May Labour Report: Employment Growth Hits a Wall

Statistics Canada's labor force surveys over the past several months indicate that Canada's multi-year, record-breaking employment growth shows signs of a slow down. This month, the May labour force survey has confirmed that employment growth has officially stalled.

Despite a modest increase of 27,000 jobs, the overall employment rate dipped to 61.3% — marking the seventh decrease in the past eight months — while the unemployment rate ticked up another 0.1 percentage points to 6.2%. Further, the modest increase was almost exclusively tied to part-time positions, shielding the decline in full-time roles across Canada.

This month’s report uncovers key areas where employment dynamics have shifted, including rising unemployment across demographics with a spotlight on Indigenous workers, a decline in the employment rate among students, and another decrease in the number of workers exclusively working from home.

Unemployment Trending Up

The increase of Canada’s unemployment rate to 6.2% in May marks the latest increase in a trend that has seen the unemployment rate rise by 1.1 percentage points since April 2023. The country now has 1.4 million people out of work and searching for employment, an increase of 28,000 from the previous month.

Long-term unemployment, defined as those who have been jobless for 27 weeks or more, remains a critical issue. In May, long-term unemployment accounted for 18.2% of all employed individuals, up from 13.2% in August 2023. This persistent challenge highlights the difficulties faced by many in re-entering the workforce after extended periods of joblessness.

The proportion of unemployed people transitioning to employment is another concerning metric. In May, just under one-quarter of those unemployed in April found jobs, a rate significantly lower than the pre-pandemic average of 31.5%. This suggests that current economic conditions are making it harder for job seekers to secure employment, potentially due to a mismatch between available jobs and the skillsets of the unemployed.

The stats are less surprising when we zoom out and see that last year Canada’s population has grown by 3.4%, primarily through immigration. While the number of jobs in the country has increased by 2% year-over-year, this leaves a 1.4% disparity that aligns with the recent employment and unemployment numbers shared by Statistics Canada. While unemployment rates are trending up across all major demographic groups over the last year, it’s Canada’s youth and Indigenous populations who have been hit particularly hard.

Youth Hit Hard by Falling Employment Rates

Over the past year, young people aged 15 to 24 have experienced some of the largest increases in unemployment rates. The rate for young women rose by 1.7%, while for young men, it increased by 1.9% — indicating an uncertain youth labour market, which may create an ominous situation in the years to come when our youth enter the job market full-time and have limited work experience.

Typically, as the summer approaches, we see an increase in youth employment — particularly for returning students. However, the employment rate for returning students aged 20 to 24 dropped to 61% in May, down from 63.9% in the same month last year.

The data reveals a gender disparity among returning students. While the employment rate for female students remained relatively stable at 64.2%, their male counterparts saw a sharp decrease of 6.6 percentage points, falling to 57.3%. This gender disparity could be explained by the industries these returning students are seeking work in. While returning students regardless of gender are most likely to be employed in accommodation and food services or retail trade, women are more likely to be employed in health care and social assistance whereas men are more likely to be employed in information, culture and recreation. It’s worth noting that the third most common industry for each group has experienced vastly different job growth rates over the last year. In May, health care and social assistance grew by nearly 30,000 new jobs, whereas information, culture and recreation saw a decline of 10,800 jobs.

As the first indicator of the summer job market, the May employment figures for returning students sets the stage for the coming months. Economic uncertainties and evolving business conditions are clearly leading to fewer available positions for young job seekers. Additionally, employers faced with fluctuating demand may be hesitant to hire temporary staff, further affecting students’ opportunities.

While it might make short-term sense for businesses to avoid hiring students, neglecting to invest in the next generation of workers carries grave long-term consequences. Without early work experiences, students may face greater challenges transitioning into full-time roles, potentially leading to skill gaps and an underprepared workforce for the future. It is crucial for employers to recognize the value of investing in young talent to foster a resilient and adept labour market for years to come.

Employment Down Among Indigenous Canadians

June is National Indigenous History Month, a time to reflect on and celebrate the rich history, heritage, resilience and diversity of Canada’s First Nations people, Inuit and Métis. In the spirit of this month, Statistics Canada put a spotlight on employment trends for Indigenous Peoples, revealing a complex and concerning picture.

