Illustration by Science History Images / Alamy S
Four months into the COVID-19 pandemic, the pink slips keep coming.
With most movie theatres closed and thousands of employees awaiting recall, Cineplex Inc. said last week it was cutting about 130 full-time roles. The operator of Toronto’s Pearson International Airport is eliminating 500 positions as air travel takes a nosedive. Reeling from weak oil demand, Ovintiv Inc. (formerly Calgary-based Encana Corp.) targeted a range of positions in some 650 cuts – geologists, engineers, human resources and senior leadership, to name a few.
WestJet Airlines Ltd. and Canadian National Railway Co. also slashed positions in recent weeks, and in what feels like an especially bad omen, the professional networking site LinkedIn Corp. said Tuesday it was cutting about 960 employees, or 6 per cent of its global work force, saying that “fewer companies, including ours, need to hire at the same volume they did previously.”
And the layoffs aren’t over yet. “The first wave was something very unique to the pandemic,” said Royce Mendes, senior economist at CIBC Capital Markets, referencing shutdowns that left employers with little choice but to trim headcount as they waited to reopen.
“The second [wave] is really the underlying economic drag on employment. That’s going to be far more persistent than the first wave of layoffs, and it’s going to take a lot longer to heal.”
The long road to recovery
Employment in Canada, millions of people
19.5
1.8-million gap
19.0
18.5
18.0
17.5
17.0
16.5
16.0
June
Aug.
Oct.
Dec.
Feb.
April
June
2019
2020
THE GLOBE AND MAIL, SOURCE: statistics canada
The long road to recovery
Employment in Canada, millions of people
19.5
1.8-million gap
19.0
18.5
18.0
17.5
17.0
16.5
16.0
June
Aug.
Oct.
Dec.
Feb.
April
June
2019
2020
THE GLOBE AND MAIL, SOURCE: statistics canada
The long road to recovery
Employment in Canada, millions of people
19.5
19.0
1.8-million gap
18.5
18.0
17.5
17.0
16.5
16.0
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
April
May
June
2019
2020
THE GLOBE AND MAIL, SOURCE: statistics canada
The drag could last years. Alongside its recent decision to keep its benchmark interest rate at just 0.25 per cent, the Bank of Canada forecast that a full recovery to precrisis levels of economic output won’t occur until well into 2022.
What emerges will be a very different economy – and glimpses of what it might look like are already appearing. Faced with adjusting to a brutal new environment, many executives are finding that now is the ideal time to reimagine their operations and retool for a new reality.
For a retail chain such as Harry Rosen Inc., which had to shutter its 19 stores in March, COVID-19 has inspired it to accelerate e-commerce expansion plans. “Where we needed to be three years from now, we need to be three months from now,” chief executive Larry Rosen said.
Montreal’s Goodfood Market Corp. has had an unexpectedly encouraging experience: The pandemic has driven growth.
The five-year-old company, which delivers meal kits and groceries, has capitalized on a surge of interest as consumers hunker down at home. CEO Jonathan Ferrari said the pandemic has led to a 30-per-cent sales spike, helping Goodfood turn its first quarterly profit – no small feat in a notoriously difficult, cash-draining industry.
To service that demand, Goodfood had to hire aggressively. Since the pandemic started, the company has added a net total of roughly 600 employees, taking its total work force to about 3,200. The additions run the gamut: hourly wage employees in the company’s fulfillment centres, along with product developers, data analysts and marketers.
“The labour pool has really shifted,” Mr. Ferrari said. Before the crisis, the company was “fighting to attract talent.” Now, it’s getting four or five times as many applicants on a typical job posting, with many of the new hires migrating over from ailing retailers, restaurants and hotels.
While the steady drumbeat of COVID-19 layoffs has hurt many companies and their workers, some will discover opportunities, particularly with businesses eager to shore up their talent in logistics and product development.
But with a fragile economic rebound under way, and many companies in no position to hire, getting Canadians back to work won’t be easy.
“We shouldn’t mistake this [recovery] for anything that can happen very quickly,” Mr. Mendes said. “It’s a very painful process reallocating labour across the economy.”
If history is any guide, this downturn will be particularly rough on routine jobs.
