Canadian Unemployment Continues to Rise as Job Growth Lags Behind Population Increase
Canada’s Labor Market Struggles to Keep Pace with Population Growth
According to the latest Labor Force Survey (LFS) released by Statistics Canada (Stat Can), employment in Canada saw a slight increase in May. However, the growth fell far short of what was necessary to accommodate the country’s rapid population growth. Consequently, the unemployment rate rose as thousands more joined the job market.
Despite ongoing job creation, Canada’s economy is grappling with a significant gap. In May, employment edged up by 27,000 jobs to reach 20.5 million. Notably, part-time positions surged by 1.7%, adding 62,000 jobs, while full-time roles experienced a decline of 0.2%, shedding 36,000 jobs.
This trend has persisted over the past year as the labor market gradually loosens. Canada witnessed a 2.0% increase in the number of jobs over the past year, with part-time positions growing at a rate more than double that of full-time roles (+3.8% compared to +1.6%). However, this has also led to a rise in involuntary part-time employment, with the rate climbing to 18.2%, indicating that nearly one in five part-time workers are unable to secure full-time positions.
While the employment growth may appear significant on its own, the contrast with Canada’s population growth reveals a concerning disparity. In the last month alone, Canada’s working-age population (15 years and above) surged by 0.3% (+97.6k), tripling the rate of employment added. Over the past year, the working-age population has increased by a substantial 3.4% (+1.1 million), highlighting a stark reality: for every three new workers, only one job opportunity has been created.
The disparity between job creation and population growth has inevitably resulted in a surge in unemployment. In May, the unemployment rate rose by 0.1 points (+27.7k people) to reach 6.2%, marking a significant increase of 0.9 points (+250k people) compared to last year. Presently, approximately 1.37 million individuals are unemployed, with an additional 692k underemployed. Notably, this figure excludes full-time students, who, although statistically considered employed, cannot be classified as unemployed as per survey criteria.
Coincidentally, Canada’s largest bank has highlighted the remarkable increase in the country’s student population. This trend suggests that securing employment while pursuing education is not only challenging but also poses difficulties post-graduation.
Overall, these trends underscore a swiftly deteriorating job market. Typically, an unemployment rate increase exceeding 0.5 points is indicative of an impending recession. Currently, Canada’s rate stands at 0.9 points, nearly double the threshold. While the country is already experiencing a per-capita recession, overall economic growth is obscured by the added demand stemming from excessive population growth.
