Collective Effort Essential as Labour Market Tightens

Late last week, annual labour force survey data for the tourism sector was released. That data shows the stark, ongoing impact of the pandemic on tourism employment. In 2019, tourism employed almost 2.1 million workers. In 2020, this fell to 1.62 million workers, and only rose 2.2% in 2021. There were 1.66 million tourism employees in 2021—that’s 413,500 fewer than in 2019.

Tourism HR Canada will review the annual data and release a full report in the coming months.

Data for the month of December was also published last week. Tourism employment increased for the second month in a row, rising by 8,100, or 0.5%. Data was collected the week of December 5th to 11th, before most Omicron-related restrictions started to be implemented, and therefore do not capture the results of business closures and layoffs later in the month.

Across the entire economy, seasonally adjusted employment rose by 55,000 in December. But the seasonally unadjusted data, which captures the actual number of individuals gaining or losing work, showed employment falling by 13,700. For December, that is a very small employment drop—hence the gain in jobs once seasonal adjustments are made.

Whether using adjusted or unadjusted data, total employment was much higher than in February 2020, the month before the pandemic set in, and than it was in December 2019, to look at the same month prior to COVID. Yet tourism employment remains significantly suppressed, down 16.1% compared to December 2019—even before taking into account tourism job losses that occurred later in the month.

Highlights:

  • As of early December, 1,743,300 individuals were working in the tourism sector.
  • The travel services industry gained 3,800 full-time employees and 3,700 part-time employees, for a total employment gain of 7,500, a 29.6% increase relative to November.
  • In December 2021, the unemployment rate in the tourism sector was at 5.2%.
  • Compared to November, tourism employment increased by 6.7% in Prince Edward Island, 7.3% in Nova Scotia, and 7.6% in Saskatchewan. Smaller employment gains occurred in Alberta, Manitoba, and Quebec.
  • The total number of unemployed individuals fell for the fourth month in a row this December.
  • The participation rate for individuals aged 15 to 64 is higher than it was two years ago.
  • Job vacancies fell in October (the most recent month for which there is data), but quarterly job vacancy data shows the massive shortfalls tourism industries experienced this summer.

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

Tourism employment increased for the second month in a row in December. The increase in employment was small: an additional 8,100 employees were gained in the sector, an increase of 0.5%. Still, the data for November and December does show that the industry was adding staff in preparation for the holiday season. Increasing employment in November and December contrasts strongly with the trendline from 2020, when employment fell throughout the fall and early winter (see Figure 1). As of early December, 1,743,300 individuals were working in the tourism sector’s five industry groups. This is 172,800 more employed workers than at this time last year. However, compared to the same month in 2019, over 333,000 fewer individuals worked in the tourism sector this December.

Both full-time and part-time tourism employment increased in December, although this trend varied greatly by industry group (see Figure 2).

The travel services industry gained 3,800 full-time employees and 3,700 part-time employees, for a total employment gain of 7,500, a 29.6% increase relative to November. Employment in the accommodations industry grew 3.8%, mostly in part-time positions, as was the case in the transportation industry, which grew 3.4% overall.

There was no employment change in the food and beverage services industry due to a loss of part-time employees that offset a gain of 5,200 full-time employees. Recreation and entertainment was the only industry where employment was lost in December, falling 3.4% due to a loss of both full-time and part-time workers.

Tourism employment has yet to recover to pre-pandemic levels (see Figure 3). Employment is also lower in all industry groups than in December 2019 (see Figure 4).

Despite December’s employment decrease, the recreation and entertainment industry remains closest to pre-pandemic levels of employment. Relative to February 2020, employment in this industry is down 10.1%. Employment levels in the transportation industry are down 11.9% and employment in food and beverage services is down 13.9% when compared to the same month.

While December saw a significant increase in travel services employment, employment is still down 45.1% compared to the last month before pandemic-induced shutdowns began. Employment in the accommodations industry is down 18.0% compared to February 2020.

That said, due to seasonal variability in employment levels within some industries, comparison to the same month in 2019 can provide a better picture of how employment is holding up (see Figure 4). By this metric, the accommodations industry is doing much worse, with employment down 24.8% compared to December 2019. This is also true of food and beverage services, where employment is down 17.8%.

