Environmental Scan - Ontario: 2021

ONTARIO ENVIRONMENTAL SCAN 2021

DEMOGRAPHICS

• 2 million people lived in Ontario in 2021, an increase of 5.8% from 2016 to 2021. Ontario represents 38.5% of Canada’s total population.
• The proportion of seniors aged 65+ is projected to increase from 18.5% in 2021 to 22.5% in 2031. This will increase demand for the Canada Pension Plan (CPP) and Old Age Security (OAS) programs.
• In 2021, individuals aged 55 and over accounted for 38.8% of the working-age population. By 2031, that proportion could reach 40%.
• The proportion of youth (15-29) in Ontario is projected to decline slightly from 18.8% in 2021 to 18.6% in 2031.
• A high number of youth work in environments that prevent teleworking, such as frontline retail.
• Average age of the non-Indigenous population in Ontario is 40.7 versus 33.6 in the Indigenous population (2016 Census).
• The Indigenous population comprises 2.8% of the total Ontario population (2016 Census), and continues to be under-represented in the labour market, accounting for 2.2% of the total Ontario labour force as of 2020. The geographic isolation of many Indigenous communities has heightened the impact of COVID-19 on Indigenous peoples, particularly in terms of access to health care.
• Ontario has the largest proportion of immigrants arriving in Canada, with 39.0% of recent immigrants who arrived between 2011 and 2016. Newcomers to Ontario have been concerned with health-related issues, employment and finance issues, and education issues due to the COVID-19 pandemic.
• The official-language minority community in Ontario represents 4.1% of the provincial population (2016 Census), and is prevalent mostly in the Northeast Ontario and Ottawa economic regions.
• In 2017, 24.1% of the Ontario population aged 15 and over were persons with disabilities, defined as persons who report a limitation in their day-to-day activities. The 2017 Canadian Survey on Disability revealed wide differences in income and employment outcomes of those persons with disabilities when compared with the rest of the population.
  
  

LABOUR MARKET CONDITIONS

• In 2021…
  • Employment recovered significantly (+4.9%)
  • Unemployment fell, but still above 2019 levels (-14.0%)
  • Participation rate recovered (63.6% to 64.9%)
  • Employment rate increased (57.5% to 59.7%)
• Ontario’s Unemployment Rate
  • The provincial unemployment rate fell from 9.6% in 2020 to 8.0% in 2021, as the Ontario labour market began recovering and adapting to the various challenges brought on by the COVID-19 pandemic.
• In 2022…
  • As the economy gradually recovers from the widespread impact of the COVID-19 pandemic, employment in Ontario is projected to expand by about 3.5% in 2022, and to increase further by about 2% in 2023.
  • In addition, the unemployment rate in Ontario is projected to fall to about 6.3% in 2022, and then to drop further to about 5.7% in 2023.

REGIONAL ECONOMIC CONDITIONS

Ontario’s Economic Drivers in 2021

• Government expenditures providing pandemic-related support
• Growing consumer and business confidence
• Expanding investment in residential structures

Reviewing 2021

• Public health measures and restrictions accompanied various waves of the COVID-19 pandemic in Ontario, leading to significant federal & provincial government support in 2021.
• Economic activity rebounded in 2021 in Ontario, as consumer and business confidence grew through the year. Investment flowed into numerous sectors, notably into residential construction and renovation.
• Inflation rates reached historic highs, driven by supply chain and labour shortage issues. Pent-up consumer savings, elevated demand for goods and services, and government spending are also contributing factors.
• Real GDP fell by 5.1% in 2020, but is forecast to grow by about 4.4% in Ontario over 2021, and similarly in 2022. However, risks to the Ontario economy remain due to the unpredictable nature of the pandemic.

Risks to the Ontario Economy in 2022

• Uncertainty of possible restrictions in response to the ongoing COVID-19 pandemic, resulting in labour shortages, lower production, business layoffs and/or closures.
• Greater digitalization and physical distancing measures, primarily affecting tourism and travel, accommodation and food services, education, and retail trade
• Elevated household debt levels affected by increases in interest rates to counter high inflation rates

Wages and Low-Income Populations

• The COVID-19 pandemic has accelerated workplace trends such as telework or work-from-home
• Low-income individuals have experienced increased financial hardships in the pandemic-affected labour market, due to the high concentration of these workers in the industries and occupations most affected by the guidelines aimed at mitigating the pandemic

Small-Medium Enterprises (SMEs)

• Small and medium enterprises have been hit particularly hard by the economic impacts of the COVID-19 pandemic, as lower saving reserves compared to large enterprises has put SMEs at greater risk of not being able to endure temporary lockdown orders
• Small enterprises (1-99 employees) represent 97.9% of businesses with at least one employee in Ontario,[i] and employ 35.6% of employees in Ontario as of 2020
• Medium enterprises (100-499 employees) represent 1.9% of businesses with at least one employee in Ontario, and employ 15.8% of employees in Ontario as of 2020
• Large enterprises (500+ employees) represent 0.3% of businesses with at least one employee in Ontario, and employ 48.6% of employees in Ontario as of 2020

Industry Trends

• Employment gains were recorded in the majority of the industries in Ontario in 2021, recovering from the nearly universal employment losses across all sectors in 2020.
• Information, culture and recreation (+11.7%) and professional, scientific and technical services (+11.1%) had the sharpest growths among sectors in Ontario, as film production picked up again, and IT-related employment went from strength to strength even through the pandemic.
• Agriculture (-6.1%) endured a 2^nd consecutive year of employment losses in Ontario, as workforce levels in the sector continued its downward trend.
• Employment increased in both the goods (+4.0%) and services-producing (+5.2%) sectors in 2021 in Ontario.

Regional Economic Conditions

• Employment levels grew in all but one economic region in Ontario in 2021.
• Windsor-Sarnia (+10.5%) observed the sharpest employment growth among Ontario regions, reversing the trend from the previous year when the region had the steepest employment decline among all regions in Ontario.
• Northeast Ontario was the only region in Ontario where employment fell for 2021. The regional labour market saw workforce decreases in its trade and health care sectors.