CANADA’S UNEMPLOYMENT RATE APPROACHING ‘WORRYING LEVELS’: SENIOR ECONOMIST
A senior economist at job-search website Indeed says that Canada’s unemployment rate is approaching “worrying levels” as employment growth continues to lag behind the number of new participants in the labour force.
“The story really is that the job numbers aren’t keeping up with that soaring size of the labour force and it’s resulting in a weaker employment situation,” Brendon Bernard told BNN Bloomberg in a Friday interview.
Bernard’s comments came immediately after Statistics Canada released its August labour force survey, which revealed that the Canadian economy added 22,000 jobs last month. Canada’s jobless rate increased to 6.6 per cent in August, up from 6.4 per cent in July, the agency said.
“That 6.6 per cent that we’re now at, it’s trending in the wrong direction. We’ve gone from low to normal and now starting to approach worrying levels,” Bernard said.
He noted that the softening demand for labour in Canada is disproportionately impacting those who are looking for work compared to those who are already employed, as layoffs have been kept at lower levels than usually seen during job market downturns.
“Typically, when the employment situation is deteriorating, the ability to find a job is correlated with job security – it hasn’t been in this cycle,” Bernard explained.
“So, people with steady employment have remained in their jobs fairly well; layoff rates have been pretty low. Hiring, though, has been quite weak, so that’s been the main driver of the weakening trend in unemployment.”
Bernard said that the lack of widespread layoffs is a main reason why the “panic button” hasn’t yet been hit when it comes to the public perception of Canada’s weakening employment levels, which are now at their lowest since 2017 when pandemic-related job losses are stripped out.
Youth unemployment
Bernard said the weakening demand for labour was felt most by young Canadians last month, as the youth unemployment rate rose to 14.5 per cent, according to StatCan; the highest since 2012, excluding the pandemic period.
“Youth unemployment is way up more than other age groups because they’re the group that’s most vulnerable to the slowdown in hiring, while people in their middle ages generally have more stable employment,” Bernard added.
“And part of that story also relates to going back to population growth; we’ve got this really rapid pace of population growth and it’s actually occurring within the 15 to 24-year-old age cohort.”
Bernard said that as the number of young Canadians looking for work increases while employers scale back their hiring efforts at the same time, “it’s a game of musical chairs and people are getting left out.”
Story by: BNN Bloomberg
