Politicians, policymakers, and the media frequently use the unemployment rate as a proxy for the condition of Canada’s labor market. In order to fully comprehend the situation of the Canadian labor market, it is important to look more closely at a number of statistics.

Understanding how the Labor Market Works

Supply and demand are impacted at the macroeconomic level by both domestic and global market dynamics, as well as elements like immigration, population aging, and educational attainment. Productivity, total income, unemployment, participation rates, and gross domestic product are important metrics for GDP.

When it comes to microeconomics, specific businesses hire, fire, and change the wages and hours of their employees. The link between supply and demand affects how many hours workers put in and how much they are paid in terms of wages, salaries, and benefits.

Canada’s Labor Market

It would seem that the Canadian labor market has more than recovered if one only considered the unemployment rate. Particularly, the unemployment rate in 2022 (5.5%) was 0.3 percentage points lower than the unemployment rate in 2019 (5.8%). The unemployment rate has further decreased in recent months, reaching a record-low of 4.9%.

But how do other statistics depict Canada’s labor market recovery?

The employment rate, or the percentage of Canadians aged 15 and above who are employed, indicates that the country’s labor market has not recovered fully. The national employment rate in 2022 (61.7%) was 0.2 points lower than the employment rate in 2019 (61.9%). The employment rate also decreased over the last few months, down to 61.6%.

The study finds that the country’s population is still aging, which has prevented the labor market as a whole from fully recovering from the pandemic-induced recession.

Despite the uncertain outlook, job seekers remain optimistic

Even in the absence of global economic uncertainty, Canadian employment growth will eventually slow down. Whether or not the job seeker market that developed during the pandemic’s recovery will continue in 2023 is a crucial topic, and much depends on whether or not the economy suffers a recession.

Job seekers are still feeling generally optimistic so far. According to a survey, 49% of Canadians actively looking for employment in August 2022 were at least fairly confident they could find a new job fast. It’s unclear whether this feeling will last.

Preparing for balance

Demand and supply are the two components that will help us achieve a more balanced labor market in the future. For the labor supply to catch up with demand, demand must be reduced. Additionally, as the labor supply increases over time, a slower decline in labor demand is required to reestablish and maintain price stability.

Conclusion

Post COVID-19, the labor market has been in utter disarray. The pandemic increased inequality already experienced by women, young people, and underprivileged labor while also causing a spike in unemployment. There were worries about deflation, significant reductions in consumer spending, and widespread job losses. However, the recovery was rapid and all-encompassing, with the fastest employment recovery ever. The economy has now veered too far off course. The employment market is too competitive; there is too much economic demand; and inflation is on the rise. Although monetary policy has started to have an effect, it will take some time for lower demand and lower inflation to be seen throughout the economy as a result of rising interest rates.

Inflation affects interest rates, which then throw borrowers into expensive debts. Not knowing how to navigate this period could throw individuals and families off balance. Spending wisely and borrowing wisely is important at this point, but not everyone can easily adjust. At EmpireOne Credit, we help people become debt-free as they regain their financial independence and peace of mind. We offer free and friendly consultation. You can reach out to us today to get rid of all your unsecured debt!