Employment rises as Canada’s labor force shrink slightly

The domestic labor market is still contracting despite an increase in employment and a minor drop in unemployment in Canada.

In September, the country's unemployment rate decreased by 0.2% to 5.2%. Statistics While the September Labour Force Survey in Canada showed encouraging employment gains, worries about an aging population and rising retiree departure rates lingered in the background.

September witnessed increases in employment in British Columbia, Manitoba, Nova Scotia, New Brunswick, Yukon, and Nunavut, while there was a modest fall in employment in Ontario, Prince Edward Island, and the Northwest Territories. 

Employment climbed for women in Canada's core-aged population (25–54) and held flat for men in the same age group. These continue to be the most encouraging indicators for overall economic success and the robust hiring environment Canada is presently experiencing.

Losses in manufacturing, information, culture, entertainment, transportation and warehousing, and public administration more than offset gains in employment for educational, health, and social support services.

A steady return to pre-pandemic business levels has been assisted by increases in the service sector businesses, which are a reflection of higher post-pandemic expenditure in these areas.

Additionally, Canadians seeking work were becoming fewer long-term unemployed, with a steep decrease of 9.7% (18,000) in long-term employment (the number of people who have been continuous without a job for more than a year). This is another positive indication of a healthy hiring environment.

The national labor market will continue to be most concerned about the need to handle a persistently high number of job openings, as witnessed since July. Despite the fact that these continue to be positive indicators of economic performance and highlight potential in Canada, there are certain longer-term patterns that are less encouraging.

Shrinkage of the labor force

The number of persons who are employed or jobless as a whole decreased by -0.4% in September, and the participation rate also decreased by -0.1%. These decreases are in accordance with yearly and monthly patterns, which emphasize the necessity of ongoing labor recruitment in Canada. The national labor force participation rate has decreased by 2.4% since 2002.

In light of the high unemployment rate and aging population—the latter of which is a serious internal issue that Canada must constantly address—these policies are still very necessary. However, the reduction becomes much more significant in light of a subsequent trend:

In September, nearly a million adults aged 55 to 64 said that their primary activity was retirement. As a result of an aging population, more and more workers are choosing to retire, which reduces Canada's labor force.

In the face of job openings and a contracting labor market, Canada will need to take measures to address these issues as more of the country's working population reaches retirement age (since 2019, the number of Canadians 65 and older has increased by 11.6%, compared to only 3.5% growth in the population of people of working age).

Canada will have to take increasing measures to make sure that it does not experience a severe labor shortage and can still attain its economic and fiscal goals.

The significance of foreign employees

Immigration will be crucial for Canada's ability to maintain economic development and health in the face of a labor market with many open positions, a declining labor force, and an aging population.

It is obvious that Canada cannot refill the labor pool through natural growth as more people continue to reach or approach retirement age and a low fertility rate. Instead, the government will strive to alleviate market labor and skills shortages through its immigration programs (already seeing increases in Gen-Z and millennial workforce).

Immigration, Refugees and Citizenship Canada (IRCC) wants to welcome a record 430,000 new immigrants to meet shortages (such as those in the healthcare and social support sectors).

By November 1st, the Canadian government will also release its immigration levels plan 2023–2025, which serves as the overarching framework for its newcomer policy.

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