What will be the long-term employment impacts of COVID1-19?
I have been contemplating this question as the COVID-19 virus worsens and governments everywhere undertake dramatic measures to contain this contagion. Almost overnight phrases such as “shelter in place” and “social isolation” have crept into our vocabulary. Everyday, we turn on newscasts to watch and listen in horror at the rising number of cases and the tragic number of deaths.
The U.S. government is now activating special legislation not used since the Second World War to ramp up production of ventilators and medical equipment. The French government is considering nationalizing critical industries to ensure they don’t go bankrupt. Here in Canada there is talk of activating legislation to institute mandatory curfews.
We Live in Turbulent Times
In Canada, the number of applications for Employment Insurance in one week went from 27,000 to nearly half a million as thousands of workers in every sector from retail to the airline industry received layoff notices. No one has a crystal ball, nor can anyone accurately predict what will happen in the future. Based on everything I have seen and read though this is my best guess.
The Long-term Prognosis for the Labour Market
- 6 months at Least: I am no expert, and I make no claim to be a medical clinician. However, I would guess this crisis will be with us in one form or another until at least September of this year.
- Winners & Losers: Certain industries will bear the brunt of the downsizing. Many small, independent retailers will disappear, as will a couple of national ones. While the banks, insurance companies, high technology, medical systems, national grocery chains, telecommunications and the utilities sectors will probably survive my guess is two or three international automobile manufacturers will disappear.
- Increased government intervention on an unprecedented level: Governments of all political stripes will step in to nationalize several critical businesses. In Canada, my guess is that the Trudeau government will be pushed into bailing out the oil and gas sector if for no other reason than to prop up the governments of Alberta and Newfoundland and Labrador. The term “nationalization” used to be the preserve of radical socialists and Marxist-Leninists. In future, it will be viewed as a practical economic tool to instill market stability.
- Zero Immigration: Immigration will take a major hit. The number of newcomers to Canada will drop significantly. No political party will run the risk of inviting newcomers to settle in Canada while tens of thousands of people are registering for Employment Insurance. Some may call it “xenophobia”. Others will label it “common sense”. Regardless, employers who once relied upon new immigrants to fill critical vacancies had better ramp up their training budgets or come up with creative ways to hire new recruits.
- Program Rationalization: There will be a much greater demand upon governments at all political levels to rationalize spending decisions. Some estimates peg the federal deficit in Canada may rise to $100 billion. Programs that do not confer direct or immediate benefits upon taxpayers, or that provide purely advisory or consultative services, or which are engaging in advisory or advocacy work, will likely be scrapped. My guess is that programs such as Employment Equity, Multiculturalism, Immigrant Resettlement Initiatives and Heritage Language training will ultimately be scrapped. There will be an increased focus on the Not-for-Profit sector to demonstrate clear and measurable value for the work they provide, or else run the risk of losing funding.
- Taking a Pass on retirement: With the savings of many retirees depleted thanks to a precipitous drop in the stock market you can expect many formerly retired or semi-retired workers will return to the labour force.
- Here today, gone tomorrow: Many employers in the retail, restaurant and fast food chains who laid off staff can’t necessarily count on those workers returning once this crisis is over. The commitment of many of these workers was tenuous at best. Given this reality, when social isolation ends and people look again to reconnect over lunch or dinner we had better be prepared to deal with new and inexperienced staff who lack the training and quality customer service they once enjoyed.
- Work From Home is the New Reality: When I worked for Scotiabank, I recall a former Vice President who was continually complaining about her staff requesting to work from home one day a week. In the new reality she and others had better get used to the fact that telework is a permanent fixture in the new labour market. If it had not existed many companies would have had to close up operations. More and more employers will be dumping “bricks and mortar” establishments to permit their employees to work remotely. In a financial downturn employers will do anything to reap a financial reward. The commercial real estate market will feel this jolt particularly hard as vacancy rates will likely soar.
- A Rejuvenated Work Ethic. Many commentators have lamented the decline of loyalty and commitment in the workforce. Some have attributed this to the attitude of Millennials. A different and far more competitive labour market will precipitate a rapid change in the attitude of many entrants. Workers, and especially Millennials, are about to get a cold, hard jolt as they realize that competition for quality jobs is about to get a whole lot tougher.
- It’s a Buyers’ Market: My guess is the unemployment rate in Canada will likely hit 30% before the end of the year. In this labour market employers will have an advantage…but not for long. History has shown that after every major economic downturn there is a rebound. When that happens is anyone’s guess, but smart employers will be using this hiatus to think seriously about how their businesses are structured, and how to position themselves and their company’s brand for long-term success.
What This All Means
If you are one of those caught in this difficult situation and wondering where to turn consider this: even in the midst of the Depression in 1933 the highest unemployment level was 24.9%. That still meant that 75% of the population was working. All of this was before the days of Employment Insurance when the concept of a social safety net was more an illusion than a reality.
Within every tragedy there is an opportunity. Staying ahead of the curve requires some imagination and creativity. That goes for job search too. Moving to where the jobs are rather than relying upon outdated practices that are no longer relevant is an important insight to recognize. Being vigilant and aggressive in your job search is more critical than ever. Even at a time when companies are shedding workers firms such as Wal-Mart, Amazon and even Revera Long-Term Care are ramping up hiring.
A Final Thought….
My mother passed away nine years ago last month. She, like many of her generation, were born in the 1920’s, grew up during the Depression, and entered adulthood during the Second World War. I recall her telling me that in the midst of economic adversity or war there was a sense of community, kindness and thoughtfulness that was missing in later years.
I’ve reflected on the salience of her words many times in the past two weeks as I’ve encountered neighbours I have seldom seen before walking dogs, going for walks, or playing with their children. Many have expressed warm greetings, albeit from afar. Simple practices such as eating together as family, or watching television, or playing board games, are a way of drawing families together in times of crisis. I’ve also seen many acts of simple kindness, particularly following up on elderly parents or friends, which speaks directly to our compassion as a people.
There is a quote I heard once that seems particularly appropriate for the times in which we now find ourselves:
“Success builds confidence but adversity builds character”
I submit that for all of us the next few months will be an epic adventure in character building.