‘Economic scarring’: What’s at risk as youth unemployment soars

Canadian youth are facing one of the hardest summer job markets in decades. Here's why it's so hard to land that first job, and what young workers can do to stand out.

A relatively slow cooling in the overall Canadian labour market combined with surging levels of unemployment among Canada’s youth is a trend that experts say could leave the country’s youngest workers with “economic scarring.”

Statistics Canada’s June labour force survey, released last week, shows the unemployment rate for youth aged 15-24 rose nearly a full percentage point to 13.5 per cent in the month, more than double the rate of 6.4 per cent for the overall population. That’s the highest level since September 2014, excluding the temporary jump during the COVID-19 pandemic.

Rough economic conditions are especially affecting students during what should be the busy summer job season. The rate of unemployment among students between semesters at school is at its highest level since 1998, StatCan said, as less than half (46.8 per cent) of this cohort found jobs this summer.

Brendon Bernard, senior economist at job search site Indeed, tells Global News that two forces are conspiring simultaneously in Canada’s labour market, “and they’re not in favour of youth finding work.”

The first obstacle for today’s youth is the general slowing in Canada’s economy, tied to higher borrowing costs and slowing consumer spending, which is suppressing hiring appetite in businesses.

Bernard says that the levels of job postings on Indeed are now slightly below where they were before the COVID-19 pandemic. That’s a “pretty sudden” shift from even 18 months ago when employers were still struggling to find enough labour to meet demand during the pandemic recovery, he notes. As the well of open jobs dries up, a growing number of workers are competing for the few open positions.

A note from BMO senior economist Robert Kavcic earlier this week noted that youth employment has in fact grown by roughly 25,000 positions over the past year, but the size of the labour force in that age range ballooned by 100,000 people, driving up the unemployment rate.

More and more young workers competing for fewer and fewer positions has led to a “gridlock in the job market,” Bernard explains.