Pandemic job concerns could pose problem in long term, Bank of Canada says
Most businesses don't expect the positive impacts of vaccinations to materialize until later this year.
Consumers’ concerns about finding work during the pandemic could signal longer-term problems for the country’s labour market, the Bank of Canada says.
The central bank’s quarterly survey on consumer expectations showed that respondents believed they were less likely to find a new job if they lost their current one.
Although respondents were less concerned about losing their current jobs, they were also less likely to leave their job voluntarily, suggesting that Canadians remain concerned about the health of the job market.
Bank of Canada officials wrote that people appear unwilling to change jobs until the situation normalizes. That means less “moving up” between jobs that the bank warned could weigh on future wage growth and lead to lower productivity that would impact the economy overall.
The survey of consumer expectations was conducted during November just as COVID-19 case counts started to rise nationally, but before lockdowns in some provinces.
Lockdowns in the spring of 2020 led to a historic drop in employment with about three million jobs lost. Asked whether new restrictions would be better or worse economically, three-quarters of respondents in the survey said they expected lockdowns now to have a similar or slightly smaller impact on their hours worked, earnings and spending.
“Most respondents do not expect the threat from COVID-19 to diminish before the second half of 2021,” the report said.
Heading into the end of 2020, the outlook overall seemed to be more positive than it was a few months earlier. Despite rising case counts, there was also positive news about vaccines.
The bank’s quarterly business outlook survey also released Monday suggested business sentiment improved in line with news about vaccines, with more companies saying they planned to hire and invest than in the fall of 2020.
However, the bank said most businesses don’t expect the positive impacts of vaccinations to materialize until later this year.
Nor are the impacts going to be widespread. The business outlook survey noted that one-third of companies polled didn’t expect their sales to return to pre-pandemic levels in the next 12 months.
“Despite the upbeat headline figures, the underlying story is mixed with services sectors continuing to struggle amid ongoing restrictions,” wrote BMO’s Benjamin Reitzes in an analysis.