The federal government is moving to shore up a historically weak summer job market for students even as one economist argues tough employment prospects for young people suggest broader softness in the job market.
Statistics Canada shone a light on the difficult employment prospects for students heading back to school this fall in its May jobs report last Friday (June 5).
Roughly one in five returning students aged 15 to 24 was unemployed in May, the agency said. The last time the jobless rate for students was this high outside the pandemic was in May 2009.
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Canada Summer Jobs program is expanding
Also on Friday, the federal government announced an expansion of the Canada Summer Jobs program, which offers wage subsidies to businesses hiring young people for seasonal work.
Ottawa says it plans to subsidize an additional 6,000 jobs on top of the 70,000 already planned for employers participating in the annual program.
Employment and Social Development Canada, which runs the Canada Summer Jobs program, will pay for the extra positions with $25 million in reallocated internal funding.
Jobs Minister Patty Hajdu said in a media statement that the higher target is meant “to address the urgent needs youth are experiencing in the job market.”
Who can apply for the Canada Summer Jobs program?
According to Employment and Social Development Canada, to be eligible, youth must:
- be between 15 and 30 years of age at the beginning of the employment period
- be a Canadian citizen, permanent resident, or person to whom refugee protection has been conferred under the Immigration and Refugee Protection Act for the duration of the employment and
- have a valid social insurance number (SIN) at the start of employment and be legally entitled to work in Canada in accordance with relevant provincial or territorial legislation and regulations
Note that international students are not eligible for this program. —MoneySense editors
Economic trends contributing to weak summer labour market
StatCan said the jobless rate for returning students has trended up annually each May since 2022, when just over 10% of returning students were unemployed in a relatively tight labour market.
Brendon Bernard, senior economist at the online jobs board Indeed, said the summer labour market is “pretty weak right now.”
“But the weakness is wrapped up in broader economic trends,” he said. “Targeted youth policies are only going to be dealing with one of the symptoms of the problem, where there are other aspects of the labour market that … we need to get in better shape for the situation to really improve.”
Canada’s overall unemployment is increasing
Canada’s broader unemployment rate also has been rising in recent years, ticking up to 7% in May.
A major disruption in the labour market tied to Canada’s trade war with the United States could be denying young people early work experience, Bernard said.
He pointed to recent job losses in sectors like manufacturing as a particular problem for border towns that rely heavily on trade between Canada and the United States.
Younger Canadians who had hoped to break into the manufacturing sector in those regions are now seeing opportunities dry up, Bernard said, and they’re likely being pushed to other opportunities outside their field, crowding the job market for all youth this summer.
The national vacancy rate, the share of jobs left unfilled compared to all available positions in Canada, stands at 3%, according to the latest available data from March.
Such a low vacancy rate suggests reduced hiring demand among businesses, or indicates that they’re having little to no trouble filling jobs.
Employer demand for youth labour has fallen
Employer demand for the Summer Jobs Program is lower this year than in previous years, data provided by ESDC shows.
The department received 44,821 requests from businesses for funding to support 225,766 jobs during the application period late last year. That’s roughly 2,000 fewer applications and almost 9,000 fewer jobs than in each of the previous two years.
Bernard said youth unemployment is higher today than in 2019, the last time Canada’s vacancy rate was roughly this low.
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That suggests there’s more slack building up in the younger end of the labour pool, he said.
“Something has hit the youth labour market differently than the labour market for older workers,” Bernard said.
One explanation could be recent population growth trends that saw a surge in mostly younger workers entering Canada over the past few years, he said.
But Bernard also said a lack of mobility among older Canadian workers is creating a “traffic jam” in the labour market.
“Another potential factor that has impacted youth employment recently is just how slow job-switching has been,” he said.
The rate of job changes in May was 0.46%, Bernard said, a third lower than it was in 2019.
In a strong job market, Bernard said, you would normally see workers changing jobs and moving up the career ladder, leaving entry-level positions to younger workers who need the experience.
He said that government efforts to support the youth workforce are likely to fall short because the plight of younger job-seekers is tied to broader conditions in the labour market.
Hajdu acknowledged in her statement that governments “can’t do it alone.”
“Programs like this open the door, but it’s employers, community leaders and organizations who help young people walk through it,” she said.
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