‘Every business, from manufacturing to services to restaurants, are just desperate,' says Canadian expert
Canada has entered a technical recession, and falling worker financial confidence and a wave of business closures are driving down workplace performance and straining employers' ability to retain staff, according to one expert.
A technical recession is defined as two consecutive quarters of declining GDP—which measures the total value of all goods and services produced in the economy, according to the Fraser Institute.
Joshua Harris, CEO of Harris & Partners, goes a bit farther than that, saying that this occurs when an economy records negative or weaker-than-expected growth over a sustained period, Harris said, adding that the term understates what businesses are experiencing.
"Adding the word 'technical' into it is a fancy mainstream media way of hiding the fact that this is a real recession," he tells Canadian HR Reporter.
"Our phones are off the hook. It is wild," Harris says. "Every business, from manufacturing to services to restaurants, are just desperate. They can't hold on."
Canada's economy came to a virtual standstill in the first quarter of 2026, with real gross domestic product holding flat after a 0.2% decline in the previous quarter, according to Statistics Canada.
Falling financial confidence and performance
Among workers, financial confidence – or workers' ability to manage upcoming expenses – has dropped sharply, according to data from Harris & Partners. "Canadians are really low on that confidence level right now. They don't have confidence they're going to keep their jobs," says Harris.
He describes a cycle now playing out across the economy: "The business goes bankrupt first, then the employees go on employment insurance, and then they run out of employment insurance, they can't get a job, and then they go bankrupt." He calls it "a literal crisis recession."
Overall, 56.6% of workers have delayed a major life decision due to economic concerns, and 43% have taken on overtime or a second job because of rising living costs. This matters to HR professionals because both trends correlate with higher stress and lower productivity, he explains.
"It affects workers' confidence level in their job... which ultimately affects their performance at work," Harris says, adding that delayed spending also removes money from local economies.
Also, 43.0% have taken on overtime, a second job or additional work because of rising living costs, based on Harris & Partners’ survey of 2,255 Canadian adults.
Working multiple jobs carries real costs, he says. "It's very difficult mentally, physically... your quality of life goes down significantly." He links this to rising youth unemployment, as adults take entry-level roles once held by younger workers, cutting off a "trickle-down effect" that once supported household incomes.
The result shows up directly on the job, Harris says: "You've got people coming in already exhausted, they make mistakes, mistakes cost money. Ultimately, it's not good for the employers."
Approximately 7.3 million adult Canadians are doing gig work, according to a previous report.
Steps employers can take
Amid all this, Harris recommends employers review cash flow for excess inventory, unused space or overstaffing, and pursue underused government supports such as Scientific Research and Experimental Development (SR&ED) tax credits.
He urges HR professionals to check in with staff proactively.
"[It's about] knowing the people that work for you, having those tough conversations," he says.
“If someone seems tired or anxious, have that conversation," he says, adding that normalizing financial strain can reduce stigma: "We're all human... our entire country is going through this."
Harris also tells employers to seek outside guidance. "Speak to a trustee if you need to... use the resources that are available. Don't be scared. Everyone is going through this."
