Is the Canadian labour market in danger in the short term of running out of workers?
Statistics Canada’s March Labour Force Survey recently revealed that the unemployment rate for immigrants arriving in Canada post-2017 hit a record low in March. And, the country’s overall jobless rate fell to a record low in March 2022 with more workers joining a labour market hungry for workers.
The jobless rate in March was 5.3 percent. That’s down from February’s 5.5 percent as the economy last month added 72,500 jobs.
Experts say the jobless rate may continue to fall
Currently, the demand for skilled workers in Canada is high.
That’s the lowest jobless rate since 1976 when comparable data became available, according to Statistics Canada. It’s also lower than the previous record low of 5.4 percent set in May of 2019.
In May 2020, just months into the Covid-19 pandemic the unemployment rate rose to a record 13.4 percent.
Some economists are now predicting that the jobless rate may continue to fall.
Canada is in danger of running out of workers
Nikita Perevalov, Scotiabank’s Director of Economic Forecasting, wrote that the rise in the number of jobs added in March “underscores that Canada is in danger of running out of people in the labour force.”
Canada is planning to welcome 1.3 million newcomers over three years while clearing an estimated backlog of 1.8 already approved newcomers. Additionally, Canada will be landing more Afghan refugees and thousands of Ukrainians fleeing that country which has been devastated by a Russian invasion.
Andrew Grantham, an economist with the Canadian Imperial Bank of Commerce, told The Toronto Star that the jobless rate hasn’t necessarily bottomed out and may yet fall further as oil-producing provinces recover.
According to Shelby Thevenot of CIC News, the jobless rate for immigrants who arrived in Canada during the past five years was 8.3 percent. That’s the lowest since comparable data became available in 2006. Canadian-born workers had a jobless rate of 4.5 percent.
Immigration fuels Canada’s population growth.
Statistics Canada’s 2021 census recently showed that Canada had the fastest growing population in the G7 due to immigration.
Between the 2016 and 2021 censuses, four out of five of the 1.8 million people added to the population were temporary residents or immigrants with permanent status. The rest of the population growth was the result of a natural increase (the difference between births and deaths).
“To keep the job creation machine going is a strong plus,” said Derek Holt, vice president of capital markets economics at Scotiabank.
Boomers are exiting the labour market
As Kareem El-Assal of CIC News pointed out last week, “Canada has about 20 million workers, of whom about 9 million are baby boomers. All 9 million of these baby boomers will reach Canada’s retirement age of 65 within the next decade. More of them are retiring which is leaving a larger gap in the labour market.
“Historically, Canada has been able to fully replace retirees with young Canadian graduates completing their education and entering the workforce but this is no longer the case,” wrote El-Assal. “Canada’s low birth rate means it must rely on other sources of talent to replace its retiring workers.”
Job creation in Ontario is off to a good start
Scotiabank’s Senior Economist Marc Desormeaux observed last week that Ontario’s Provincial job creation has also “gotten off to a good start so far in 2022.”
Employment increased by 35,000 in Ontario in March, mainly thanks to the construction and natural resources industries.
Employment in the Toronto census metropolitan area has grown by 243,000 (7.3 percent) year-over-year, with widespread gains in the wholesale and retail trade, finance, insurance, real estate, rental and leasing, as well as accommodation and food services.
Wages are also expected to rise
“We are in an overheated economy that is nearing full employment,” said RSM Canada economist Tu Nguyen told Jordan Press of Canadian Press. RSM is a global provider of audit, tax and consulting services focused on the middle market. Nguyen also said wages may go higher.
Travis O’Rourke, president of Hays Canada, wrote “this job growth rate is surpassing population growth and as such the Employees market persists and will likely do so for the rest of 2022. The biggest group to benefit? Professional, Scientific, and Technical Services workers have enjoyed wage growth of 7.5% over the past year.
O’Rourke went on to add that “with the current geopolitical situation I’m expecting Canada to dip into the low four percent range this summer. Our Oil, Gas, Mining, and Forestry sectors are booming with jobs. If you want work – there is really no excuse.”
Driving the unemployment rate down last month were gains in a variety of sectors. Key to the gains were 24,500 women over age 55 finding work and 35,300 core-aged men between 25 and 54 taking jobs, primarily part-time.
