COVID-19 sidelines construction workers in all provinces – especially Quebec

Although Quebec and Ontario are home to just over 60% of the country’s population, together they have reported 84% of Canada’s 75,000 confirmed COVID-19 cases and 94% of the 5,600 deaths attributed to the virus. Efforts to lock down those two provinces to halt COVID’s spread virtually paralyzed their economies during the final week of March, all of April and much of May. Forced to suspend operations that might expose their employees to infection, employers in the two provinces laid off an unprecedented 1,913,000 workers in March and April, the bulk of whom (98%) were in the private sector. As a result, the unemployment rate in Ontario jumped from 5.5% in February to 11.3% in April, and in Quebec, from 4.5% to a breathtaking 17.0%.

Almost 40% of Quebec’s construction workforce idled by COVID-19 lockdown

Given the disproportionate incidence of COVID-19 in Quebec, it’s not surprising that the provincial government locked down the province earlier and harder than the rest of the country. Near the top of the list of industries hardest hit by the lockdown, announced on March 25, was Quebec construction, where employment fell by a record 108,000 jobs (-39%) in April. In Ontario, the government’s lockdown, announced on April 3, was less restrictive than Quebec’s. Work was suspended on private sector industrial, commercial and institutional projects, but exempted for public sector projects. Construction employment dropped by 93,800 jobs (-17%) in the month. After a month-and-a-half hiatus, construction in Quebec was unlocked on May 11 and shortly thereafter, on May 14 in Ontario. Given the projects under construction that were interrupted by the lockdowns, there is little doubt that construction employment in both provinces will start to recover in May and June.

New Brunswick, Newfoundland & PEI post large job losses, few COVID-19 Cases

As the chart illustrates, although the incidence of COVID-19 across the rest of the country is significantly lower than in Quebec and Ontario, the job losses stemming from government-imposed lockdowns, plus the shutdown of projects by firms attempting to limit the spread of the virus, are disproportionately greater. This is particularly the case in New Brunswick, Newfoundland and Labrador, and Prince Edward Island which have seen their construction workforces shrink by -22.6%, -21.2%, and -19.2% respectively.

Following seven consecutive days without a new case, Premier Higgs announced that New Brunswick was relaxing COVID-focussed restrictions on April 24 and, according to the Construction Association of New Brunswick, both residential and non-residential construction activity are gradually picking up across the province. Similar moves to ease public health restrictions in Newfoundland and Labrador and also in Prince Edward Island should prompt construction firms to gradually rehire laid-off staff in May and June.

Construction firms in Alberta & Saskatchewan already lean due to weak energy

Given the slower growth of construction and the accompanying reductions in hiring in the sector in Alberta and Saskatchewan since the end of 2018, it’s understandable the impacts of measures to limit COVID-19 have been less than in other provinces. Looking ahead, the easing of health restrictions in Alberta and Saskatchewan in early May brighten their near-term outlooks. However, lingering uncertainty about future energy investment in both provinces overshadows the outlook for construction employment in the longer term.

B.C. suffers less from COVID-19 and will see faster gain in construction hiring

Despite being Canada’s third-largest province (by population), the incidence of COVID-19 in British Columbia at 0.48 cases per million people is among the lowest in the country. And while the province did not order construction projects to be shut down, as did Quebec, the BC Building Trades Council called for large construction projects such as LNG Canada to scale back activity. Also, the workforce on the Site C dam project was cut back by BC Hydro in early April. The recent (May 19) easing of pandemic restrictions in the province following the B.C. Center for Disease Control’s announcement that the risk of COVID-19 was the lowest since early March, puts a very positive light on both the near-term and the longer-term outlooks for construction employment in the region.

Improving business sentiment in construction equals pick-up in hiring

The improved outlook for construction employment in Canada over the next several months, as noted above, is reinforced by the Canadian Federation of Independent Business’ early May Flash Business Barometer. Since early April, the Business Barometer Index has risen from 37.7 to 53.2 while the index reflecting the expectations of owners of construction companies has increased from 35.0 to 57.5. Across the country, expectations in New Brunswick (59.5), Manitoba (57.3) and British Columbia (56.7) are well above the national average, while Quebec (36.4) and Prince Edward Island (47.6) are under. Collectively, these more positive values point to a gradual pickup in economic activity heading into the second half of this year.

Per cent change in total employment vs confirmed COVID-19 cases Canada and provinces

John Clinkard has over 35 years’ experience as an economist in international, national and regional research and analysis with leading financial institutions and media outlets in Canada.