Canada’s summer job market for students is facing its toughest conditions in over a decade, prompting the federal government to expand its support program as economists warn of deeper issues in the overall labour market. Roughly one in five students aged 15 to 24 returning to school this fall were unemployed in May, a level not seen outside of the pandemic since May 2009.
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Key Takeaways:
- Student unemployment reached approximately 20% in May, its highest rate outside pandemic years since 2009.
- The federal government is adding 6,000 subsidized jobs to the Canada Summer Jobs program, bringing the total to 76,000.
- Experts link the weak student market to broader national labour market trends, including rising overall unemployment and low job vacancy rates.
- Factors like slower job switching and recent population growth may also be contributing to the challenging environment for young job seekers.
The Challenging Picture for Young Job Seekers
According to Statistics Canada’s May jobs report, the unemployment rate for students returning to school climbed significantly. This marks an upward trend each May since 2022, when the rate was just over 10%. The current situation highlights a notable shift from recent years when a tighter labour market offered more opportunities for young people.
This elevated youth unemployment figure suggests increasing difficulty for students trying to gain valuable work experience and earn money for their education.
Government Responds with Program Expansion
In response to the challenging data, the federal government announced an expansion of the Canada Summer Jobs program. This initiative provides wage subsidies to businesses and organizations hiring young people for seasonal positions.
Ottawa plans to add 6,000 subsidized jobs to the program, increasing the total target to 76,000 positions this summer. This expansion is funded by C$25 million in reallocated internal funding from Employment and Social Development Canada, the department administering the program. Jobs Minister Patty Hajdu stated the increased target aims “to address the urgent needs youth are experiencing in the job market.”
Broader Economic Weakness Affecting Youth
While targeted programs help, economists argue that the difficulties faced by students are symptoms of broader trends within the Canadian labour market. Brendon Bernard, senior economist at Indeed, notes that the weakness is “wrapped up in broader economic trends” and targeted youth policies address only one aspect of the problem.
Canada’s overall unemployment rate has also been rising, hitting seven per cent in May. This general softening indicates that finding work is becoming more difficult across all age groups, but certain factors might disproportionately affect younger workers. Bernard points to recent job losses in sectors like manufacturing, potentially linked to trade dynamics, which can limit entry-level opportunities that young people might typically pursue. This could push more youth into competing for fewer jobs in other fields.
Low Demand from Employers
Further evidence of a softer job market comes from the national vacancy rate, which stood at three per cent in March. A low vacancy rate suggests that employers are either hiring less or finding it easier to fill open positions, indicating reduced demand for labour compared to previous periods.
The demand for the Canada Summer Jobs program itself also shows a decline this year. ESDC data indicates that during the application period, the department received requests for funding for 225,766 jobs from 44,821 applications. This is fewer applications (by about 2,000) and fewer requested jobs (by almost 9,000) compared to each of the previous two years, suggesting employers are seeking fewer subsidies for youth hires.
Graph showing Statistics Canada data on the national labour market and unemployment rate
Bernard notes that youth unemployment is currently higher than in 2019, the last time the national vacancy rate was similarly low. This implies that the labour market slack is accumulating more significantly among younger workers compared to older demographics.
Why Are Younger Workers Hit Harder?
Several factors might explain why the youth labour market is facing particular pressure. Recent substantial population growth in Canada has brought in many new workers, including younger individuals, increasing competition for available jobs.
Additionally, Bernard highlights a slowdown in “job-switching” among older workers. The rate of job changes in May was 0.46 per cent, significantly lower than in 2019. In a robust market, higher job mobility allows experienced workers to move up, creating openings in entry-level roles for young people. Slower mobility creates a “traffic jam” that blocks entry points for youth.
Outlook and Implications
While the Canada Summer Jobs program expansion is a positive step, economists suggest that its impact will be limited because the core challenges facing youth employment are tied to these broader labour market dynamics. Addressing high student unemployment effectively likely requires improvements across the entire economy, not just targeted youth programs.
As Minister Hajdu acknowledged, government programs “can’t do it alone,” emphasizing the crucial role employers, community leaders, and organizations play in creating opportunities for young people. The current high student unemployment rate serves as a potential early indicator of underlying softness in the broader Canadian labour market, warranting close monitoring of economic trends and their impact on different worker groups.