The past three recessions wiped out nearly 1.2 million routine jobs – roles that are characterized by repetitive, regular and unvarying tasks, such as machine operators. Those jobs have never returned, according to a new paper from University of Waterloo professor Joel Blit.
During tough times, companies invest in automation, eliminating many roles in the process. Other companies fail, taking routine jobs with them and ceding market share to more efficient rivals.
For this recession, Prof. Blit projects a “bigger economic transformation” could result in the permanent loss of 586,000 more routine jobs in Canada. Companies now “have added incentives to automate to protect the health of workers and mitigate risks to their operations.”
One sector that’s especially vulnerable: retail trade. Already, the headlines are jammed with store shutdowns. Reitmans (Canada) Ltd., DavidsTea Inc. and Aldo Group Inc. have announced deep pullbacks to their store counts, affecting thousands of staff who fold clothing, ring in sales and fetch items from backrooms.
“I think everyone would agree that retail is oversaturated on stores,” said Simeon Siegel, a New York-based retail analyst with Bank of Montreal.
Instead, there’s even greater focus on e-commerce. Retail e-commerce sales totalled $3.8-billion in May, an increase of 113 per cent from a year earlier, according to Statistics Canada data. That’s partly borne out of necessity – many stores were still closed in May – but also health anxiety and the conversion of old-school shoppers.
With the pandemic, “we took a whole bunch of guys like me – I’m 64 – and they all learned how to shop online during this crisis,” Mr. Rosen said. His business saw its e-commerce sales climb 500 per cent while its stores were shuttered for months, helping to recover some lost revenue.
Floor staff aren’t the only vulnerable workers. As the retail shakeout unfolds, layoffs are climbing up the corporate structure.
Department store Macy’s Inc. said in late June it was slashing close to 4,000 corporate and management jobs. Last week, J.C. Penney Co. Inc. said it was cutting roughly 1,000 corporate, field management and international positions, alongside 152 store closings.
“As soon as [the pandemic] started to flare up in March, the writing was on the wall,” said Lisa Tant, who lost her position as a Toronto-based sales director for Nordstrom last month. “Everyone is getting very, very lean and focusing on which roles directly impact the customer, and how can we consolidate roles and not have as many people in head office.”
Across all industries, the number of people working in senior management occupations is down 17,000 (30 per cent) since February, according to Statscan. Middle management in retail and wholesale trade is down close to 50,000 people (9 per cent). Sales support occupations are down by 74,000 people (11 per cent). And office support roles are down 72,000 (12 per cent).
Save for senior management, all of those occupations saw employment gains in June. But as the pace of reopening slows, and as white-collar layoffs mount, a full recovery could be tricky.
“With everybody working from home … it’s really exposing a lot of middle management for what value you’re actually providing to the organization,” said Travis O’Rourke, president at recruiting agency Hays Canada. “You’ve got a lot of ‘meeting champions,’ [and] meetings aren’t happening any more” in person.
Office administration faces a potentially dicey future. A recent Statscan report said that 36 per cent of office support occupations, including clerks and receptionists, were at high risk of automation-related job transformation, far greater than any other occupation. Some positions will disappear and others will change dramatically.
“We’re going to see organizations take a really close look at transactional work,” said Stephen Harrington, Deloitte’s advisory leader for work-force strategy, pointing to “menial tasks” such as data entry.
“There’s an incredible amount of ‘swivel-chair’ jobs in Canada, where people are moving data from one place to another, maybe doing some simple addition to that data … and then repeat, day after day after day.”
For many people, automation conjures images of robots stealing jobs. To be sure, the process of reallocating labour will be difficult, Prof. Blit said. But there are “silver linings,” he added – notably that recessions spur innovation, helping companies become more productive and competitive.
The pandemic has inspired Agnico Eagle Mines Ltd., which digs for gold three kilometres underground at its LaRonde mine in Quebec, to accelerate its move into automated mining.
LaRonde, like all mines in Quebec, was forced to idle its operations from late March to mid-April, to reduce the risk of virus spread.
