Causes of Unemployment in Canada
The causes of unemployment in Canada are many, and include economic, social, and technological factors. Changes in demand for labor are one of the most prominent reasons leading to increased unemployment rates. There are some sectors that have witnessed a decline in economic activity, which led to a decline in demand for workers in them.
- Economic crises: Canada has previously suffered from the impact of global economic crises, such as the financial crisis in 2008, and the repercussions of the Corona pandemic. These crises greatly affected economic sectors, leading to the loss of many jobs. During the economic recession, demand for goods and services decreased, which contributed to the increase in the unemployment rate.
- Technological changes: Rapid technological developments play a role in creating new jobs, but they may also lead to the destruction of old jobs. For example, with the increasing use of automation, artificial intelligence, and digital transformations, many traditional jobs may be at risk. In Canada, as is the case in most countries, many workers suffer from job losses due to these technological transformations.
- Changes in the labor market: Structural changes in the labor market are one of the reasons for unemployment. As the economy shifts to more advanced and sophisticated sectors, some may find it difficult to adapt to new work requirements. Some industries have also experienced a significant recession due to a decline in demand for their products or services.
- Economic policy: Government policies play a major role in influencing the unemployment rate. Tax increases or economic contraction can negatively impact job opportunities. Stimulus policies that focus on providing support to small and medium-sized enterprises, and providing training and continuing education, can contribute to reducing the unemployment rate.
Unemployment rate stabilizes at 6.5% in September
The unemployment rate remained unchanged at 6.5% in October, after declining by 0.1 percentage points in September. On an annual basis, the unemployment rate rose by 0.8 percentage points in October, as 193,000 people (+15.6%) were looking for work or were temporarily laid off.
The youth unemployment rate decreased by 0.7 percentage points to 12.8% in October, after declining by 1.0 percentage points in September. Prior to these declines, the youth unemployment rate had been on a strong upward trend since January, rising to a recent peak of 14.5% in August.
On an annual basis, the unemployment rate rose 2.4 percentage points to 14.3% among young men in October and was little changed at 11.1% among young women. The unemployment rate for women of prime working age rose 0.2 percentage points to 5.5% in October, after rising 0.3 percentage points the previous month.
The unemployment rate for women of prime working age had been on an upward trend in the 12 months to October, rising 1.0 percentage points during the period. For men of prime working age, the unemployment rate was almost unchanged on the month at 5.7%, but rose 0.6 percentage points year-on-year. Unemployment rate falls year-over-year for First Nations and Metis working-age people, rises for First Nations youth
Among First Nations people living off-reserve in the provinces, the unemployment rate was 11.5% in October, little changed from the previous 12 months (10.8%) (three-month moving averages, not seasonally adjusted). For First Nations people of core age (ages 25 to 54), the unemployment rate was 7.8%, down 1.6 percentage points from the previous 12 months. However, for First Nations youth (ages 15 to 24), the unemployment rate rose 5.6 percentage points to 22.0% over the same period.
Participation rate falls in October, fourth monthly decline since May
The unemployment rate was 6.1% in October, down 1.5 percentage points year-over-year. The unemployment rate among Métis of prime working age fell 2.2 percentage points to 4.7% in the 12 months through October, while it was little changed over the same period among Métis youth (12.7%) and Métis ages 55 and older (3.6%).
The labor force participation rate—the share of the population ages 15 and older who are working or looking for work—declined 0.1 percentage points to 64.8% in October, the fourth monthly decline since May. The October participation rate was the lowest since December 1997 (excluding 2020 and 2021, during the COVID-19 pandemic).
After peaking at 67.7% before the recession of 2008 and 2009, the labor force participation rate has been on a steady downward trend, reflecting the long-term downward pressures on labor supply from an aging population.
In recent years, the participation rate has remained relatively steady, with strong population growth and a strong labor market contributing to The narrowing of labour force participation, particularly among people of prime working age, has offset the long-term effects of population ageing on aggregate labour supply.
More recently, labour market conditions have slowed, and declines in labour force participation have been recorded. Although the participation rate for youth aged 15-24 was little changed at 62.3% in October, it fell by 2.1 percentage points year-on-year, the largest decline among key age groups.
The decline was driven by lower labour force participation among students; year-on-year, the participation rate among students fell (-3.1 percentage points to 44.1%), but was little changed for non-students (87.5%) (not seasonally adjusted). Among youth not in the labour force, the majority (88.7%) were attending school – virtually unchanged from
Previous year. Nearly 3 in 10 Canadians live in a household that has had difficulty meeting its financial needs.
In October, nearly 3 in 10 Canadians (28.8%) aged 15 and older lived in a household that had difficulty or very difficulty, in the previous four weeks, meeting their financial needs for transportation, housing, food, clothing and other essential expenses. This was down from October 2023 (33.1%) and October 2022 (35.5%), but still higher than the figure recorded in October 2020 (20.4%) during the first year of the COVID-19 pandemic.
Continuing the pattern observed in October 2022 and 2023, Quebecers were the least likely to live in a household that had difficulty meeting their financial needs (22.3%) in October 2024. On the other hand, the proportions of people living in households experiencing financial difficulties in Ontario (31.7%) and Alberta (31.3%) were higher than the Canadian average.
People living in rented accommodation were more likely to be in a household that had difficulty or a great deal of difficulty meeting their financial needs (39.2%) than those living in a household owned by a family member (24.3%). The participation rate for men of prime working age fell by 0.3 percentage points to 91.4% in October and was down 0.9 percentage points from its recent high of 92.3% reached in April-May 2024.
The participation rate for men of prime working age in October was similar to its pre-pandemic average from 2017 to 2019 (91.2%
For women of prime working age, the participation rate remained almost unchanged at 84.9% in October, but dropped by 0.6 percentage points from its recent high of 85.5% in April 2024. Despite the recent decline, the participation rate for women of prime working age in October remained above the 2017 to 2019 average of 83.4%.
The participation rate for people aged 55 to 64 was little changed in October and year-on-year for both men (73.8%) and women (61.8%)
