Just before Labour Day, Statistics Canada released its monthly Labour Force Survey (LFS) for August 2020. In normal times, the reported rise in employment of 246,000 would make for a blockbuster month. In the present context, this figure means something entirely different—a warning sign that the recovery is petering out far before the massive damage of March (1,011,000 jobs lost) and April (another 1,946,000 jobs lost) has been undone.
Month-over-month employment growth continues, but is markedly slowing relative to the pace of May (290,000 jobs gained) June (953,000 jobs gained), and July (419,000 jobs gained). As of mid-August, there were still 1.1 million fewer people employed in Canada than in February, plus an additional 700,000 more than in February who continue to be employed but worked fewer than half their usual hours. And, the LFS details how the pandemic is decimating prospects for workers earning low wages, and disproportionately affecting women, racialized, and Indigenous workers.
All this while conditions for those at the top have never been better. Last month, the world’s richest man Jeff Bezos became the first person in history to be worth over $200 billion, up $87 billion since January. While few on the street could name him, Canada’s richest person David Thomson (together with members of his family) is worth an estimated $37.9 billion as of September 4, 2020—on par with his pre-pandemic wealth. The higher-profile Weston family has reversed temporary losses to return its fortune to above the $8 billion mark, which it did in part by cutting pandemic pay for its workers in June.
There is no sugar coating the fact that the latest economic news—for those who are not billionaires— is bleak. It is clear we are nowhere near the end of the crisis the pandemic has triggered, but we may be approaching the end of the beginning. Following the acute economic collapse earlier in the year followed by a weak recovery, we are now entering what is likely to be a prolonged phase of stagnation at best.
Depressing as the situation may seem, there are glimmers of hope as workers push back in the workplace and in the political sphere. From strikes over wages by grocery store workers, to a newly reinvigorated movement for social benefit reform, to putting forward a proposal for a well-staffed, public long-term care system prioritizing care instead of profits, workers are resisting the big business lobby’s dystopian vision of a hunger games world and putting real alternatives on the agenda.
An economy reaching stall speed
One of the early medical observations about COVID-19 is the potential for long-term health effects that linger far beyond the initial period of acute infection.
The economic impacts appear set to take a similar course to a severe COVID-19 case—serious initial illness, followed by some relative recovery, but with major long-term effects that linger.
At a macro level, the economic effects of COVID-19 in March and April 2020 had no parallel in postwar Canadian history. The employment rate fell from 61.8% in February to 52.1% in April—a drop of nearly 10 percentage points in two months. On top of that, 2.5 million more people in April than in February were still employed but worked fewer than half their regular hours (equivalent to another eight percentage point drop in the employment rate).
As of August, a majority of the initial job losses have now been reversed. But this is cold comfort in a context where employment is far below pre-pandemic levels and the rate of growth is roughly halving each month. If job growth continues to slow on its current trend before stalling in fall or winter, total employment could remain five percent or more behind where it would have otherwise been. This is a dramatic gap that will have long-term consequences for individual households and the economy as a whole.
Another indicator of the steep road ahead is the dramatic reduction in temporary layoffs. From February levels, temporary layoffs spiked by 1.1 million to reach a peak in April, but as of August are back to around 130,000 above where they were in February. While it is good news that many workers have been recalled (though others have been permanently let go), the low remaining number of workers on temporary layoff reveals limited prospects for further improvements by recalls.
There are reports of more and more employers permanently eliminating jobs in sectors from airlines to media to retail. As the crisis drags on, there will no doubt be ongoing permanent layoffs and potentially bankruptcies among the many companies that will become unable to service their high pre-pandemic debt loads that will only have risen during the pandemic. This will have spin-off effects as negatively affected households will eventually have to cut spending.
All this is without accounting for a possible resurgence of COVID-19 in Canada. It now seems unlikely that COVID-19 control measures can be further relaxed without substantially worsening the health crisis. In other words, there is little upside risk—few businesses not yet open will be able to re-open any time soon. The downside risk, on the contrary, is huge. Countries all over the world have had to reimpose greater control measures following COVID-19 resurgences, and it would be naïve to think something similar could not happen in Canada (early signs are it may be happening already). Needless to say, a major COVID-19 resurgence would only worsen Canada’s economic outlook.
Low-income workers, women, racialized and Indigenous workers hit hardest
What is particularly striking about the sustained job loss in the current crisis is how concentrated it is on those working at the low end of the labour market. For analytical purposes, Statistics Canada divided workers into two groups—those earning less than two-thirds the 2019 median annual wage of $24.04 per hour, being $16.03 per hour—and all others. As of August, employment in low-wage jobs was only at 87.4% of pre-pandemic levels, while employment in higher-wage jobs (i.e. those earning more than $16.03 per hour) was at 99.1% of pre-pandemic levels. In other words, the brunt of the crisis is being borne by those working at or near the minimum wage.
The pandemic is having the effect of widening pre-existing labour market inequalities. Workers earning low wages are disproportionately likely to be women and to be racialized, particularly in the hard-hit service industry. As such, the crisis is having disproportionate gender and racial impacts. The labour underutilization rate (a broad measure of unemployment) of women (21%) now exceeds men (19.7%) where it was more or less equal pre-pandemic. Another striking figure is that while employment among core-aged fathers with children under 18 was at 99.8% of February levels in August, the equivalent figure for mothers was only 94.8%—a testament to the continuing gendered burden of child care. And, the unemployment rate for racialized and Indigenous workers is far beyond that of white workers—as was true long before the pandemic, but with the absolute percentages now much higher. Unemployment rates for Arab (17.9%), Black (17.6%), Southeast Asian (16.6%), Latin American (13.9%), Chinese (13.2%), and Filipino (12.7%) workers are much higher than for white workers (9.4%). Indigenous workers have been hit especially hard by the pandemic, with employment in August at only 91.4% of the February level versus 96.7% for non-Indigenous workers.
