourism. The number of people aged 15 to 24 who were not actively engaged in the labour force increased by 40,200 in August. This suggests that young people were becoming discouraged by the job market and stopped seeking employment.
Meanwhile, the increase in people over the age of 25 who are not active in the labour force is entirely driven by those older than 65. For those between 25 and 65, the number of people not actively engaged in the labour force has actually declined, both since the start of the pandemic and relative to the same month in 2019. The decline in inactive workers aged 25 to 64 means there is very little opportunity to draw people in that age group back into the labour force. A mix of early retirements and health concerns is the likely cause for the surge in individuals over the age of 65 leaving the labour force. It is questionable whether they will choose to return.
International Workers and Immigration
Another key constraint on the tourism labour force is the low number of International Experience Canada (IEC) participants entering the country. Commonly referred to as working holiday travellers, these individuals are essential workers for the tourism sector. Since March, the number of IEC permits being issued has fallen well below normal levels—and the number of individuals who then actually arrive in Canada on an IEC permit is likely even lower.
Finally, the monthly arrival of new immigrants to Canada has now recovered to the levels that existed pre-pandemic. However, there was a significant drop in the arrival of permanent residents over the past year, which means the labour force has not grown as much as it normally would have.
Looking Ahead
All of this has created significant challenges for the segments of the tourism sector that are reopening. Demand for their services has increased much more quickly than their ability to hire workers.
To this point, our monthly reports have focused on employment levels within the tourism sector. While this will continue, broader employment trends are becoming a more significant concern. They will feature more prominently in our reports from now on. The sector is entering a period where employment typically drops for many tourism industries. For the most part, Canada’s tourism sector is still waiting until next year for demand to truly recover.
In the meantime, macro labour force trends will indicate how great future labour shortages could become. Currently, unemployment remains high and some young people are not actively engaged in the labour force. Despite the challenges facing business owners, there is slack in the labour market. That may not be the case by the time we start to hire for the summer of 2022.