Canada’s youth are being hit hardest in a weakening labour market as the country grapples with tariffs, artificial intelligence and shifting industries, economists say.
Canada’s unemployment rate rose to 6.9 per cent in April as the economy lost 17,700 jobs, according to Statistics Canada. Among youth aged 15 to 24, the unemployment rate climbed to 14.3 per cent, which is up half a percentage point from March, and more than double the national average.
“That’s the first thing that really jumps out,” says Brendan Bernard, senior economist at Indeed.
“The demographic, who needs employers to be hiring for them to have success in the labour market– They continue to struggle.”
Bernard says the youth unemployment rate hovering around 14 per cent for months points to deeper structural challenges in the labour market, even before the summer hiring season begins.
While manufacturing, which is one of the sectors most exposed to trade war pressures, saw slight declines, it was not the main driver of weakness in April’s report, he said. Losses were concentrated in information, culture and recreation sectors, including telecom, as well as construction.
Meanwhile, gains were seen in healthcare, business support services, accommodation and food services.
Still, Bernard says there is an overall “weakness in hiring appetite” across industries that traditionally employ younger workers, including retail, accommodation and food services.
And while it’s difficult to assess if entry level jobs are being replaced by artificial intelligence (AI), he says the timing lines up because job postings in fields most likely to be replaced by AI are way lower than they were before the pandemic.
He says the hiring slump actually started in early 2022, months before ChatGPT came out and the AI hype really exploded.
“Now we’re in the kind of a period where it’s been lingering for a while that it’s fair to wonder,” says Bernard.
Economists had expected Canada to add 10,000 jobs in April. Instead, the economy shed nearly 18,000 positions.
“Monthly data reports are always volatile but they seem to have gotten even more volatile in the last year,” says Veronica Clark, economist at Citi.
Clark says the labour market is also being shaped by slowing population growth and reduced immigration levels, resulting in fewer people entering the workforce.
But despite a smaller labour pool, unemployment remains elevated.
“So it is a bit of a concerning sign that even with the slowing in immigration and population and fewer people in the labour force looking for work, there are fewer jobs for them also, and unemployment has not come down,” says Clark.