“If we had more automation in the lower mine, then that activity could have continued through the pandemic because we wouldn’t have been exposing people in those areas,” CEO Sean Boyd said. “The key now is to accelerate and implement that on a wider scale.”
workers at high risk of automated
job transformation
Predicted share, by occupation
Office support occupations
35.7%
Service supervisors and
specialized service occupations
20
Industrial, electrical and
construction trades
19.7
Sales representatives and salespersons–
wholesale and retail trade
14.7
Service representatives and other customer
and personal services occupations
13.7
Maintenance/equipment operation trades
13.2
Administrative and financial supervisors
and administrative occupations
11.3
Technical occupations in health
8.2
Paraprofessional occupations in legal, social,
community and education services
6.4
Technical occupations related to natural
and applied sciences
4.4
Retail sales supervisors and specialized
sales occupations
1.8
Professional occupations in natural
and applied sciences
0.9
Professional occupations in business/finance
0.8
THE GLOBE AND MAIL, SOURCE: 5tatistics canada
workers at high risk of automated
job transformation
Predicted share, by occupation
Office support occupations
35.7%
Service supervisors and
specialized service occupations
20
Industrial, electrical and
construction trades
19.7
Sales representatives and salespersons–
wholesale and retail trade
14.7
Service representatives and other customer
and personal services occupations
13.7
Maintenance/equipment operation trades
13.2
Administrative and financial supervisors
and administrative occupations
11.3
Technical occupations in health
8.2
Paraprofessional occupations in legal, social,
community and education services
6.4
Technical occupations related to natural
and applied sciences
4.4
Retail sales supervisors and specialized
sales occupations
1.8
Professional occupations in natural
and applied sciences
0.9
Professional occupations in business/finance
0.8
THE GLOBE AND MAIL, SOURCE: 5tatistics canada
workers at high risk of automated job transformation
Predicted share, by occupation
Office support occupations
35.7%
Service supervisors and
specialized service occupations
20
Industrial, electrical and
construction trades
19.7
Sales representatives and salespersons–
wholesale and retail trade
14.7
Service representatives and other customer
and personal services occupations
13.7
Maintenance/equipment operation trades
13.2
Administrative and financial supervisors
and administrative occupations
11.3
Technical occupations in health
8.2
Paraprofessional occupations in legal, social,
community and education services
6.4
Technical occupations related to natural
and applied sciences
4.4
Retail sales supervisors and specialized
sales occupations
1.8
Professional occupations in natural
and applied sciences
0.9
Professional occupations in business/finance
0.8
THE GLOBE AND MAIL, SOURCE: 5tatistics canada
Before the pandemic, Goodfood felt its potential market was worth $10-billion a year.
Things have changed. With physical distancing still in effect, and consumers keen to order meal kits and groceries, Mr. Ferrari reckons the domestic market has swelled to $23-billion, based on industry research.
Goodfood is ramping up its hiring – and investments – to lure shoppers. It recently announced the raise of $25-million through public markets, largely to speed up its plans for same-day delivery, and opened a fulfillment centre in Mississauga in late May, resulting in hundreds of new hires.
It’s a situation that shows how disruption doesn’t solely mean destruction.
In fact, as Canada becomes more digitized, warehousing and distribution is a massive growth area. It’s not simply the grunt work of getting products from Point A to Point B, but also the technological underpinnings of logistics, for which workers are desperately needed.
“Anybody who’s been waiting for a parcel during COVID has been experiencing the supply demand mismatch in the logistics work force,” Mr. Harrington of Deloitte said.
After the immediate panic of the pandemic subsided, staff at Clearpath Robotics Inc. in Waterloo, Ont., noticed they were getting a lot of calls about automation. Executives were suddenly very interested in the company’s automated “Otto” warehouse-roaming vehicles.
Clearpath’s Otto Motors division has shipped hundreds of the load-carrying robots in recent years – they can carry up to 1,500 kilograms and zip across warehouse floors at two metres a second. Some have hydraulic lifts to help move goods on and off high shelves.
The company was gearing up for greater demand for its Ottos when it raised US$29-million in venture financing earlier this year, but staff weren’t expecting a pandemic to do their marketing for them. Inbound calls are up 50 per cent year over year since the crisis began.
“In a post-COVID world, automation becomes a lot more of a requirement for a successful operation – whereas, previously, it was considered a luxury good,” CEO Matthew Rendall said.
