Perspective: March 2024 - Labour Force Survey, Canada
April 5, 2024
Understanding unemployment might seem simple, but it's actually quite tricky. While it's easy to tell who has a job and who doesn't, figuring out who's actively looking for work and who's not can be tough. People move in and out of the job market for lots of reasons. For example, young folks might be hunting for their first job, while experienced folks might be returning to work after a break.
Because people move in and out of the labour force so often and for such a variety of reasons, statistics on unemployment can be difficult to interpret. Sometimes, someone who says they're unemployed might not be trying hard to find a job. Or they might be waiting to go back to work after being temporarily laid off. Others might be working "under the table" while still claiming they're unemployed. In these cases, it might make more sense to think of them as not being in the job market at all, or in some cases, employed.
On the flip side, some people who say they're not in the job market might actually want to work. They might have tried to find a job but gave up after not having any luck ("discouraged" job seekers). Sometimes, people might have part-time jobs when they really want full-time work, which means they’re being underutilized.
All of these factors are important to consider when evaluating the labour market and making sense of statistics to gain a comprehensive understanding of the economic landscape.
What’s happening in Canada?
Today, Statistics Canada released the results of the March 2024 Labour Force Survey. In March, Canada lost 2,200 jobs, which might not sound like much. But, when comparing how many jobs were created to how much the population grew over the past 12 months, things get interesting. Population growth has been much faster than job growth - from March 2023 to March 2024, Canada gained approximately 1.04 million new people, but only 324,300 new jobs, that’s about 3.2 times as much. Since more people are joining the population than there are jobs, unemployment will be going up.
In March 2024, Canada's unemployment rate went up by 0.3 percentage points to 6.1%. Looking closer at the numbers, the data shows that 60,000 more people were unemployed in March than the month before, and compared to last year, there are 247,000 more unemployed people—about 1.3 million total as of last month. From March 2023 to March 2024, the total number of people in the labour force (those employed and unemployed) grew modestly by 2.7% to about 21.7 million.
When looking at the number of people who are still unemployed after a certain number of weeks, the data shows that it’s tougher for unemployed folks to find work this year compared to last year. Figure 1 shows the percentage of the labour force comprised of individuals who remain unemployed for varying durations, comparing data from March 2023 to March 2024.
So, what?
Well, having more unemployed people isn't good for the economy. This snapshot comparison (Figure 1) reveals that, there are more individuals facing greater difficulty finding employment this year compared to last year (as of March 2024).
Furthermore, the data shows there's been an increase in the percentage of people in the labour force who have been in long-term unemployment territory (27 weeks or more) compared to last year. Long-term unemployment can have effects on individuals such as financial stress, skill loss, and decreased employability. When a larger share of the labour force remains unemployed for extended periods, an individual’s earnings decrease, leading to reduced consumer spending and household consumption. If the magnitude of the impact on the labour force is large enough, this could result in slower economic growth down line if it’s persistent.
Despite some evidence that suggests the Canadian labour market has improved balance between labour supply and demand, the trending rise in unemployment should catch the eye of policymakers. A proactive focus could be set on strengthening social safety nets, such as unemployment benefits, healthcare coverage, and housing assistance, as examples. This considering the economic backdrop of affordability challenges associated with elevated inflation and the cost of living.
In addition, policymakers can take a closer look at regional, industrial, or social disparities that highlight the need for targeted workforce development strategies aimed at revitalizing economically distressed areas and job creation. In doing so, an essential aspect of this is not only to generate jobs but also to prioritize the type of employment that enables individuals to thrive, develop, and maintain their positions.
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