Canada’s healthy labour market

Many industrialized countries are facing a bunch of challenges of slowing nature for the economy, which often precede periods of more severe negative growth in the future. Surprisingly enough, Canada does great progress in managing echoing effects from the pandemic like no other economy of this vast size. Altered policy during the pandemic made it easier to get over towering challenges more smooth, yet severe, fast-paced changes created disorders in the economic structure that aren’t visible immediately, but emerge over time, hence they slowly become tangible as pandemic policy is easing throughout this year. However, disorders are omnipresent in the world we live. Therefore we shouldn’t be depressed when facing more disorder than we are used to, but motivated in finding ways and instruments to manage them properly. Because in doing so, disorders become challenges, and when the job is done right these challenges can quickly become a springboard for a leap. How this kind of management can be executed effectively is well illustrated by Canada steering their labour market thus attracting tremendous amounts of new immigrants every year to fuel population growth effectively.

Without further ado, I’d like to guide you into the matter of Canada’s labour market to explore and learn, based on applied research of valuable data for a next big move in a changing world.

Status quo

Canadian labour market at record performance

Canada’s labour market has tightened substantially as restrictions from the COVID-19 pandemic ease and economic activity continues to strengthen.

Despite slowing boost from the rebound of economic activities post-pandemic, cumulative employment had continuously increased by record numbers of more than one million (1,056,000; 5,7%) year to year. According employment rate, averaging 60.28% from 1976 to 2022, is aviating in highs ranging from 61.8 to 61.6% in the last six months.

Unemployment reached a historic low of 4.9% (4.3% among core-edged workers) in June this year and held steady onwards. This is quite remarkable when comparing this rate to G7 average of 5.3%. Matter of fact, unemployment rate approaching 4.0% virtually means that employment is aviating at maximum capacity without notable air space upwards. Current job vacancies underline a booming employment, again emphasizing healthy fundamentals of Canada’s strong labour market as the country replenishes worker shortage in almost 40% of businesses with strong immigration of skilled workforce.

Distribution of Canadian workforce among economic sectors concentrates in industry and services (98.5%). In the service-producing sector employment accumulates mainly in healthcare and social assistance; followed by finance, insurance, real estate, rental and leasing; besides professional, scientific and technical services; educational services; as well as wholesale and retail trade. These sectors form an environment for a lot of future-oriented, high-payed jobs with altered core values, including sustainability for the planet, preserving and fostering biodiversity, greater energy efficiency, new clean technologies and more self-realization for the employee.

Such new values increasingly gain importance among employees who also wish to have above average salary for their time spend on work. The combination of both is Canada’s driving force behind its labour market, gravitating tremendous amounts of new immigrants towards the country ever year.

History

Canada’s economy emerges increasingly stronger over again

Employment tightly correlates with the heartbeat of an economy. With high employment rates and a lot of job offerings when the economy grows and high unemployment rates and insufficient job supply during downturn. Since any boat can sail on calm seas, it’s more important to examine performance of the labour market during tougher periods, and further extrapolate in which direction Canada’s labour market is heading in the future.

During the time period worth to consider, Canada’s labour market has evolved through three distinct phases:

End of 1980s to early 1990 | This period frames an economic downturn and weak conditions in the labour market as a result. To mitigate inflation monetary policy was intentionally slowing the economy, pushing unemployment to reach average annual rate of 11.4% by 1993.

1993 to the late 1990s | During the second period, the economy experienced slow recovery from the early 1990s decline. While job supply and employment rate was depressed initially, job creation eventually picked up and unemployment rate recovered to reach 6.8% by 2000.

2000s | From the outset of the 2000s unemployment rate was mitigated down to 6%, because the demand and supply of labour was sufficiently balanced by a strong labor market combined with concurrent high participation rate.?

To date, unemployment rate declined steadily. It’s worth outlining that this trend recovered from the pandemic sufficiently enough to continue growing under echoing post-pandemic effects caused by eased monetary policy as well as further quantitive tightening.

What else to know

Immigrants are the main engine of work force growth?

Roughly one-fifth of working-age population are approaching retirement age, opening a lot of high-payed jobs for new immigrants to occupy. They love coming to Canada more than any other place (expected 300,000 new immigrants in 2022), most of the time starting their next life chapter with a decent job to build their new home on.

In 2021 Canada saw record admission levels reaching 405,800 new immigrants. 60% of immigrants were in the economic class since 2010. During this decade immigrants accounted for 55% of the growth in high- and medium-skilled jobs and 84% of the growth in the total labour force. Being the main driver in labour supply growth recent and long-term immigrant workers were able to offset decline in low-skilled jobs among Canadian-born workers. To illustrate such a scenario in the manufacturing sector for instance, immigrant workers were able to offset worker shortage by 46,000 workers between 2010 and 2021 thus sufficiently rebalance demand.

The employment gap is the smallest on record between new immigrants and Canadian-born workers. It decreased from 13 percentage points in 2010 down to 7 percentage points in 2021. Matter of fact, recent immigrants experience much faster growth in the employment rate than Canadian-born workers. As a result, increasingly more temporary workers are approaching transition of permanent residency. This is a shining example of Canada setting the context for organic integration by intelligent policy that actually works.

Takeaway

Healthy labour market and vivid immigration to further drive Canada’s economy resiliently

Plenty of contemporary opportunities and forward-thinking motivations combined with steady increase on the initial earnings, in spite of average salary hovering above G20 standard, render Canada’s labour market a perfect place to build a sustainable life on. The actual health of Canada’s labour market reflects in highest levels of employment on record as well as lowest unemployment rates in history. It’s important to outline that these trends sustained recent economic challenges and emerged more resilient than ever to contribute a significant portion to the bedrock of the safe heaven Canada.

Still, there remains one challenge on the horizon to master: development of new, affordable rental housing. The journey of new workers, whether Canadian-born or immigrants, often begins with renting in urban and suburban areas where working hubs are growing. With easing pandemic restriction employers are calling workers back to office putting rental housing market under pressure thus pressing affordability to record lows. However, the set is ready for the show as federal government ultimately sets the course for the private sector to meet demand — the only thing left is a suitable boat for this extraordinary journey.