The travel services industry still has a long way to go to return to pre-pandemic levels of employment, but the last two months are an improvement compared to this past October, when employment in that industry was down 62.9% compared to the same month in 2019. As of December, employment levels have improved but remain down 48.0% compared to December 2019.

Across all industries in the Canadian economy, employment had increased 1.5% compared to December 2019, while employment in the tourism industry remained down 16.1%, a decrease of 333,900 individuals.


Tourism Unemployment

For several months, we have not reported the tourism sector’s unemployment rate. This was because once a person has been unemployed for more than a year, Statistic Canada no longer attaches that individual to their former industry. In April and May of 2021, the unemployment rate for tourism dropped precipitously. This was partially due to the reclassification of unemployed former tourism workers into the “unclassified” industry category.

With overall unemployment levels returning to pre-pandemic levels (see below), it is time to start tracking tourism unemployment once more (see Figure 5). This will be particularly important in the coming months, as many tourism workers who were employed in early December will have lost employment due to the spread of the Omicron variant.

In December 2021, the unemployment rate in the tourism sector was at 5.2%, which is 9.5 percentage points lower than the rate reported in December 2020, and unchanged from the previous month (November 2021).

At 5.2%, tourism’s unemployment rate was below Canada’s seasonally unadjusted unemployment rate of 5.4%.

On a provincial basis, tourism unemployment rates ranged from 3.5% in Manitoba to 14.1% in New Brunswick (see Figure 6).

Provincial Tourism Employment

A few provinces saw substantial increases in tourism employment this December. Compared to November, tourism employment increased by 6.7% in Prince Edward Island, 7.3% in Nova Scotia, and 7.6% in Saskatchewan. Smaller employment gains occurred in Alberta, Manitoba, and Quebec. In Ontario, New Brunswick, and Newfoundland and Labrador, tourism employment decreased relative to November.

In most provinces, tourism employment was substantially higher than in December 2020. But compared to the same month in 2019, tourism employment was lower in all provinces, except for Prince Edward Island, where tourism employment was up 4.4% compared to December 2019 (see Figure 7). However, because the Labour Force Survey is based on a sample, and P.E.I. has a small population, that data should be interpreted with caution. Tourism employment in the province is highly seasonal and a recovery in December does not mean employment will also recover this summer.

Job Vacancies

The number of job vacancies in the accommodation and food services sector fell sharply in October, although it remains at historically high levels. The job vacancy rate fell from 14.0% to 11.0% (see Figure 8). Despite the decrease, at 11% there was still one vacant job for for every 10 positions within the sector.

The historically high nature of vacancies in tourism-related sectors can be seen in the quarterly vacancy data, which starts in 2015. The vacancy rate (the number of vacancies as a percentage of total available positions) has shot upward in the accommodation and food services industries since the start of 2021 (see Figure 9).

Figure 8 Source: Statistics Canada. Table 14-10-0372-01  Job vacancies, payroll employees, and job vacancy rate by industry sector, monthly, unadjusted for seasonality

Figure 9 Source: Statistics Canada. Table 14-10-0326-01  Job vacancies, payroll employees, job vacancy rate, and average offered hourly wage by industry sector, quarterly, unadjusted for seasonality

Employment by Sector

In December, most sectors of the economy employed more workers than they did two years ago. And there were more employed workers as well. Seasonally unadjusted employment has increased by 283,300 since since December 2019. Among the six sectors where employment levels are still lower than they were pre-pandemic, the accommodation and food services sector has lost the most employees by far (see Figure 10).

Figure 10 Source: Statistics Canada. Table 14-10-0036-01  Actual hours worked by industry, monthly, unadjusted for seasonality

Total Unemployed and Unemployment Rate

The number of unemployed individuals fell for the fourth month in a row this December. There were 49,500 more unemployed workers this December than in December 2019, but the number of unemployed workers was also lower than in January and February of 2020. It was also lower than in November 2019. Thus, the number of people seeking work is back to pre-pandemic levels (see Figure 11).

The seasonally unadjusted unemployment rate was 5.4% in December (the adjusted rate was 5.9%).  This is likely to change when January’s data is released, as the restrictions put in place to counter the spread of the Omicron variant will have put people out of work—particularly in the tourism industry. Unemployment will increase, although the restrictions may be shorter lived than during past waves. If so, workers will be more likely to return to their former jobs. The longer the businesses are closed, or operating at limited capacity, the more likely it is that yet more tourism workers will find employment in other industries.

