As Canada’s labor market approaches 2025, a troubling trend is emerging: systemic weakness characterized by rising unemployment and declining employer demand. In Indeed’s 2025 Canada Jobs & Hiring Trends Report, it is surmised that unemployment could climb to 7.5%—a level not seen since previous economic downturns. Job postings on the platform have dropped 9% year-over-year, and hiring appetite has cooled across nearly all sectors, leaving job seekers with fewer opportunities and less mobility.
In November 2024, Canada’s unemployment rate reached 6.8%, an increase of 1 percentage point compared to the previous year. This steady rise has fueled concerns about the long-term health of the labor market.
Brendon Bernard, Senior Economist at the Indeed Hiring Lab, explains, “The historical relationship between job vacancies and unemployment (known as the ‘Beveridge Curve’) suggests that joblessness is currently more sensitive to changes in labour demand than when the labour market was tighter in 2023.”
The drop in job vacancies is particularly alarming because it suggests that even modest economic challenges could have outsized impacts on employment. If job postings continue to decline, unemployment could reach 7.5% by 2025, according to Indeed’s projections.
The weakness in the labor market is hitting younger workers especially hard. In November 2024, 25% of Canadians aged 15-24 had never worked, a sharp increase from pre-pandemic norms. This points to significant barriers for young people attempting to enter the workforce for the first time.
Adding to the problem is a dramatic decline in job-switching rates, which have fallen to 0.43%—far below the pre-pandemic average of 0.7%. This lack of mobility within the labor market limits career advancement and wage growth opportunities for workers across all age groups.
The labor market’s struggles are not evenly distributed. Large metropolitan areas like Toronto, Montreal, and Vancouver have been hit hardest, with job postings down 15% from pre-pandemic levels. Conversely, rural areas and smaller cities have fared better, with postings up 26% compared to early 2020.
Sectoral differences are also stark. Healthcare remains a bright spot, with job postings far above pre-pandemic levels due to the sector’s unique hiring cycles. However, fields like tech, sales, and customer service have seen significant declines, exacerbating the challenges for job seekers in these industries.
Foreign interest in Canadian jobs has also waned significantly, with the share of clicks on job postings from abroad dropping from 14% in mid-2023 to 7% by late 2024. This decline coincides with reduced immigration and the planned departure of non-permanent residents, including temporary foreign workers and international students.
These outflows could disrupt industries heavily reliant on immigrant labor, particularly in lower-wage sectors like retail, personal care, and sanitation. Bernard warns that the impending departure of temporary residents introduces significant uncertainty.
“The impact of these departures are abound with uncertainty, as there is limited up-to-date labour market data tracking non-permanent residents,” he said.
While wages continued to rise robustly in 2024, with hourly earnings growing at a 4-5% year-over-year pace, the trend may not last. Productivity—a key driver of sustainable wage growth—has declined, raising concerns about whether pay increases can be sustained.
There are already signs of a slowdown. Bernard notes, “Year-over-year growth in the Indeed Wage Tracker averaged 3.0% over the three months through October, its slowest pace since late 2021.”
As the Canadian labor market grapples with systemic challenges, the role of generative artificial intelligence is emerging as a wildcard. While its adoption has grown, the technology’s impact remains limited to specific sectors, primarily tech-related fields.
By late 2024, only 0.25% of job postings in Canada explicitly mentioned GenAI-related terms, up from 0.09% a year earlier. Most mentions were concentrated in fields like software development and mathematics, where GenAI tools are being integrated into workflows. Bernard notes, “Mentions of GenAI are primarily found in tech-related job postings. In late 2024, GenAI was mentioned in 2.4% of job postings in fields including software development and mathematics, a sizable presence given how new the technology is.”
Despite its potential for widespread application, the technology’s adoption across the broader economy has been slow. Outside of tech-related roles, the share of job postings referencing GenAI is negligible, highlighting the challenges of integrating cutting-edge technologies into industries traditionally slower to adapt.
Bernard emphasizes that while some relief may come as the effects of earlier Bank of Canada rate hikes wane, the broader economic environment will remain challenging.
“A few factors on the horizon could, in fact, change the situation: The drag from earlier Bank of Canada rate hikes will likely start waning, while slower population growth will mean fewer people entering an already struggling labour market,” Bernard noted.
The Canadian labor market’s outlook for 2025 is fraught with uncertainty. Key risks include potential disruptions to Canada-U.S. trade relations, reduced immigration flows, and the continued impact of rising outflows of temporary residents. While slower population growth might ease competition for jobs, it could also dampen overall economic activity.
Information for this briefing was found via the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
