Ep.33: 5G on the Horizon
With Mirko Bibic
The COVID-19 pandemic and resulting economic crisis have shone an unforgiving spotlight on several long-standing fractures in Canada’s labour market. Repairing those structural weaknesses is an essential precondition for re-opening the economy — and keeping it open — once the immediate health emergency passes and we start heading back to work. Failing to address those challenges will amplify the consequences of this crisis for millions of Canadians, as well as our overall social and economic stability. And it will leave us more vulnerable to the next pandemic, or comparable shock of some other sort.
This commentary catalogues the damage done to Canada’s labour market by the pandemic and accompanying recession. It discusses how the precarity and inequality that shaped employment long before COVID-19 arrived has made the pandemic worse. It then discusses several priorities for labour policy reform to make jobs safer, more stable and fair — with consequent benefits for both the economy and public health.
It is difficult to comprehend the scale of the disruption in employment patterns caused by the pandemic. This recession is unlike any other in Canadian history. Activity in entire sectors of the economy was deliberately restricted to prevent contagion. Hence the decline in work and output was faster and steeper than any normal cyclical downturn. Several consumer-facing sectors were shut down, literally within days. That was bad enough, but then the more typical chain reactions of the macroeconomy began to kick in. When shops closed, for example, retailers stopped placing orders with wholesalers, and then wholesalers stopped placing orders with manufacturers. As a result, the shutdown of those initial service sectors quickly spread through the rest of the economy. While some front-line service-sector jobs lost in the initial shutdown are starting to reappear, there will be a second round of more serious, permanent layoffs ahead. Businesses in all sectors are now adjusting their employment and capacity to what many expect will be a long-term loss of demand for their products and services.
While the initial shutdowns could be described as a “supply shock,” aggregate demand impacts are also now being felt. Consumers and businesses have lost significant income — and experienced a deep shock in confidence and expectations. They will not immediately spring back into action even once community spread of the virus has been controlled — a victory not yet achieved in Canada and increasingly far-fetched south of the border. Absent massive and sustained macroeconomic leadership from government, I expect less than half of the jobs lost in the immediate downturn to be restored within the first year. The economy would then experience several years of elevated unemployment and underutilization.
Handled badly, this could easily turn into a decade-long depression. An ambitious reconstruction plan — akin to rebuilding an economy after a war and led by sustained investments in public infrastructure, public services and direct public sector hiring — would move us back to potential much faster. Such an effort must necessarily be led by the government. It’s the only force in the economy with sufficient financial resources, authority and capacity to plan and act on a national level to rekindle the normal mechanisms of self-sustaining economic growth.
The shock to employment from the shutdowns was dramatic and unprecedented. The official Statistics Canada unemployment rate in May was 13.7 per cent, the highest in Canada’s postwar history. But that is just the tip of the iceberg: that official rate excludes people technically “employed” (that is, listed on the payroll of an employer) but not working at all. It also excludes non-employed people who were working before the pandemic and would like to work, but are not “actively seeking” it to the satisfaction of Statistics Canada’s definition of that term. (The fact that public health officials were telling Canadians to stay home had an obvious impact on “active job searches!”) Those workers are considered to have “left” the labour force, and hence are not included in the official tally of unemployed. Finally, the official measures do not adjust for the enormous loss of work hours experienced by millions more employed but underutilized workers. A broader and more realistic measure of unemployment suggests that over 30 per cent of Canada’s effective labour force is no longer employed. By that benchmark, then, we are already in a depression. The challenge for policy-makers now is to ensure it doesn’t last for a decade like the last one did — and, of course, try to prevent it from ending in war.
The loss of work resulting from the pandemic has been painfully concentrated among workers who were already most vulnerable before the outbreak. Recessions always tend to hit lower-income people harder, but this is probably the most disequalizing recession in Canadian history. The accompanying table describes the disproportionate impact on employment experienced by various segments of Canada’s working population, measured from February through May. According to every criterion covered by Statistics Canada’s labour force surveys, more insecure and low-paid workers experienced the most severe disemployment effects — and by an order of magnitude. Women have been half-again more likely to lose work than men. Young workers have lost employment 2.5 times faster than those over age 25. Private-sector, non-union, temporary, shorter-tenure, less educated and immigrant workers all also lost much larger shares of employment. Income supports and recovery plans must take account of the harsh inequality of the effects of the downturn and target their benefits and opportunities at those workers who need the most help.
Another indicator of inequality not included in the table is a shocking correlation between wage levels and loss of work. Economist David Macdonald has analyzed micro labour force data and discovered that while fully half of all low-wage workers (under $16 per hour) lost all or most of their work during the first months of the pandemic, almost no workers in the highest-wage decile ($48 per hour and above) lost most or all work.
