Layoffs are an unfortunate reality. It seems like just yesterday that we were talking about the more than 6,000 layoffs of Canadian workers due to restructuring at Bombardier Inc. and General Motors. Today, of course, it’s the coronavirus-related layoffs that has everyone on edge.
Sure, some of us are able to work from home thanks to the convenience of the internet and video conferencing, and many healthcare workers are logging more hours than ever before. But there are many Canadians, especially those in the hospitality, entertainment and tourism industry, who have been temporarily or permanently sidelined as businesses shutter down and coronavirus self-isolation and quarantines have been put into place.
7 Steps to Take Following a Coronavirus Layoff
According to Bloomberg, nearly one million Canadians joined the unemployment line in the last couple of weeks. The report shows the pandemic-induced shutdown of the economy has resulted in job loss or reduced work hours for 44% of Canadian households. So what are those cash-strapped Canadians to do?
The first thing you need to do is take a deep breath. You’ll get through this, just as we all will, and having an emergency fund is definitely a big help! An emergency fund is exactly what it sounds like—it's money you set aside in case of an emergency, like losing your job.
It's recommended you should store away about 3-6 months' worth of your salary, and this must be separate from any other savings you have, like saving up for a down payment, car repair, or vacation. But if you're like most Canadians, you're likely facing a job loss without an emergency fund. If you want to learn more about how to start building an emergency fund, click here. In the meantime, here’s how to develop your own layoff survival game plan if the time for building an emergency fund has come and gone for you.
1. Make Immediate Preparations
Layoffs generally come with a “heads up” from your employer, but the coronavirus has changed all that, with many workers learning of their layoff without any notice at all. (You may want to brush up on your rights regarding terminations, layoffs or dismissals, although not all may apply during these unusual times.)
As soon as you learn about your layoff, it’s time to begin saving wherever you can. If you’re social distancing and staying home, this could mean canceling online subscriptions or memberships, digging into the pantry instead of ordering delivery or take-out, cutting back on smoking and drinking, switching from pricey coffees and sodas to water, or stopping any frivolous online shopping.
Our Budget Calculator can show you areas where you may be able to cut back and how much you could save in doing so.
2. Seek Government Assistance
Seeking government assistance is nothing to be ashamed of, especially not under these circumstances! If you’ve been laid off as a result of the coronavirus (or another reason through no fault of your own), you should contact Employment Insurance (EI). To help those who are self-isolating or are in quarantine, EI is waiving the one-week waiting period for accessing benefits. The Government of Canada has also set up a new dedicated toll-free phone number at 1-833-381-2725, which you can call if you are in quarantine and would like the one-week waiting period to be waived.
The Government of Canada has also established the new Canada Emergency Response Benefit (CERB) which will be providing a taxable benefit of $2,000 a month for up to four months to those whose income has been impacted by COVID-19 and qualify.
Considering a new career path? Now might just be the best time to start doing your research. The Government of Canada offers resources that can further your education while you're unemployed to help you pick up a job in another industry. You can check out the Government of Canada’s Skills Boost initiative here. Of course, most programs will likely be paused while the dust settles around this pandemic, but it doesn't hurt to start doing your research now, so you can hit the ground running once we all get the green light.
Lastly, you should check out the Government of Canada’s COVID-19 Economic Response Plan, which sheds light on child benefits, tax credits, mortgage support, and more.
3. Put Away the Credit Cards
It’s tempting to use credit cards after a layoff to help keep your cash safely tucked away. While this strategy makes sense in theory, it’s ultimately a bad idea because the interest you pay on credit cards quickly adds up, costing you more in the long run. If you can't pay off your credit cards in full every month, your debt will grow and the chances of it eventually becoming unmanageable increases.
If you can, put the credit cards away and dip into that emergency savings fund if you have one – that’s what it’s there for – or other savings you might have, like a TFSA. (If you've been saving up for a vacation, now's a good time to use those funds for your immediate needs instead.)
