Jobless summer: Why youth unemployment is at a decade high

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Youth unemployment jumped last month to 13.5 per cent, a level of joblessness among Canadians aged 15 to 24 not seen since September of 2014, excluding the pandemic.

Since June of last year, youth unemployment jumped by 2.1 per cent. Brendon Bernard, economist with Indeed Canada, says deteriorating business sentiment and a population boom is driving this spike in unemployed young people.

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“It’s been driven by a surge of newcomers from abroad,” he said. “At a time when employer hiring appetite has been on the wane, we now have a surge of youth job seekers, and the demand isn’t there to keep up with the [labour] supply.”

Canada welcomed 1.3 million newcomers in 2023 and the 15–24-year-old population cohort grew by an estimated 335,700 people since last June, according to Statistics Canada.

Tim Lang, president and chief executive at Youth Employment Services, one of the country’s leading employment service organizations that help youth aged 15-30 find employment opportunities, says he has seen an increase in young people seeking their services, including young newcomers to Canada, which has caused an increase in demand for jobs.

“A lot of those new Canadians are youth in the 20s-30s age, so there is far more competition for the existing jobs,” Lang said. “We know in the long-term that increase in new Canadians can lead to further economic opportunity and new businesses, but in the short-term it certainly means more competition.”

The tightness seen in the labour market, following the re-opening of the economy after the pandemic, has dissipated.

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Statistics Canada reported job vacancies were down significantly in the first quarter of 2024 across a wide variety of industries, with year-over-year decreases in manufacturing and utilities (-35.3 per cent), sales and service (-33.7 per cent), natural resources and agriculture (-29.3 per cent), trades and transport (-22.6 per cent), art culture and recreation (-24.2 per cent) and business and finance (-15.1 per cent).

Bernard noted in his summer jobs report, that overall job postings as of early May are down 23 per cent compared to 2023 and down 39 per cent from 2022. The number of job postings have now returned to levels seen since before the pandemic and in some cases, below pre-pandemic levels. This could be attributed to businesses coming to grips with the slow economic situation and the gradual fallout of a high interest environment.

“In general, recruiting activity, job vacancies, are one the most cyclical aspects of the economy,” Bernard said. “That is going to naturally impact people who are on the margins of the labour market in particular.”

Lang noted a potential third trend that may be contributing to the problem of youth joblessness, where employers are offering more part time jobs over full time positions, with many of those positions being filled by workers in older cohorts.

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“Many organizations are opting for part time offerings instead of full time,” he said. “People who have more experience are getting a second part time job are knocking out youth who are looking for their first job or a summer job because the employers are opting to give it to people with more experience.”

Bernard says the data is vague but is suggesting Canadian workers are holding onto to those entry level and part time positions for much longer.

“We’re seeing Canadians not change jobs as frequently as they were,” he said. “This could be a sign of people in entry level roles not moving up the job ladder as much as they were previously.”

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