What is the Canadian Unemployment Rate and How has COVID19 affected it?

By Remitbee - Jun 9, 2020

The recent months have come with a lot of uncertainty. A pandemic has shaken up the world in a way that none of us could have possibly expected.

Along with the fear of sickness and death, financial stress and uncertainty have imposed a plethora of issues.

With the shutdown of entire industries has come a rising unemployment rate. The Canadian government is doing what they can to make ends meet for those affected.

It is important to understand what this growing unemployment rate means for the economy of our country. Today, we’re going to discuss what the term “unemployment rate” means in technical terms and in terms of how it looks in action.

Let’s dive in.

What is the Unemployment Rate?

According to Investopedia “the unemployment rate is the share of the labour force that is jobless, expressed as a percentage.”

What this means is that the unemployment rate is calculated by looking at how many people are without jobs out of the pool of people who are actively in search of work.

Unemployment goes beyond not having a job. If you do not have a job and do not want a job, you’re not considered unemployed. The reason for this is that people who do not desire to work are not part of the labour force.


Unemployment rates rise when jobs become limited. When people are out of work, the economy takes a downturn. It is a vicious cycle.

COVID-19 and its Effect on Unemployment Rate

In response to the outbreak of the coronavirus, stores, restaurants, movie theatres, parks, gyms and other non-essential businesses have closed or cut hours to abide by social-distancing guidelines.

As these places have closed, business owners have been unable to pay their employees. This means millions of employees have been let go without pay.

While some countries have been relatively relaxed with their shut-downs, Canada has taken the virus very seriously out of care for its beloved residents.

The [Canadian unemployment rate has doubled] (https://theconversation.com/heres-how-the-coronavirus-is-affecting-canadas-labour-market-137749) in just four months from 7% to 14%. Without intervention, unemployment rates at that severity could crash the economy.

When people are not making money, they do not have the ability to support themselves and their spending is cut. This, in turn, affects other businesses that are still in operation.

When their normal patrons are cut back, they take a hit and are forced to lay off even more people.

This is why the government has stepped in with hopes of blocking this from becoming a vicious cycle.

Canada’s Response to Rising Unemployment

Canada’s response to the rising unemployment rate is pretty impressive.

Canada is giving adults whose employment was affected by COVID19 and who are not eligible for Employment Insurance $2000 CAD every month for four months through the CERB benefit. This is a total of $8000 CAD per adult. Canadians are also receiving $300 CAD per child. There is also a separate benefit for students called CESB

This stimulus package originally only covered people whose employment was affected in any way because of the coronavirus. This includes being laid off, being sick or having to quit to care for a sick family member.

They later updated the coverage to provide aid to people who are making $1000 CAD per month or less.

Although not directly related to unemployment, the Canadian Prime Minister has mandated a boost in salaries for essential workers who make less than $2500 CAD per month.

Although this has little effect on those who are currently unemployed, this extra money will likely stimulate the economy once non-essential businesses open back up. These people will have a change in their pockets to enjoy luxuries like eating out or shopping.

Once the “non-essential” demand returns, these businesses will have to staff their shops, thus creating jobs.

At this point, it is unclear when things will begin to open or if a “next step” is necessary from the government.


Between the looming health risk imposed by the coronavirus and the risk of a rocky future for the economy, we’re living in an unsettling time.

As long as our government continues to stimulate the economy by putting money in the pockets of the people, the economy should remain somewhat intact.

The Remitbee team is here to help you however we can. We hope that you are staying healthy and safe. Please remember that we are by your side.

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