The overlap between job displacement and precarity in employment is both obvious and predictable. After all, the whole point of non-standard, on-demand employment relationships — from the employers’ perspective — is to facilitate more immediate, costless, and seamless adjustments in labour demand to economic and market conditions. So, it’s not surprising that workers in less permanent, precarious positions should be the first to lose work in the shutdowns. The consequences — for future employment recovery, social cohesion and even public health — of concentrating so much economic pain on already-vulnerable segments of society are dire. If workers who did not have access to stable jobs, income supports and employment benefits (like paid sick leave) in the first place are now left to traverse a shattered post-COVID labour market on their own, the inevitable results will be concentrated hardship, exclusion and disfunction. That would severely weaken the collective compliance and social trust that contributed to Canada’s strong effort to curtail COVID-19.
There are several axes along which the quality and stability of work must be improved in the wake of the pandemic to support a sustainable and healthy re-opening of workplaces and broader economic and social reconstruction.
Fixing these long-standing structural faults in the labour market is not just a moral imperative; it is also an economic necessity.
Re-engaging all workers to their full potential, and supporting their continued work effort (removing the economic and social barriers to their participation and productivity), will be essential to rebuilding both the quantity and quality of work after the pandemic — and avoiding disruption from future waves of infection.
The top priority in rebuilding employment after COVID-19 must be effective and rigorous measures to ensure workplaces are safe from further contagion. In retrospect, both employers and regulators took the safety of many workers for granted when the pandemic first erupted. There were many occupations — from taxi and ride-share drivers, to meat-packing workers, to workers in crowded oil sands and farm labour camps — for which the risk of infection was obvious, but little was done until devastating outbreaks occurred.
Rigorous workplace safety regimes will require the spatial reorganization of work stations, top-quality protective equipment and detailed procedures governing movement, shifts, cleaning opportunities and more. These measures will be expensive and may force changes in the business models of entire industries, but they are essential to prevent more outbreaks that would short-circuit the whole economic re-opening. Paid sick leave arrangements, to allow workers of any employment status (employees, contractors and freelancers alike) to stay away from work when advised (for two weeks or even more) will be essential. The cost of these measures will need to be socialized through public provision (potentially by expanding Employment Insurance benefits). If workers lose hundreds of dollars by staying home as a precaution against infection, many will be compelled to ignore the health advice and go to work anyway.
Five million Canadians were working from home at the peak of the pandemic, triple the pre-pandemic level. That surge in home-work will not last: there are many reasons why permanent work-from-home arrangements are neither effective nor sustainable, for both employers and workers. But there will certainly be some permanent increase in working from home. While home-work has been an important cushion during the pandemic, there are important risks and challenges associated with it that must be addressed by employers, policy-makers and unions. Employers have a duty of care to protect the health and safety of workers doing paid work from home, and serious procedures must be established to address these issues (from ergonomics to lighting and wiring to elevated risks of domestic violence).
Fair compensation norms should be established, including allowances for costs of home offices, and normal limits on working hours must be protected (despite having work co-located with life). Some employers, preoccupied with the possibility of workers “slacking off,” are misusing digital technologies for surveillance, monitoring and even discipline of home-based workers (such as web cam monitors, GPS locators and keystroke counters). These practices should be strictly controlled or prohibited regardless of where the work is being done, and all the more so in the context of workers’ own homes.
Precarious employment strategies contributed directly to the spread of disease during the pandemic. For example, the lamentable use of temporary and agency staffing models was a major factor in the catastrophe that unfolded in long-term care homes (especially private for-profit homes). If we want workers, even in so-called “menial” jobs — like carers, cleaners and retail clerks — to do their jobs effectively and safely, in the interests of public safety, then we must organize, protect, and compensate their work accordingly.
Prohibiting precarious work strategies is a legitimate response in some key industries (as the B.C. government did in response to outbreaks in long-term care facilities). Regulatory constraints and obligations on insecure work practices (such as closing off avenues for employers to avoid normal obligations through artificial reclassification of workers as contractors), public procurement rules (establishing job quality benchmarks for publicly funded projects and services), and collective bargaining would also help to constrain the growth of precarious work — and ensure workers in these jobs are treated like human beings, not productive inputs. And that will enhance the quality and safety, for all of us, of the work they perform.
The share of public-sector jobs in total employment has been climbing gradually for years. While some lament this trend as a sign of bloated government, it is actually driven by natural and positive economic forces. Citizens generally choose to allocate a greater share of output to high-quality public services (like health care and education) as their income levels grow. During the COVID-19 recession, the public-sector share of total employment jumped dramatically. Again, this should be welcomed, not lamented. First, the services provided by these workers (including new public health functions like testing and tracing) are important and valuable. Public-sector jobs have been far more stable than private-sector roles. And spending on increased direct employment is an important way government can get the macroeconomic ball rolling again after the COVID-19 shock.