The tightening of the labour market meant average hourly wages were up to 3.4 percent year-over-year in March compared with a year-over-year gain of 3.1 percent in February. The rate lagged the annual pace of inflation in February, which RSM Canada economist Tu Nguyen said is on track to reach its highest point since the early 1980s.
Workers over 55 are a potential labour pool
With over 900,000 job vacancies as of January – the most recent figures available from Statistics Canada – the jobs report shows that another potential pool of workers is those aged 55 and older and job gains for that group totalled 39,300 in March.
Statistics Canada said the jobless rate in March would have been 7.2 percent if it had included those who wanted a job but did not look for one.
Added jobs are outpacing population growth
Gains in employment since September of 2021 have surpassed the population growth. Since Canada’s employment recovered from the pandemic nearly eight months ago, employment has jumped 2.4 percent compared to the population aged 15 and older (which has grown at 0.8 percent).
This slow rate of population growth combined with high job vacancies and fast employment growth is a key argument for easing and speeding the entry of newcomer workers.
Unemployment forecast to remain low
Trading Economics, in its most recent projections, expects the jobless rate in Canada to be 6.20 percent by the end of this quarter. In the long-term, the Canada Unemployment Rate is forecast to trend around 5.60 percent in 2023 and 5.50 percent in 2024, according to its econometric models.
Here are Canada’s March employment (numbers from the previous month in brackets) as compiled by Canadian Press:
- Unemployment rate: 5.3 percent (5.5)
- Employment rate: 61.9 percent (61.8)
- Participation rate: 65.4 percent (65.4)
- Number unemployed: 1,100,200 (1,135,500)
- Number working: 19,585,200 (19,512,700)
- Youth (15-24 years) unemployment rate: 9.8 percent (10.9)
- Men (25 plus) unemployment rate: 4.4 percent (4.7)
- Women (25 plus) unemployment rate: 4.8 percent (4.5)
March jobless rates last month by province (numbers from the previous month in brackets):
- Newfoundland and Labrador 12.9 percent (12.3)
- Prince Edward Island 8.1 percent (9.0)
- Nova Scotia 6.5 percent (6.6)
- New Brunswick 7.7 percent (7.9)
- Quebec 4.1 percent (4.5)
- Ontario 5.3 percent (5.5)
- Manitoba 5.3 percent (4.8)
- Saskatchewan 5.0 percent (4.7)
- Alberta 6.5 percent (6.8)
- British Columbia 5.1 percent (4.9)
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As compiled by Canadian Press, Statistics Canada also released seasonally adjusted, three-month moving average unemployment rates for major cities:
- St. John’s, N.L. 7.4 percent (7.3)
- Halifax 5.4 percent (5.7)
- Moncton, N.B. 5.7 percent (6.1)
- Saint John, N.B. 7.4 percent (7.3)
- Saguenay, Que. 4.5 percent (4.4)
- Quebec City 2.7 percent (2.8)
- Sherbrooke, Que. 2.6 percent (2.8)
- Trois-Rivieres, Que. 3.9 percent (5.0)
- Montreal 5.1 percent (5.2)
- Gatineau, Que. 3.8 percent (4.6)
- Ottawa 5.3 percent (5.0)
- Kingston, Ont. 5.9 percent (5.7)
- Peterborough, Ont. 3.8 percent (5.9)
- Oshawa, Ont. 5.4 percent (6.4)
- Toronto 7.2 percent (7.4)
- Hamilton, Ont. 5.3 percent (5.2)
- St. Catharines-Niagara, Ont. 6.2 percent (6.3)
- Kitchener-Cambridge-Waterloo, Ont. 5.4 percent (5.2)
- Brantford, Ont. 5.1 percent (5.5)
- Guelph, Ont. 4.8 percent (4.3)
- London, Ont. 5.3 percent (5.8)
- Windsor, Ont. 8.3 percent (8.3)
- Barrie, Ont. 7.6 percent (7.7)
- Greater Sudbury, Ont. 4.0 percent (4.3)
- Thunder Bay, Ont. 4.9 percent (5.9)
- Winnipeg 5.1 percent (4.9)
- Regina 5.2 percent (5.4)
- Saskatoon 4.6 percent (4.8)
- Calgary 7.7 percent (8.0)
- Edmonton 7.1 percent (6.9)
- Kelowna, B.C. 6.7 percent (7.1)
- Abbotsford-Mission, B.C. 3.9 percent (4.2)
- Vancouver 5.4 percent (5.4)
- Victoria 4.1 percent (4.2)