Young people have been hit hard by unemployment this summer, according to July's labour force report. With the school year set to begin, many young people will be stressed trying to make difficult financial decisions for the months ahead.
It’s a quick reversal of fortune—only two years ago, young people had their pick of jobs in the hot labour market in 2022, recouping huge employment losses during the pandemic.
Fast forward to summer 2024, youth unemployment among those aged 15 to 24 years is now 14.2 per cent—up 0.7 percentage points from June and the highest rate since September 2012 outside the pandemic years of 2020 and 2021.
The youth employment rate has been worsening for a year, dropping by four percentage points since last summer to 54 per cent (seasonally adjusted). Among full-time students, the decline was even larger—almost seven percentage points. This represents a loss of 112,000 jobs among students in just a year.
The largest declines in youth employment have been recorded in Quebec, New Brunswick, Ontario and B.C. (down 5.7, 5.2, 4.7 and 3.7 percentage points, respectively). And the groups experiencing the largest losses are those who already confront the largest barriers to employment.
For instance, after a significant employment rally in 2021, the employment rate among Indigenous youth promptly fell by 11.5 percentage points between July 2022 and July 2024.
Racialized youth have lost ground too. In July 2024, there was a 12 percentage point gap in employment rates between racialized and non-racialized youth; more than one in five West Asian, Black and Chinese young people are unemployed this summer.
The unemployment rate among recent immigrants—almost 90 per cent of whom are racialized—has increased by more than 75 per cent since March and now stands at 22.8 per cent.
In the eye of the storm
It’s always been hard for young people to break into the labour market. They are typically less experienced and don’t have the contacts and networks that older workers do. But the economic challenges confronting youth this year are markedly different.
Canada’s economic slowdown, tied to higher borrowing costs and reduced consumer spending, is driving up youth unemployment. The Bank of Canada’s aggressive campaign of interest rate hikes is working as intended. Job vacancies are down sharply across a range of industries, not only in sectors like food and accommodation that have yet to fully recover from the pandemic but also in professional services, finance, manufacturing and construction.
At the same time, population growth has been surging. There was actually a modest increase in the number of jobs between July 2022 and July 2024 (up 2.4 per cent), but the overall population aged 15 to 24 years grew at a much faster clip over this same period (by 11.5 per cent).
In other words, the labour market is simply not growing fast enough to absorb new entrants—both Canadian-born and newcomers alike.
But there is something more happening. While new arrivals to Canada have been fuelling population growth, it’s actually been domestic and international students and new graduates who have been driving aggregate unemployment rate increases.
“Fully half of the total 0.8 [percentage point] increase in the [overall] unemployment rate has come from those that were previously not in the labour market because they were in school. That is a substantially larger share than the roughly one-third coming from layoffs,” according to a recent RBC Economics report. Young people, in other words, are not finding work after graduating school.
At this moment, workers over age 25 are holding their own. With the pandemic upheaval fresh in their minds, most companies—with notable exceptions in the tech sector—are not pursuing mass lay-offs as the economy weakens. But this “soft landing” celebrated in the business press hides the fact that these same employers are scaling back new hires and offering more part-time work.
A very large group of young workers is bearing the brunt of the economic slowdown caused by high interest rates in the context of rapid population growth, competing for a limited number of openings not only among themselves but with older, more experienced workers too.
Economic scars that last a lifetime
Young workers have experienced profound disruption in their lives as a result of the pandemic with the loss of connection to family and friends, the shuttering of schools, workplaces and vital services, and the proliferation of fear, anxiety and social discord.
Current economic struggles are yet another barrier in their path—more so in the context of sky-high rents, tuition and food costs. The rate of inflation may have eased but the lines at food banks haven’t. Food banks and community pantries are now permanent fixtures on campuses across the country, serving students who have no money left after covering rent and tuition.
The situation of international students is particularly acute. These students come to Canada on the hook for a massive tuition bill (typically more than four times higher than the equivalent Canadian student) only to find the cost of living in much higher than they expected.
As a consequence, many are forced to live in appalling conditions. Provincial and federal policy failures expose students to unsafe housing and food insecurity, exorbitant education fees, harassment and exploitation in the workplace, and significant mental health impacts, including the risk of suicide.
The depth of this generational crisis is staggering. Compared to previous generations, young adults are facing a future of lower earnings and more employment precarity.
They are also burdened with higher levels of debt. In 2020, the average student loan debt in Canada was $16,700 for college graduates and $30,600 for those with bachelor’s degrees. These figures are most certainly higher today.