Among First Nations people aged 25 to 54 living off-reserve in the provinces the employment rate stood at 68.7% in May, a minor increase from 67.4% a year earlier. While these numbers show a trend of growth and in fact a higher employment rate than the national average for core-aged workers, it’s Indigenous youth and elders who are particularly falling behind.

Employment for First Nations youth aged 15 to 24 fell by 6.6 percentage points to 45.2% over the last year, while Métis youth employment is down 7.1 percentage points to 52.6% over that same period. Meanwhile, employment for older Métis workers aged 55 and older is down 8.6 percentage points to an employment rate of 31.3% over the last year.

Of particular concern is the reduction of Inuit workers in Nunavut who are employed. Considering that Inuit people make up 84% of the total population of Nunavut, their employment rate is only 51.8% — down 5.7 percentage points from a year earlier. This decline highlights the ongoing economic challenges in our northern communities, where job opportunities are often limited or seasonal.

Addressing the challenges faced by Indigenous workers requires a concerted effort from all levels of Government and industry leaders, as well as collaboration with Indigenous leaders and organizations. Investment in education, training, and economic development initiatives tailored to the unique needs of Indigenous communities is essential to growing their economic opportunity. By fostering an inclusive labour market, Canada can ensure that Indigenous Peoples have equal opportunities to participate in and benefit from the country’s economic growth.

Proportion of Workers Exclusively Working from Home Decreases

There has been a gradual decline in exclusive work from home positions since the push for return to office began in mid-2022. In May, 13.2% of employed Canadians were working exclusively from home, down 1.2 percentage points from the same time last year. Hybrid work arrangements, however, have remained steady with little change year-over-year. This stability indicates that while many workers are returning to the office in some capacity, the flexibility of hybrid models continues to appeal to both employers and employees.

The decrease in exclusive remote work can be attributed to several factors. Many organizations have adopted a more flexible approach, balancing the benefits of remote work with the need for in-person collaboration. Additionally, some sectors, particularly those requiring hands-on or customer-facing roles, have seen a stronger return to physical workplaces.

However, the shift back to office environments is not uniform across all industries. Knowledge-based sectors, such as technology and finance, where remote work has proven effective, continue to support higher rates of telecommuting. In contrast, industries like manufacturing, retail, and healthcare see fewer remote work opportunities due to the nature of the work involved.

The implications of these trends are significant for urban planning, transportation, and commercial real estate. Cities that saw reduced congestion and lower demand for office space during the height of the pandemic are now adjusting to a new equilibrium. Employers are rethinking office layouts and investments in digital infrastructure to support flexible work models.

For employees, the ability to work remotely or in a hybrid manner offers a better work-life balance, reduced commuting times, and greater autonomy. However, it also presents challenges such as maintaining productivity, maintaining work-life boundaries, and ensuring equitable access to career development opportunities.

As employers across Canada continue to navigate this new landscape, the evolution of work arrangements remains a critical area of focus. Employers must balance the benefits of flexibility with the needs of their workforce, ensuring that remote and hybrid work models support both business goals and employee well-being.

Looking Ahead

From the stagnation in employment growth to the disparities of unemployment faced by youth and Indigenous Peoples, it’s evident there are pressing issues in our current labour market that require attention and action.

“As employers, it’s imperative that we recognize the urgency in fostering inclusive and equitable workplaces. Not just for the next quarter, but for years to come,” says Agilus CEO, Craig Brown. “We must engage in initiatives that support diversity, invest in youth talent, and address Indigenous employment gaps. This coupled with technology innovations like AI, challenges like mental health and economic uncertainty creates a lot of moving parts for business and human resources leaders. Partnering with recruitment firms like Agilus can offer invaluable support in addressing these complex dynamics.”

At Agilus, we’re committed to delivering better outcomes for your business through our tailored recruitment solutions. With a national team of recruitment experts, we possess the insights and resources to address your unique hiring needs effectively. Let us make a difference for your business by helping you discover top-tier talent today. Contact us to learn more about how Agilus can support your hiring initiatives and drives your business growth.

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