A record high number of employees missed work due to illness or disability in January, more than at the onset of the pandemic as the Omicron wave spread rapidly and forced semi-lockdowns in parts of the country.

Statistics Canada reported that 10 per cent of workers were absent from their job for all or part of the week in which it conducted its January labour force survey. That’s about a third higher than the average for January between 2017 and 2019 and higher than the 8.1 per cent seen in March 2020, the agency reported Friday.

“I’m not surprised at this result given how much more transmissible (Omicron) has been,” Jimmy Jean, chief economist at Desjardins, said in an interview. “We’re seeing hospitalizations improve, … it seems like the pandemic is receding a bit and we’ve been through these motions before. We’re going to see people get better and get back to their jobs.”

The rising level of absenteeism coincides with a bigger-than-expected loss of 200,000 jobs in January, which clawed back gains the economy had been making heading into the fifth wave of the pandemic. The unemployment rate rose to 6.5 per cent from six per cent in December. Economists had expected a jobs loss of 110,000.

The weaker labour market appears to validate the Bank of Canada’s decision to hold the interest rate at a quarter per cent last week despite an increasingly vocal set of traders and economists calling for a hike. The economy had been building steam before heading into the Omicron wave with inflation surging to the fastest pace in 30 years to 4.8 per cent in December and gross domestic product finally climbing above pre-pandemic levels in November.

Almost all industries had higher than average absences during January, with the exception of education, public administration and utilities. Statistics Canada conducted its survey during Jan. 9 to 15, when many schools had shifted to online learning.

Absences in the retail sector and restaurant and hotel sector shot up above typical levels. Restaurants saw an almost 12-per-cent absence rate, while restaurant and hotels saw the number of absences climb just above 10 per cent.

In Ontario and Quebec, the provinces kept restaurants open but closed in-door dining. Ontario kept malls open while Quebec shuttered all non-essential businesses.

In many parts of the country, hospitalizations surged higher than previous waves of the pandemic and provinces gave up on reporting case counts as the highly contagious variant overwhelmed tracking measures. In Canada’s most populous province, hospitalizations have retreated from a high of close to 4,200 cases on Jan. 18 to just above 2,600 cases on Feb. 4.

Now that provinces have begun lifting restrictions, employment levels should bounce back. “There’s no reason to believe this wave will be any different than past waves,” Benjamin Reitzes, a strategist and managing director at Bank of Montreal, said in an interview.

Almost a quarter of respondents in the labour force survey said they have been working at home exclusively during the pandemic, higher than the 7.5 per cent recorded in census data. Those who don’t normally work from home but did in January grew by 30 per cent, as many health officials urged businesses to keep employees off-site.

The jump in those who work exclusively from home could present an upside for employers and the employment rate, Reitzes said. If it proves to be a long-term structural shift, that could expand the labour pool and provide more flexibility for people, like parents with childcare responsibilities or those close to retirement age, he said.

Canada is experiencing high levels of vacancy rates, numbering close to 900,000 in November. More work-from-home opportunities could ease some of the tightness in the labour market, but a structural shift can take years to manifest, Reitzes added.

Statistics Canada also reported that just 7.3 per cent of workers aged 15 to 69 intended to leave their jobs in the next 12 months compared to 16 per cent from a separate survey in 2016. The number is also lower than the 20 per cent reported in the Bank of Canada’s consumer outlook survey.

“It’s curious,” said Jean. “Wage growth is pretty moderate … but the big picture is still one of a very tight labour market, low unemployment — job vacancies started coming down but they’re still very elevated.”

Average hourly wages grew 2.4 per cent last month, compared with year-over-year gains of 2.7 per cent in the previous two months.

“All those factors should lead to higher wage growth and I think we are going to see at some point more people switching jobs, especially in the sectors that are prone to instability from COVID,” Jean said.

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