Canadian Unemployment Rate Jumps by Almost 20% in a Single Year
Canada’s economy faces challenges in generating enough jobs to match its growing population. Recent data from Statistics Canada (Stat Can) indicates that the unemployment rate remained stable in December.
Canada Faces Mismatch as 202k More People Join the Workforce than Jobs Created in the Last Year
Canada is grappling with a notable population surge, outpacing job opportunities. The working-age population, comprising individuals aged 15 and above, increased by 0.22% (+74.2k people) to reach 32.95 million in December. Concurrently, the number of employed individuals saw a modest 0.02% growth (+4.8k) to 21.56 million during the same period. This dynamic contributed to a 0.2-point decline in the employment rate, now standing at 61.6%. Notably, around 2 in 5 working-age adults are either unemployed or not actively seeking employment, presenting a significant challenge despite Canada being the youngest G7 country.
In the past year, the labor force expanded by 632k individuals, reaching a total of 21.56 million people. However, the economy added only 430k jobs, reaching 20.31 million. This disparity in growth rates is resulting in a notable increase in unemployment, a concern further complicated by the overall employment rate.
Over the last year, Canada has witnessed a significant increase in the unemployment rate. In December, the unemployment rate reached 5.8%, marking an ascent in five of the past seven months. Since April, it has seen a rise of 0.8 points—an identical increase observed throughout the entire year.
While the unemployment rate appears relatively low from a historical standpoint, it still represents a substantial number of individuals. In December, the count of unemployed people reached 1.2 million, indicating a notable 19.3% increase (+202k people) compared to the previous year. The last instance of the rate hitting 5.8% before the pandemic was in August 2019, with 70.8k fewer unemployed workers. Although the rate might not seem alarming, a considerable number of individuals are actively seeking employment. This poses a challenge, particularly when the Gross Domestic Product (GDP) shows reluctance to increase.
Moreover, Canada’s unemployment data overlooks the growing stress experienced by international students. The immigration minister highlights the vital role these students play in meeting labor demands, as they are drawn to study and work in the country. However, it’s crucial to note that this demographic is not included in the count of the unemployed; only those who are currently employed are considered.
The issue becomes more evident following a recent policy extension. Originally set to expire at the end of December, the measure allowing international students to work more than 20 hours was prolonged due to concerns about students’ ability to afford education without working longer hours alongside their classes.
While it may be tempting to dismiss the data when focusing on overall rates, underlying problems are accumulating. The methodology and rates might obscure the true extent of the issue, but the growing challenges remain, posing potential liabilities that the economy will eventually confront.
