In the coming months, more than 1.3 million jobs in the accommodation and food services sector will be affected by the COVID-19 outbreak in Canada. This represents approximately 7 per cent of all Canadian jobs. However, the economic impact on the sector will be felt unevenly across the country because economic regions are specialized in different industries.
Unlike other sectors of the economy, the lost demand for the accommodation and food services sector is largely irrecoverable. For example, manufactured goods can be inventoried for a future purchase, but empty hotel rooms or meals not served cannot be repurposed for later use.
Regions where employment in hotels and restaurants is well above average are particularly at risk. St. Catharines–Niagara, Kelowna, Victoria, Kingston, and Vancouver top the list. St. Catharines–Niagara attracts millions of visitors each year. Kelowna, Victoria, Kingston, and Vancouver also have a high concentration of jobs in the sector. (See Table 1.)
Cities with high employment in accommodation and food services are most at risk
The same five cities are also at the highest risk of income losses for this sector. The effects of lost wages will be significant even though the average income in this sector is less than half the national average for all sectors. Nationally, $2.4 billion in labour income is at risk every month, representing 2.9 per cent of the Canadian total. What is more, accommodation and food services jobs in these cities pay higher wages and salaries than the same jobs elsewhere in the country, magnifying the income impacts.
Regions with higher concentrations of these vulnerable jobs may need to act more quickly and than others. These regions will need to provide rapid and significant support to businesses and employees to help them weather the COVID-19 pandemic.
Although the accommodation and food services sector accounts for only a small portion of income in many regions, there are at least two reasons to be concerned.
First, the low wages of workers in the sector mean they have limited financial resources to draw on if they are laid off or their hours are scaled back. The $2,000 monthly benefit to workers who have lost their jobs, part of the federal government’s Emergency Response Benefit, will be critical to limiting these negative effects.
Second, the reduction in employment income in the sector will reduce consumer spending and have secondary impacts on other sectors. The federal government’s response to COVID-19 must be deployed in a timely manner.