Laid-off Canadians play waiting game as they collect federal pandemic aid

By Kelsey Johnson and Moira Warburton

OTTAWA/TORONTO (Reuters) - Canada's unemployment rate jumped less than expected in April because some laid-off people collect federal aid and wait to return to their old jobs when the pandemic passes, while hiring has also ground to a standstill.

The 13% April jobless figure, released on Friday, is the highest since December 1982, when it reached 13.1%, but much lower than the 18% forecast by economists. The Canadian number was also better than the 14.7% reported in the United States on the same day.

In March, Prime Minister Justin Trudeau's Liberal government introduced the Canada's Emergency Response Benefit (CERB) to provide income support for those forced to stay home amid the economic shutdown caused by the pandemic.

With this, the government has spent C$29 billion (£16.79 billion) to provide almost 7.8 million Canadians C$2,000 per month, official data shows.

Canada's federal aid "is a key factor in why the Canadian unemployment rate is so markedly below the U.S, even though we were shut down every little bit as tight, if not tighter," said Doug Porter, chief economist at BMO Capital Markets.

The unemployment figure only captures those people who are actively looking for jobs. In April some 1.1 million Canadians were counted as temporarily unemployed but not looking for work. If they had been counted, Statscan said, the unemployment rate would have risen to 17.8%.

Canada's labor market participation rate, which measures the number of people employed and those seeking work, fell to 59.8% in April - the lowest in the data series, which began in January 1976.

Cassandra Sirois, 25, is an actor, filmmaker and bartender who hasn't worked since March 7. Instead of applying for jobs, she chose to focus on her artistic projects while she collects the CERB because she was concerned she would catch COVID-19 if she worked.

"The first two weeks, I had a few panic attacks... I have no financial stability," Sirois said. "I was struggling with, 'Well, why do I have to put myself at risk because I can't do my jobs?'"

She added the federal support allayed her financial fears.

Heather Dabrowski, 35, is an educator for the Canadian Ecology Centre, an outdoor education facility in northern Ontario.

Now that Dabrowski knows she won't return to work soon, she considered applying for a job but decided against it as she collects federal support. She spends her days sewing masks and gardening with her mother.

"I can't really justify looking for employment when in a month my work may be able to call me back," Dabrowski said. "That's the trickiest thing right now, the waiting."

(Reporting by Kelsey Johnson in Ottawa and Moira Warburton in Toronto; editing by Steve Scherer and Franklin Paul)