How are employment and immigration connected?
There is an inherent correlation between how fast our population grows (including immigrants) and how steady our employment situation is. Balancing the number of skilled workers with the number of jobs available at the right time is somewhat of an art form. Too many people and not enough jobs, and you have an unemployment issue. At times, the Canadian government will increase immigration with the goal of addressing labour shortages in the country. In turn, they are ensuring sufficient skilled workers to meet business and industry goals.
There are many different avenues to immigrate to Canada. Immigration via the Express Entry pathway to becoming a Permanent Resident is just one example. There are many more arriving via temporary pathways, like a temporary work permit, the Temporary Foreign Worker Program (TFWP), study permits, post-grad work permits, and more. Most of these programs are related to covering labour shortages in the country, in various industries and sectors.
What’s going on in Canada now?
Recently, the unemployment rate increased to 6.6% in August 2024, slightly up from 6.4% in July 2024. Comparatively, the economy added 22,000 jobs. This lags far behind the rate of population growth. Consequently, the unemployment rate continues to grow. By August 2024, 1.5 million people in Canada were unemployed, a 22.9% increase in just one year, from August 2023. For context, Canada welcomed 1.2 million new residents in 2023, of which permanent residents made up 471,771, and the remaining 804,901 entrants were temporary residents. This means 2023 was the second consecutive year where temporary immigration was the main driver of population growth, with the highest annual population growth rate since 1957.
In fact, experts are saying that unemployment has displaced mortgage renewal strain as the most pressing issue for Canadians. While mortgage renewal shock is still a concern, the labour market pains are looking like a larger issue than previously anticipated. Recent RBC research estimates that a 1-point rise in the unemployment rate can lower household disposable income by 0.5%. That will have five times the effect of an anticipated mortgage renewal shock.
The same RBC research also forecasts that the unemployment rate in Canada will reach 7% by early 2025. A lot will depend on job vacancies over the next few months, and how the labour market shapes up. RBC’s research assumes job vacancies will hold the current level of decline of 25% from last year. If it gets worse, the forecast will be further impacted adversely, and may even rise about 7%.
A surprising development is that the unemployment rate has now gone above pre-pandemic levels. Job vacancy rates are lower. Overall, there is less homegrown business growth, which means there are fewer jobs to go around, and unemployment is increasing alarmingly. Plus, not everyone who does have a job is able to comfortably make ends meet either. The federal average hourly wage for low-skill workers (bottom 25% of the wage distribution), which was stagnant from 2015 to 2020, has since seen mild increases each year. It now sits at $17.64 per hour which, if calculated at 40 hours a week, is well below the poverty line.
Wage disparities
The average hourly wages in August 2024 were up 5% YoY (year on year), now at $35.16 hourly.
Recent immigrants (landed immigrants and PRs) have instead seen their hourly wage decrease by 1.3% YoY. This statistic does not include international students or migrant workers, only people who have residency here, meaning they were invited to immigrate to the country because their skills were in demand in Canada.
On the other hand, established immigrants saw hourly wages go up 6.3%, with Canadian-born workers seeing similar wage growth of 6%. This rate is above the overall Canadian average wage growth rate.
In sharp contrast, the unemployment rate for student summer jobs reached 16.7%, up from 12.9% last year. It is the highest level since summer 2012, not counting the summer of 2020 during the pandemic. Black, Chinese and South Asian students faced even higher unemployment rates. Black students currently face a high 29.5% unemployment rate, up a staggering 10.1% from summer 2023.
How to adapt to the current market?
Some economists note that the increase in the unemployment rate may be due to job searches taking longer. This could be for a variety of reasons, for example, new market entrants finding it harder to get that foot in the door, interview processes taking longer than they used to, or even layoffs increasing across industries. Quite a few people also work from home nowadays, either in a remote or hybrid setup. This can mean fewer networking opportunities that can help with spontaneous job finding.
No matter the reason, the biggest factor remains. There’s a mismatch between the number of jobs available and the sheer number of people looking for jobs. As a layperson applying for jobs, there is not much one can do on an individual level to address this mismatch. However, here are a few tips for your own job search.
Job search tips
- Be patient while applying, as it’s taking much longer to hear back from companies lately. This is likely due to employment processes taking longer.
- Tailor your resumes for roles you really want. Make your candidacy stand out by showcasing how you’re a good fit with a strong resume.
- If you’re interested in a company, reach out to people on LinkedIn or other professional networking sites to express interest or ask for an informational interview.
- If you’re trying to upskill, reach out to people who are working in the field you want to transition to and ask for an informational interview. You may get valuable advice that will help you get better direction.
- Be open to part-time positions, it might help you get a foot in the door. This can also help you stay afloat financially while looking for the job you really want.
- Consider contract jobs. While they don’t have the job security of a full-time position, these jobs can add value to your resume and experience. They can also help you get your foot in the door, and give you an opportunity to make an impression.
What changes are happening?
The Canadian government has reduced immigration targets for 2025-2027. This development is expected to relieve some pressure on the housing market and job market. Ideally, it will also close the gap between population growth and employment opportunities. Only time will tell whether this reduction will have an effect as soon as the government anticipates.
One of the categories to gain points in the Express Entry draws for Permanent Residency, is Canadian work experience. This category will now be eligible for more points, meaning people who are already in Canada (and employed) will gain more points over applicants from outside the country, as well as applicants in Canada who do not already have jobs. The IRCC (Immigration, Refugees and Citizenship Canada) is also doing targeted, sector-specific Express Entry draws, like healthcare, IT, supply chain, and skilled trades. The hope is that inviting newcomers who have sectoral experience will help fill the labour market gaps in those industries. It also means that people who don’t bring in those skills are less likely to receive invitations to apply for Permanent Residency.
Additionally, the government has implemented more stringent rules for LMIA applications.
- From Sept 2024, there’s no processing of LMIA applications for low-wage positions in areas that have a 6% or higher unemployment rate.
- Previously, companies were allowed to hire up to 20% of their workforce as low-wage foreign workers. This has now been capped at 10%.
- Employment duration is capped at one year now, down from two.
- Quebec has paused low-wage LMIA applications for 6 months in Montreal, exempting essential sectors.
- Starting from May 2024 the LMIA validity period is now just 6 months.
Key Takeaways
The unemployment rate increased to 6.6% in August 2024, and the economy added only 22,000 jobs. Canada had 1.5 million people unemployed in the same month. In 2023, Canada welcomed 1.2 million new residents, of which over 804,000 were temporary residents. This rate of immigration is clearly affecting the unemployment rate. Research forecasts the employment rate may rise to 7% by early 2025 and could get worse if job vacancies continue to decline, like the 25% decline last year.
Looking for employment has become increasingly difficult, compounded by the high immigration rates, the huge number of temporary residents within this group, fewer job vacancies available, and layoffs across industries. The government is making changes to reduce reliance on foreign workers, instead trying to prioritize job opportunities for citizens and permanent residents. However, the existing situation in terms of unemployment and immigration has reached worrying levels. The hope remains that these changes will soon start to have a positive effect on the day-to-day lives of Canadians.
Unemployed and struggling to keep up with debt payments? There are options out there to help. Consolidated Credit Canada Credit Counsellors are available to go over them and discuss which one would be most ideal for your situation. Call for a free consultation.
