Canada’s job market is back but it looks very different than it did pre-pandemic. Statistics Canada (Stat Can) data shows two diverging employment trends evolving. Canada’s booming economy is producing a low unemployment rate and soaring job vacancies. Despite the tight labor market, long-term unemployment hit the highest level in more than two decades.
Canada’s Unemployment Rate Is Near Pre-Pandemic Levels
Canada’s economy is stronger than many might assume, with a low unemployment rate. The rate fell to 5.9% in October, just above the pre-pandemic 5.7% in February 2020. For context, the rate was around 6.5% when they began to raise interest rates in 2017. The economy was considered booming at a higher rate just a few years ago, but weak at a lower rate today.
Long-Term Unemployment Hits The Highest Level Since The 1990s
Canada’s employment market is robust, yet long-term unemployment is the worst in decades. The number of people unemployed for over a year reached 137,200 people in 2021, up 163% from the year before. It was the most people since 1997, and represents about 1 in 10 people.
Canadian Long-Term Unemployment
The number of Canadians in the labor force looking for employment for over 1 year.
Source: Stat Can; Better Dwelling.
Canada’s Long-Term Unemployment Is Rising With Job Vacancies
Long-term unemployment seems even more perplexing with soaring job vacancies. There were over 964,000 vacant jobs in October, one of the highest rates ever. This implies it has less to do with a lack of jobs, but an incompatible skill set.
Long-term unemployment creates a number of unique issues. The longer people are out of the job market, the less likely they are to achieve their peak earnings. That’s IF they can gain employment with their current skill set. A population underperforming doesn’t make or spend as much as they could. Essentially, the economy is leaving productivity on the table.
The Bank of Canada is currently trying to keep rates low to reduce the unemployment rate. However, it appears to be doing a better job at driving prices higher than creating jobs. More targeted programs for retraining might be better suited for the task.