There is no getting ahead. Young people take any job on offer to juggle their financial obligations—and not the job aligned with their training or aspirations for the future. Graduates who start out on this footing—or experience long periods of unemployment—run the risk of falling further and further behind over time.
Women and racialized persons are especially vulnerable since they tend to face labour market obstacles even in the best of times.
“For people who have a bad start, the likelihood of remaining underemployed after five years is more than 60%.” They also face the likelihood of much lower earnings over their lifetimes and all of the economic struggle and hardship that follows.
Patchwork of programs aren’t meeting the need
The federal government mobilized a quick response to the pandemic, temporarily expanding youth employment programs, offering financial assistance via the Canada Emergency Student Benefit for those unable to work due to COVID-19 restrictions, widening eligibility for grants and loans under the Canada Student Financial Assistance Program, and removing the cap on hours worked by international students in essential services.
More recently, in recognition of the high cost of living, the government boosted the Canada Student Grant from $3,000 to $4,200 (on a one-time basis), permanently eliminated interest on Canada Student Loans and Canada Apprentice Loans, and renewed the Student Work Placement Program ($208M over 4 years) and Youth Employment and Skills Strategy ($370M over 4 years) which support thousands of young people each year.
Young people’s experience in summer 2024 clearly demonstrates that governments, post-secondary institutions, and employers need to be doing much more—not only to make education more affordable, but to tackle the surge in youth unemployment and the growing generational divide between good jobs and bad jobs.
Permanent increases to grant amounts, cancelling debt for students, and addressing the systemic issues driving tuition increases for all students should top the federal government’s list. Saddling students with mountains of debt is counterproductive in the extreme given concerns about population aging, labour market participation and income inequality.
Governments also need to scale up programs that help young people navigate economic barriers and education/employment transitions over the long term. The existing patchwork of public and for-profit services serves young people poorly, especially those who are no longer in school and/or those who face large barriers in accessing employment.
The career guidance support that post-secondary institutions offer typically ends when a person leaves college or university—the time it would be the most useful. This includes access to vital supports like mental health services. And because many young workers now work a succession of precarious jobs, they are not eligible for the training programs offered through the Employment Insurance (EI) program because of restrictive eligibility criteria.
The government youth training and job-creation programs that are available do not begin to meet the need. When the current federal government came to power, it doubled the number of spots in the Canada Summer Jobs program to 70,000—but the federal government needs to create many more now, year-round. This should include part-time positions too, given that young people by necessity regularly blend paid work and education.
Likewise, the Youth Employment and Skills Strategy programs receive far more applications than are available to community-based organizations working with the most disadvantaged communities. Tailored programs offering wraparound supports have been proven to help young people successfully navigate the shift into the labour market.
Improving the situation of international students—including access to employment supports—must also be a priority. Like temporary foreign workers, students are being blamed for a situation not of their making.
We should have an informed discussion about immigration levels, community capacity and the labour market. But students coming to Canada can expect protection from exploitation, abuse and economic destitution. The current system, lacking any kind of meaningful oversight, effectively exposes students to considerable risks, while channeling them into low-waged, precarious employment, throwing up barriers to future application for permanent status.
How is this different from the expansion of the temporary worker program at the behest of low-wage employers—recently described by a UN envoy as “a breeding ground for contemporary forms of slavery.”
The federal government has recently raised the financial threshold that international students must meet in order to secure a study permit (from $10,000 to $20,635 on top of tuition) and re-imposed a cap on the number of hours students are allowed to work off campus during school term starting this fall. The government has also imposed a cap on the number of study permits that will be issued over the next two years.
These steps were announced to ensure that students arriving are “financially prepared for life in Canada” but the federal government’s restrictions on work permits—without the extension of rights to social services, supports and labour protections—will undoubtedly result in greater financial stress and hardship in the context of persistently high youth unemployment.
We must do better
Many of us had the misfortune of coming into the labour market during a recession. We might think that we survived so today’s young people will too. But will they bounce back from successive losses? Can they aspire to a better future?
In our economic system, there are winners and losers. At this moment, the economic elites are throwing young people under the bus, collateral damage in efforts to rein in inflation and reassert neoliberal economic orthodoxy that delivers extraordinary wealth to the rich.
The systemic underfunding of post-secondary institutions has further compounded this difficult situation as schools have turned to international students to fill funding shortfalls—opening the door to precarity and abuse.
Make no mistake. As the baby boom generation retires, Canada will need to rely on the next generation of workers—those who were born here and the many we welcome from abroad. This is precisely the time we need to be investing in young people and their futures.