The situation of the Canadian labour market prior to the pandemic was hardly a paradise. Huge numbers of workers were in precarious employment, earning low wages with few or no benefits and limited job security. It is now much worse, with high unemployment tilting the balance of forces even more strongly in favour of employers.
Workers continuing to fight
Economic crises emboldens employers. When unemployment spikes, employers use workers’ economic vulnerability to push for concessions at work, on everything from wages and benefits to working conditions.
A particularly poignant example during the pandemic has been various forms of “pandemic pay” that have appeared in the public and private sectors alike. Shortly after the onset of the pandemic, some employers began offering modest boosts to wage rates, mostly to service workers earning low wages who were celebrated for continuing their essential work in a time of crisis. In Ontario and other provinces, governments for a period of time funded pandemic pay for some workers.
However, while there is no indicating that public sentiment in support of essential workers has diminished, nor any argument that their jobs today are less essential than the outset of the pandemic, public and private employers alike have moved quickly to claw back pandemic pay at the first opportunity.
Major grocers appeared to act in concert in June in cancelling $2 an hour pandemic pay increases, a move sufficiently craven to earn the condemnation of a columnist for the business-friendly Globe and Mail. Along with public outrage has gone workplace action, with 1,400 workers at the Dominion supermarket chain in Newfoundland and Labrador represented by Unifor leading the way by striking for higher wages starting August 22. The Dominion strike will no doubt not be the last of the current economic crisis, and is an inspiring example of workers pushing for gains even in the face of challenging economic conditions.
The fight for social benefits is an extension of workplace struggle
Workers’ fights during the pandemic have not been limited to the workplace alone. Because of the pandemic, millions more workers than usual have had to turn to government supports to stay afloat. This has made the fight for improved social benefits a key site of struggle.
In response to the pandemic, the federal government created the Canada Emergency Response Benefit (CERB), which provides recipients who have lost work due to the pandemic with $2,000 per month in emergency income support. While CERB was initially scheduled to last for 16 weeks, it has now been extended to up to 28 weeks—a provisional victory for workers.
CERB has so far been a lifeline to millions of households, but has been under attack by the right almost from the moment of its creation. The big business lobby, right-wing media, and conservative politicians have decried CERB for its substantial cost, and because it is alleged to create work disincentives for recipients.
The Liberals seemed ready to cave to pressure from the right when they threatened CERB recipients with punitive measures in draft legislation. Fortunately, that move failed after no other party agreed to back the minority Liberals.
In addition to two CERB extensions, the Liberals have now put forward a plan to transition most workers currently on CERB to an enhanced Employment Insurance (EI) system. There are important progressive measures in what has been announced that constitute further provisional victories, such as a $400 minimum weekly income floor, the lowering of the hours need to qualify to 120 and bringing uniform national eligibility requirements for accessing EI. These improvements were won thanks to dedicated campaigning by workers active in movements like the Fight for $15 and Fairness as well as in trade unions. However, the new enhanced EI system remains a step down from CERB—many workers will see their weekly income fall—and further measures are needed to ensure all workers including migrant workers are protected.
Moreover, the next step in the fight will be to make enhanced income support measures permanent. The EI system was inadequate in terms of coverage, income replacement rates, and accessibility prior to COVID-19. It will be crucial to ensure improvements that are won during COVID-19 are maintained even when the pandemic subsides.
A long-term vision for a caring society
The fight to protect income support measures and for permanent changes to enhance benefit programs are key immediate demands for workers in this moment that should be fully supported. But, taken alone, there are limits to income transfers as a means of social transformation. The pandemic has laid bare the shortcomings of an economy built on profit rather than social need, and raised questions about what an alternative economy might look like.
An ambitious agenda to properly fund and improve publicly-delivered services must be front and centre at this moment. While a long-term project, there are several important campaigns proposing concrete immediate steps. In the education sector, demands have centred on the need for a “Safe September”—that is, a well-funded plan to return students to school safely with good, safe working conditions for teachers and support workers. The campaign in Ontario, involving education workers and their unions alongside parents, students, and concerned members of the public—has gotten significant traction, although the response of the government has remained inadequate. Just as the “Safe September” movement built on pre-pandemic organizing in the education sector, the movement sets the stage for the ongoing work needed to rebuild Ontario’s resource-starved public education system for the coming years and decades.
The longstanding problems of a privatized, underfunded long-term care system remain, even as the immediate health crisis has thankfully eased somewhat for the time being. CUPE, the largest union operating in the long-term care sector in Canada, has launched a national campaign to prioritize social needs over profit and ensure long-term care facilities are well-staffed and well-funded. As the Canadian population ages, the question of ensuring decent, quality care for seniors will only continue to intensify, even when the threat of COVID-19 subsides.
There is an alternative
Many people in Canada have been fixated on the multi-level catastrophe unfolding south of the border. The antics of Donald Trump in the midst of an uncontrolled public health crisis much worse than Canada’s is a spectacle of the worst kind, but a spectacle nonetheless. It can be easy to fall into passively watching in horror while being grateful that the situation in Canada is relatively more stable.
But now cannot be a moment for either hopelessness or fatalism. As the first chapter of the 2020 economic crisis comes to a close in Canada, an important turning point has been reached. The question now is whether the next chapter fulfills the right-wing libertarian dream of the big business lobby and their allies, or whether we can collectively chart a course that not only tackles the ongoing health crisis, but that also rebuilds an economy in the interests of working people.
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