Figure 11 Source: Statistics Canada. Table 14-10-0017-01  Labour force characteristics by sex and detailed age group, monthly, unadjusted for seasonality (x 1,000)

Not in the Labour Force – Not Employed, Not Seeking Work

The number of people not actively engaging in the labour force continued to increase in December (see Figure 12). This is a common trend for this time of year. The number of people not active in the labour force (not employed or actively seeking a job), usually climbs through the fall and early winter before declining again starting in February or March.

The number of people who were not in the labour force but wanted to work also increased slightly, by 8,800. These are individuals who may be enticed to return to work. However, there are barriers which prevent them from active labour force participation and can be difficult to surmount. As of December, there were 386,600 individuals who wanted to work but were unable, for various reasons (see Figure 15).

The participation rate is the percentage of the population over the age of 15 that is either employed or actively seeking work. The overall participation rate is lower than it was two years ago, but this is due to lower participation among those over 65. Among the 15 to 64 age group, participation is higher than it was two years ago (see Figure 14). This is a good thing as it means more of Canada’s population is working, or looking for work. There are always some people who are unable to actively participate in the labour market at some point because they are retired, ill, a student, or for other reasons. A higher participation rate is generally good for the economy, but the higher it climbs, the harder it is to draw more people into active participation in the labour force. For sectors that are still seeking to restaff, higher participation rates are a double-edged sword, especially when unemployment has fallen.

Figure 12 Source: Statistics Canada. Table 14-10-0017-01 Labour force characteristics by sex and detailed age group, monthly, unadjusted for seasonality (x 1,000)

Figure 13 Source: Statistics Canada. Table 14-10-0127-01 Reason for not looking for work, monthly, unadjusted for seasonality (x 1,000)

Figure 14 Source: Statistics Canada. Table 14-10-0287-01  Labour force characteristics, monthly, seasonally adjusted and trend-cycle, last 5 months

Figure 15 Source: Statistics Canada. Table 14-10-0127-01  Reason for not looking for work, monthly, unadjusted for seasonality (x 1,000)

A Tightening Labour Market

Even with a slight increase in tourism employment this December, the annual data clearly shows how far tourism employment has fallen from its pre-pandemic highs. On a monthly basis the number of workers in the sector fluctuates, but with annual data we can safely say that our industry needs approximately 400,000 workers to return to pre-COVID levels of employment. This has been driven by repeated rounds of businesses closures and limitations on business activity and travel that forced tourism workers out of their jobs. Many found jobs in other industries. The Canadian labour market returned to pre-pandemic status several months ago. Unemployment is low and people 15 to 64 are participating in the labour force more than before the pandemic. This leaves limited avenues for sectors of the economy such as tourism to find former workers.

And although the monthly data showed an increase in employment this December, we also know that later in the month many current tourism workers lost their jobs once more. Just how many will be answered when January data is released in early February. Hopefully, business closures and restrictions will not last as long as during other waves. Having come during the holiday season, however, is going to severely hurt hospitality businesses. Even as restrictions lift, some businesses will find it difficult to fully reopen at this time of year.

If businesses can reopen quickly, tourism workforce losses may be limited. The longer former tourism employees are out of work, the more likely they are to find jobs in other industries. The tourism industry has a major challenge in the coming months. Let’s say Omicron is the final major wave of the pandemic. If that is the case, there will be significant lifting of restrictions and a resurgence of travel this summer. We won’t get back to 2019 levels, but there will be a lot more demand for tourism than there has been for the past two years. Tourism businesses will need to find a lot of lost workers. We will have the usual summer increase of employment from students and other young people, but it is the long-term, year-round employees that were lost that must be replaced. Without them, the summer youth cohort is not enough to meet demand.

We also need to recognize that the workforce has given our industry a hard look these past two years. Sentiment towards the tourism sector as a place of work has taken a negative turn. The long-term workers that have been lost are not coming back—at least not in significant numbers. We need to figure out how to attract enough workers in the short, medium, and long term. The successful and sustainable recovery of our visitor economy depends on all of us collaborating to make ourselves a more attractive place to work, because we need to convert new hires into long-term tourism employees and future industry leaders.

View more employment charts and analysis on our Tourism Employment Tracker.