I would like to understand by what economic logic the authorities can be both concerned about the recent increase in the unemployment rate, while noting a significant shortage of labor? Who are these unemployed people who are exerting upward pressure on the unemployment rate? – Michèle Ruel, Sainte-Agathe-des-Monts
We can be concerned at the same time about the rising unemployment rate and the labour shortage. This is the reality of the labour market. Unemployment and labour shortages have always coexisted. The labour needs of businesses are never perfectly aligned with the skills of people looking for work. The labour force may be available in Montreal, while the jobs are elsewhere, in the regions.
Emna Braham, director of the Institut du Québec, explains it this way: “There is not just one job market, but several. People are not interchangeable.”
Although it is not new, the rapid increase in the number of unemployed while companies complain more than ever about a shortage of workers may come as a surprise.
Because a lot has happened in a short time.
Emna Braham, director of the Quebec Institute
“Between 2017 and 2023, the job market was tight in all regions of Quebec and there was a lot of talk about a labour shortage,” she recalls. The unemployment rate was very low, the result of solid economic growth, the increase in the number of retirements and the pandemic that changed lifestyles.
New arrivals, students, vacancies
The wind has been turning since the end of 2023, says the economist.
To combat post-pandemic inflation, the Bank of Canada raised interest rates, slowing the economy. Businesses put the brakes on hiring while immigration surged.
Canada’s population has grown rapidly, by more than a million people in 2023 alone. Some of these new arrivals have filled job vacancies, which have shrunk in number. The rest have joined the ranks of the unemployed, which has pushed up the unemployment rate.
Asylum seekers, international students, spouses and families of these new arrivals often take the first available job. There are fewer for young people looking for a first job that does not require experience or specific skills.
Moreover, the slowdown is mostly affecting the most vulnerable sectors of the economy, such as retail, accommodation and food services, where young people, those aged 15 to 24, are numerous. “We see this all the time,” says Emna Braham. “When the job market tightens, young people and recent immigrants are always the most affected.”
The current unemployment rate of 6.6% is an average that covers different realities. Among young people aged 15 to 24, the unemployment rate was 14.5% in August, compared to 5.4% among those aged 25 to 54, according to Statistics Canada’s latest Labour Force Survey.
At the same time as the number of unemployed increased, the number of vacant positions decreased, but there were still around 140,000 in Quebec at the last count, at the end of the first quarter of 2024.