Canada chased rapid population growth to fill its soaring job vacancies. Now it’s running out of jobs, and still has near-record population growth. National Bank of Canada (NBF) believes this is a concerning setup for new immigrants who are arriving to the tightest job market in 7 years. Not only is this driving unemployment for newcomers, it’s also driving the rate for young adults who compete for similar roles.
Canadian unemployment is rising but it’s mostly contained to certain demographics. The unemployment rate rose 1 point over the past to hit 6.3% in June, the highest non-pandemic rate since 2017. The tightening job market means job vacancies are disappearing just as fast as they appeared. That’s a problem for the massive inflow of immigrants expecting to address a labor shortage.
“Businesses’ appetite for workers is not keeping pace with population growth, which continues to push up the unemployment rate,” explains Matthieu Arseneau, deputy chief economist at NBF.
We previously discussed unemployment rising much more sharply for immigrants. Newcomers within the past 5 years have an unemployment rate of 11.7%, more than double the rate of other Canadians. It’s also worsening the rate for young adults (12.7%), who compete for similar entry-level roles.
“The weak labor market is particularly hard on those trying to enter it, including immigrants,” he explains. “For new immigrants, the increase in the unemployment rate since the trough in 2022 (+5.8 percentage points) is already equivalent to the increase recorded during the global financial crisis of 2008-2009.”
Most Canadians wouldn’t compare the current job market to the global financial crisis. However, that’s exactly what the shift feels like to recent immigrants and young adults. It’s also going to get a lot worse due to the current setup.
NBF is concerned the picture is about to get a lot worse in the near-term. The job vacancy rate for industries where newcomers typically find employment is falling sharply. About 6.6% of these roles were unfilled during the 2022 peak, but have since fallen to 3.2% as of April. It’s the fewest jobs since 2017 for this demographic.
Source: NBF.
“According to Statistics Canada’s population clock, demographic growth remained outsized in Q2. Such strength, if it were to continue, makes us concerned about the economic conditions that await newcomers in the coming months,” warns Arseneau.
Canada has recently announced it will throttle immigration with higher barriers to entry. However, economists have expressed skepticism of whether there’s any reality to the plan. Concerns have also been shared regarding potentially offsetting cuts made in other areas, ultimately undermining the throttle.
