Canada’s unemployment rate rises as November sees equal employment gains and losses

Statistics Canada recently released its Labour Force Survey (LFS) for November 2023. The survey reveals a stalemate between employment gains and losses in Canada, as the national unemployment rate continues a five-month upward trajectory.

Simultaneously, November’s LFS helped showcase barriers that newcomers particularly face when trying to enter Canada’s labour market—especially around their ability to fit their skills to Canada’s labour demand once in the country.

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What sectors saw the biggest changes in employment?

November saw strong employment gains in construction (+16,000 jobs) and manufacturing (+28,000 jobs), however these were accompanied by losses in wholesale and retail trade (-27,000 jobs) and finance, insurance, real estate, rental and leasing (-18,000 jobs), causing the national unemployment rate to increase by 0.1%.

While employment gains and losses were largely equal this month, overall employment across all sectors in Canada has increased by an additional 499,000 jobs in 2023 so far. However, this addition of workers is still not being felt in certain key sectors, which have seen continued labour shortages and declines throughout the year. Specifically, these were: construction, wholesale and retail trade, finance, insurance, real estate, rental, and leasing, and business, building and other support services. All four of these sectors (as of the last LFS) have fewer workers in November, than they did at the start of the year.

In particular, losses in wholesale and retail trade were notable, as the industry shed an additional 22,000 jobs in the month of October—resulting in the lowest industry-wide employment rates since December 2022. Similarly, finance, insurance, real estate, rental, and leasing faced continual hits to employment, becoming the industry with the largest loss in employment between April and November 2023.

Population increases: the hidden ingredient

The rise in the national unemployment rate (going from a steady 5% through the first four months of the year, to 5.8% currently) is certainly a reflection of these persistent job vacancies throughout critical sectors—however there is another factor to consider when assessing this upturn: population increases.

2022 that saw an additional 1.05 million people added to Canada’s populace. That year, Immigration Refugees and Citizenship Canada (IRCC) set an immigration level target of 431,000 new permanent residents—compared to this year’s target of 485,000. According to Statistics Canada, this year has already seen an additional 800,000 people added to Canada’s population. Due to a rapidly rising population, Canada is likely to see some natural gains in unemployment, due to the fact that a larger population will entail a more people added to the country, thus impacting the calculation.

Will this population increase be enough to support future labour demand? All indications are no, though immigration is Canada's most powerful tool to meet labour demand and support

This begs the question however: aren’t most of Canada’s newcomers arriving to help with labour demand and economic growth in the country? Economic immigrants represent the largest category of any new permanent residents that Canada plans to accept, and newcomers constitute close to 100% of Canada’s labour growth. If these things remain true, then why is a rising population not bringing the national unemployment rate down, as opposed to the increases in unemployment we have seen in recent months?

Nearly 6/10 newcomers faced challenges integrating to Canada’s labour market

Within the last two years, Statistics Canada reports that 58.2% of newcomers who had arrived in Canada as late as 2018 had faced challenges securing employment related to their previous employment or expertise.

In particular these individuals had trouble securing employment due to: lacking Canadian work experience (22.7%), not having connections in the Canadian job market (20.3%), and lacking professional or personal references in the country (18.5%).

While this may seem surprising, it is in line with previous Statistics Canada research, which has found that immigrants tend to experience the highest rates of unemployment within the first 5 years of their arrival in Canada. Further research has suggested that obtaining Canadian work experience prior to entering the labour market as a newcomer may be the single best thing that those new to Canada can do for their employment prospects—a key reason why international students with a Canadian education (especially those in co-op enabled work/study programs) tend to perform well in the labour market.

Understanding these barriers and buffer time in newcomer employment will be a crucial area of consideration for the government, as immigration continues to be a key strategy to deal with domestic labour demand. If newcomers face obstacles that routinely keep them from contributing to the economy for the first five years of their arrival, then the positive effects of their arrival will also be delayed.

Creating better and more agile accreditation and bridging measures for foreign trained professionals would prove a key measure in this regard, not only to make sure that newcomers are best placed to contribute to the economy, but also so that Canada maintains its immigrant-friendly ecosystem into the future.

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