Unemployment in Canada increased in June, driven by challenges faced by youth and newcomers
Canada's unemployment rate rose to 6.4 percent in June, up from 6.2 percent in May, continuing an upward trend that began in April 2023, according to Statistics Canada.
Long-term unemployment also remained elevated, with 17.6 percent of currently unemployed workers out of work for 27 weeks or more, indicating job seekers are finding it increasingly difficult to secure employment in a challenging labour market.
Youth unemployment reached 13.5 percent, the highest since September 2014, excluding the pandemic years of 2020-2021. Returning students also struggled to find summer jobs, with an unemployment rate of 15.9 percent.
Ontario saw its unemployment rate increase to 7 percent in June, while Alberta's rate slightly decreased to 7.1 percent. Provinces with the highest unemployment rates include Newfoundland and Labrador, Nunavut, Prince Edward Island, and New Brunswick.
Wage growth continued to accelerate in June, with average hourly wages rising by 5.4 percent year-over-year, up from 5.1 percent growth in May. Overall employment remained unchanged from the previous month.
Employment declined in industries such as transportation, warehousing, culture and recreation, public administration, construction, and professional and technical services. However, employment increased in accommodation, food services, and agriculture, as reported by the Financial Post.
Temporary residents and recent immigrants are also contributing to the rising unemployment rate. The unemployment rate for temporary residents, including foreign workers, international students, and asylum seekers, was 11 percent in June, based on Bloomberg calculations.
For all workers, the unemployment rate was 6.2 percent last month. Recent immigrants, those who arrived in the past five years, faced a 12.6 percent unemployment rate in June.
Derek Holt, an economist at Scotiabank, noted on BNN Bloomberg Television that the largest single contribution to the rise in unemployment comes from the temporary residence category.
Bank of Canada Governor Tiff Macklem acknowledged that the loosening of Canada's labour market has particularly affected young workers and newcomers, who are also more likely to be renters facing higher financial stress.
Prime Minister Justin Trudeau's government plans to reduce the number of non-permanent residents by 20 percent over three years to prevent labour shortages or market tightening, as stated by Macklem.
Bloomberg calculations show that temporary residents and recent immigrants now account for nearly one-fifth of unemployed workers but only one-tenth of the labour force. The unemployment rate for temporary residents hit a record low of 5.7 percent in November 2021.
Holt suggests that as the number of temporary residents decreases, the unemployment rate may edge back down. He stated, “As we take out that category of immigration and slow it down and reverse it, the unemployment rate may edge back a little bit.”
It takes years for newcomers to fully integrate into Canada's labour market, with recent immigrants facing more than twice the unemployment rate of Canadian-born workers. However, after a decade or more, immigrants find jobs at nearly the same rate as Canadian-born workers, according to the data.
Brendon Bernard, an economist at Indeed, noted that the labour market is “bifurcating into two camps.” He explained, “Employer hiring appetite has really cooled, and there’s been a wave of population growth that’s resulted in a lot of job seekers in Canada,” as reported by Bloomberg.
