Young people looking for work this summer have hit a wall. Not since 2012 has the job market been so difficult for 15- to 24-year-olds.
In its summer report released at the same time as the August data, Statistics Canada notes that the summer was very difficult for young people who wanted to work before returning to school. From May to August, the unemployment rate for students returning to school was 16.7%. Last summer, the unemployment rate for these young people was 12.9%.
At 16.7%, the unemployment rate for young people aged 15 to 24 recorded this summer is the highest since 2012, excluding the pandemic period.
It’s not that there are fewer jobs for young people, it’s that there are more young people looking for work, explains Desjardins economist Randall Bartlett. “The still-rapid population growth has remained concentrated among young workers,” he analyzes.
Over the past year, one-third of new immigrants and half of non-permanent residents have been under 25. The number of workers in this age category has increased by an unprecedented 8% over the past year. “This has driven up unemployment rates for both youth and newcomers, two groups that overlap considerably,” says Bartlett.
The increase in the youth unemployment rate is pushing up the overall unemployment rate, which climbed from 6.4% to 6.6% in August in the country, while it remained unchanged at 5.7% in Quebec.
Statistics Canada reported 22,000 jobs were added last month, after losing 2,800 in July. At 6.6%, the unemployment rate is at its highest level since May 2017, excluding the pandemic period.
In Quebec, employment was little changed in August and the unemployment rate remained unchanged at 5.7%. Over the past year, the unemployment rate has increased by 1.3% in the province. Quebec has not lost any jobs over the past year, but the number of people looking for work has increased by 67,000, which has pushed up the unemployment rate.
PHOTO PATRICK SANFAÇON, LA PRESSE ARCHIVES
It is not the number of jobs for young people that has fallen, but rather the number of young people looking for work that has increased.
Quebec created 14,700 jobs in August, but more will be needed to keep the unemployment rate from rising further, estimates Florence Jean-Jacobs, senior economist at Desjardins. “The record growth of the working-age population, at 2.6% per year, far exceeds the anemic growth of employment, which is 0.3%,” she explains.
With its unemployment rate of 5.7%, Quebec is doing well among Canadian provinces. Only Saskatchewan is doing better, with an unemployment rate of 5.4%. In Ontario, the unemployment rate jumped 0.4 percentage points in August, reaching 7.1%.
Towards an unemployment rate of 7%
In Canada, the job market is at a standstill. August is the fourth consecutive month in which employment has changed very little, notes Statistics Canada, while the population is increasing.
In August, the number of private sector jobs increased by 38,000, offsetting the similar decline in July.
Education, health care and retail services added jobs in August.
According to Statistics Canada, the average hourly wage increased by 5% in August, after 5.4% in June and 5.25% in July. In Quebec, wage growth is slowing and has settled at 4.9%. Interestingly, the majority of employees aged 15 to 69 believe that they are adequately paid, notes Statistics Canada, which added this question to its monthly survey for the month of August.
Despite these wage increases, which are well above the current inflation rate of 2.5%, the door is wide open for the Bank of Canada to reduce its key rate as quickly as possible, according to economists at the National Bank. The job market continues to weaken rapidly, according to them.
“Current conditions suggest that our forecast of a 7% unemployment rate by the end of the year is unfortunately on track to come true,” write Matthieu Arseneau and Alexandra Ducharme in their analysis of Statistics Canada’s August data.
This week, the Bank of Canada expressed concern about the weakness in the economy and its governor said it was important that growth resume. So far, the Canadian economy has avoided recession and a soft landing from the inflationary surge is still possible.
Gross domestic product grew by an annualized 2.1 percent in the second quarter of 2024, but growth is expected to slow in the third and fourth quarters.