By stimulating employment, incomes and spending, expanded government activity can contribute to the restoration of broader economic confidence (including in the private sector). This makes it all the more important to resist predictable calls for fiscal austerity in the wake of the pandemic. So long as monetary and financial policies remain reasonable, Canada’s public sector can sustain much larger amounts of debt, for as long as is necessary. The alternative — retrenching public service delivery and employment — would needlessly deepen and prolong the current recession and undermine public health.
The gaping holes in Canada’s social safety net were starkly highlighted as the pandemic took hold. For years, the Employment Insurance system excluded most unemployed Canadians from receiving any benefits because of its onerous and arbitrary hours-of-work qualifying requirements. With millions of Canadians losing work in the pandemic and the risk of personal and social calamity if they could not access income protection, the federal government implemented a whole new income security system. This response was centred on the Canada Emergency Response Benefit (CERB) and supplemented by various other measures, including a wage subsidy to prevent layoffs in the first place. The CERB is more universal than EI, though not perfectly so: unlike EI it covers part-time workers, contractors and self-employed, and even some “gig” workers. The CERB’s flat-rate benefit structure ($500 per week) is particularly beneficial for workers in precarious jobs, who suffered as much or more from inadequate and irregular hours as from low hourly wages.
The CERB (or something like it) will need to be extended until the labour market is well into recovery. And then the improvements in access and benefit levels incorporated in the CERB must be maintained. Some low-wage employers complain this makes it harder to recruit and retain labour — particularly employers in sectors such as retail and hospitality, which experienced long-standing challenges filling insecure and low-paid positions, years before CERB came along. The answer to this challenge is obvious: employers in these sectors need to improve their employment practices, offering better pay and especially more stable and regular hours if they hope to elicit strong effort and loyalty from their employees.
A common thread running through all of these essential post-COVID reforms in work is the need for workers to have a greater say in, and more capacity to influence, the terms and conditions of their work. Many workers in low-wage, precarious jobs were kept working in close quarters to customers and colleagues, even as the virus raged through the community. No executives and few professionals (outside of health-care settings) faced such risks — and they faced no economic compulsion to risk their lives by going to work. But people who count on every hour of work to pay their rent and buy groceries will be more likely to enter dangerous workplaces despite the threats posed to themselves and their families. Tragic stories of Canadian workers who died from workplace-contracted COVID-19, knowing they could be infected but continuing to do their jobs out of economic necessity, are a blight on what has otherwise been a strong national effort to defeat this pandemic.
Workers need the ability to raise concerns and have them acted on — first and foremost, their concerns about safe working conditions. When workers can build and exercise their collective voice and bargaining power, their workplaces will be safer, their jobs will be fairer and society will be stronger and healthier. Many strategies are needed to help achieve a more balanced terrain for negotiating the terms and conditions of work; both at the micro-level of individual workplaces and the macro level of national economic and social policy. Priorities would include:
These would all help to build a labour market more responsive to workers’ priorities and achieve better safety and sustainability in work.
The COVID-19 pandemic has altered Canadians’ opinions and attitudes in dramatic ways. We are deeply appreciative of the risks essential workers are undertaking to help us all get through the crisis; not just health-care workers and first responders, but also more undervalued occupations such as cleaners, carers and retail cashiers. We have a renewed appreciation of the importance of strong and flexible government in protecting us against catastrophe, whether epidemiological or economic. Millions of Canadians relied on government income support to get through the shutdowns and this will change the politics of income support for years to come. Old reflexes to vilify income recipients as undeserving or lacking in ambition will be less influential. Finally, there is a stronger recognition that the well-being of all Canadians depends on the health, safety and security of everyone in our communities — even the most humble among us. Our sense of collective self-interest and mutual protection is more potent after the pandemic. We now realize that if lower-income workers in precarious jobs are abandoned to confront economic and health crises on their own, without appropriate supports and protections, they could carry the next virus right to our doorsteps — along with the pizza or online purchase they are delivering.
For all these reasons, I am cautiously optimistic that the COVID-19 pandemic and associated economic crisis will inspire a more inclusive, compassionate and interventionist approach to labour market policy. We can start to repair the labour market fractures discussed above, and end up with a stronger, productive and sustainable economy and society. That might be a modest silver lining to this catastrophic moment in our history.
Consulting Partner: Deloitte
Federal Government Partner: Government of Canada
Provincial Government Partners:
Foundation Partners: Metcalf Foundation
PPF would like to acknowledge that the views and opinions expressed in this article are those of the author(s) and do not necessarily reflect those of the project’s partners.