You should also contact your creditors, as many are offering coronavirus debt relief in the form of deferred payments. However, they’re only doing this on a case-by-case basis, and they’re not going to call you to make it happen. So, pick up the phone and see what they can do for you given the situation. Making arrangements can also help you keep your credit score intact, which is important for when we come out on the other side of this crisis.
4. Prioritize Your Expenses
When cash is tight, you need to prioritize which bills are most important. Food and shelter are, of course, the most crucial. If you’re concerned about your mortgage or rent payments, you should contact your lender or landlord to discuss payment options. Many lenders are offering options for homeowners to defer mortgage payments for up to six months on a case-by-case basis; however, interest can continue to accumulate, which means higher monthly payments when they resume. No order has been made yet to freeze rent payments, though some provinces have plans to help renters.
If you’re cash-strapped and are able to defer payments or work out a deal with your landlord, you may want to consider holding off on housing payments for as long as you can to maintain your savings. (Just know that you may end up paying more when you can start making payments again to make up the difference.) When it comes to food, stick to the essentials, like non-perishables or longer-lasting perishables. The Globe and Mail put together a list of items to consider for your next shopping trip.
When it comes to credit cards, you should call customer service immediately to inform them of your situation. They may be willing to work with you, lowering your interest rate or moving your payment due date around. Plus, although it is rarely advertised, many creditors have hardship programs, in which minimum payments may be lowered or payment can be deferred for up to six months or a year.
A word of caution though: When that period is up, you often need to pay back the interest accrued in one lump sum. Student loan payments can often be temporarily lowered or deferred as well.
5. Create a Monthly Household Budget
In the past, perhaps you thought you didn’t have time to create a monthly household budget. Well, if you’re self-isolating, now it is the perfect time, and what a difference it can make! A household budget helps you understand where your money goes each month, so you can determine areas where you can cut back.
Housing, utilities, and food are a must of course (although the latter can usually be cut back on), while clothing, salons, gym memberships, dining out and extracurricular lessons for your kids, like piano or ballet, can be (temporarily) eliminated. One expense you should aim to keep? Your internet plan, so you can keep up with coronavirus assistance plans and continue to job search.
Not sure where to start when creating a monthly budget? No worries, we’ve developed a free downloadable Budget Planner + Expense Tracker.
6. Start Networking
Begin your next job search as soon as you receive notice of the layoff simply by reaching out to those you know. That means family, friends, friends-of-friends, former co-workers, and former bosses. Although many industries have completely shut down, such as entertainment, hospitality and tourism, others are full steam ahead, such as healthcare, manufacturing, delivery services, supermarkets and pharmacies, as well as other essential services. (More on this further down in #7.)
A new survey on LinkedIn reveals that 85% of all jobs are filled through networking. While in-person networking events used to be a great opportunity to get your name out there, social distancing has put them on hold. Instead, get on social media and attend virtual networking events. Do anything you can to let other people know you’re looking for your next opportunity!
7. Get a Temporary Job
Although many jobs have been suspended, other jobs are opening up. Opportunity abounds in the “gig economy,” with home delivery positions taking the cake. But that’s not all. Amazon.com has announced plans to add 100,000 new full-time and part-time workers around the world to meet a surge in demand as a result of the widespread impact of the coronavirus. Check out this story from CTV News on some Canadian companies experiencing a hiring surge as a result of COVID-19.
Don’t Face Your Layoff Alone
A job layoff isn't your fault, especially when it’s coronavirus related. If your layoff has left your finances in dire straits or you're worried about a potential layoff, you can speak to a certified Credit Counsellor at Credit Canada for free by calling 1.800.267.2272 and booking a counselling session. They will review your situation and discuss your debt relief options. All of our counselling is completely free, confidential and non-judgmental. You can also check out our COVID-19 Financial Resource Centre for more information and free webinars on how to weather the storm.
How to Regain Good Credit and Good Financial Health
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