Displaced Workers in Canada – Only one in five adopted at least one adjustment strategy

It has been almost a year since the COVID-19 pandemic began in early 2020, forcing thousands of workers out of jobs in Canada — many of them permanently. Although emergency income-support programs were introduced fairly quickly, they were meant to be temporary. With mass vaccination on the horizon, now may be the time to start thinking about long-term policies that will help displaced workers adjust to post­pandemic economic realities. A wide range of such policies already exists in Canada, including temporary income replacement, training and assistance with job search. What is less well known, however, is what workers do to improve their situations, especially when employment opportunities are scarce — as they are now and are likely to remain until the pandemic’s effects subside.

This study by Statistics Canada researchers René Morissette and Theresa Hanqing Qiu documents the use of four adjustment strategies by Canadian workers permanently laid off in 2009 — in the middle of the last recession: moving to another region, enrolling in post-secondary education, signing up for a registered apprenticeship and becoming self-employed. The authors examine whether the adoption of strategies varied according to workers’ characteristics and their employment status a year after job loss, and to what extent it differed in the short and long terms.

Looking at adjustment patterns in the first and fifth years after job loss, the authors find that, overall, only a minority of displaced workers — at most one in five — adopted at least one of these strategies. The use of adjustment strategies varied considerably depending on gender, age, education and other characteristics. For instance, in the first year after job loss, the most common strategy among laid-off women was to enrol in post-secondary education, whereas among men it was to move to another region. Five years after job loss, moving was the predominant strategy for both genders. Older displaced workers were less likely to move to another region or invest in skills, in both the short and long terms. Those with more education were more likely to become self-­employed or pursue post-secondary education, especially if they already had university degrees. Compared with displaced workers born in Canada, immigrants — especially women — were less likely to move to another region, in both the short and long terms, whereas recent immigrant men were more likely to start a business, but only in the long term. Compared with laid-off workers who were re-­employed in the year after job loss, those without jobs were more likely to adopt at least one adjustment strategy during the entire five-year period. Still, less than half of them (42 percent) did so at some point during that time.

As to whether job loss per se induced a large behavioural response on the part of displaced workers — that is, led them to make greater use of adjustment strategies — that does not appear to be the case. Although those who lost their jobs in 2009 were more likely than those who were not laid off to adopt at least one of these strategies, the difference was rather small. And the impact of job loss was more pronounced among workers who had more education than it was among those who had less.

Documenting and quantifying the adoption of various adjustment strategies is a first step in improving our understanding of workers’ behaviour after job loss. Each strategy has pros and cons to be considered. And identifying the predominant strategies can shed light on the wide array of incentives and barriers people face when responding to job loss, especially when employment options are scarce. In the postpandemic world, the findings of this study will be especially relevant for informing the development of policies to support displaced workers.

Chosen excerpts by Job Market Monitor. Read the whole story @ Adjusting to Job Loss When Times Are Tough