“Retailers have to become logistics companies now,” Mr. Rosen said, adding that 70 per cent of his online orders are fulfilled at a central warehouse. Years ago, 95 per cent came from stores.
It’s led to a boom in hiring. As of December, about 65,000 Canadians worked in warehousing and storage, an increase of roughly 20,000 from five years ago. That doesn’t account for everyone else connected to the industry, such as IT staff, supply chain managers and client support. Truckers alone numbered more than 200,000 before the crisis.
The trend doesn’t appear to be slowing. Walmart Canada is investing $3.5-billion over five years in its e-commerce business, with $1.1-billion earmarked for two new distribution centres. Amazon Canada recently announced a second fulfillment centre in Ottawa and is ramping up hiring in several domestic markets. Between them, the two giants are creating thousands of jobs.
“The Industrial Revolution didn’t put an end to the worker,” Mr. O’Rourke said in reference to the automation that’s taking hold. “It just changed the role.”
The e-commerce boom
Retail E-commerce sales in billions, monthly
$4
3
2
1
0
2016
2017
2018
2019
2020
THE GLOBE AND MAIL, SOURCE: statistics canada
The e-commerce boom
Retail E-commerce sales in billions, monthly
$4
3
2
1
0
2016
2017
2018
2019
2020
THE GLOBE AND MAIL, SOURCE: statistics canada
The e-commerce boom
Retail E-commerce sales in billions, monthly
$4
3
2
1
0
2016
2017
2018
2019
2020
THE GLOBE AND MAIL, SOURCE: statistics canada
Eventually, there will be a full recovery of jobs.
Thus far, roughly 40 per cent of three million jobs lost to the pandemic have been recouped, leaving about 1.8 million to go.
Over time, companies will get more comfortable with hiring. New businesses will pop up and need talent. And people in hard-hit positions and industries will transition to better situations.
Still, the coming months – even years – will be complicated.
Several government programs are slated to end this year, including the Canada Emergency Wage Subsidy, which Ottawa has proposed to extend until December. For qualifying companies, the subsidy covers up to 75 per cent of an employee’s wages to a maximum of $847 a week.
Another question is how the expiration of the Canada Emergency Response Benefit – which pays $2,000 every four weeks to workers deeply affected by COVID-19 – will affect retail consumption, which has essentially staged a full rebound, a Statscan estimate shows.
In the interim, the hiring climate is challenging. New postings on the Indeed Canada job-search website are down 17 per cent from the same time last year – much better than at the depths of the crisis, but with weakness in accounting, human resources and marketing.
Hiring freezes are fairly common, said Carolyn Levy, president at the technology division of recruiter Randstad Canada. Among companies that are expanding, hiring for permanent positions “has really slowed down,” Ms. Levy added, with employers shifting work to contractors.
For advertising agencies Ogilvy Canada and John St., the shift might be unavoidable. One consequence of the pandemic is that clients are “less confident” in making long-term commitments, wanting “more flexibility and on-demand service,” said group CEO Arthur Fleischmann, who’s in charge of both agencies. Precrisis, between 10 per cent and 20 per cent of staff were freelancers.
Now, “I’m trying to imagine a world where we could get to 50 per cent,” Mr. Fleischmann said. “I can’t imagine that being good for culture and ultimately good for the creative product we produce. But is it something that we’re going to have to think through as an industry? Absolutely.”
Another outcome is that remote work is here to stay, to some degree.
Seven in 10 businesses expect some form of flexible work arrangements to become standard within the next two years, according to a recent HSBC survey of 200 Canadian companies. More than half said they would continue to use virtual meetings after the pandemic.
For employment, “it actually works positively in both ways, because organizations can look, from a diversity and inclusion standpoint, much more broadly than they ever have before,” Ms. Levy said. “And then talent now has access to opportunities that they may not have considered in the past either.”
For white-collar employees, the transition to new work should be manageable, particularly if they can tap savings for acquiring new skills or their employers invest in retraining. But for many – including young people, recent immigrants, part-timers and less-educated Canadians, who’ve been most affected by recent job losses – moving into thriving industries will be a challenge.
“We need to support everyday Canadians workers through this transition,” Prof. Blit said.
With reports from Niall McGee and Josh O’Kane
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Matt Lundy