July’s labour market report from Statistics Canada paints a picture of stability, but bubbling just below the surface are significant shifts that could signal deeper issues in the job market. The overall employment figures remained largely unchanged, with just a minor dip of 2,800 jobs, and the employment rate held steady at 6.4%. However, there are some significant movements within key sectors and demographics that warrant closer examination.
July’s data reveals a complex labour market where gains in full-time employment were offset by losses in part-time positions. However, the majority of full-time positions were attributed to public sector growth, while the private sector experienced a further reduction of jobs. For businesses, this can signal a need to reassess recruitment strategies and the growing talent pool. For strategic employers, this could be the time to build your employer brand and attract talent. The patterns seen in July are a reminder that while overall numbers may not shift dramatically, the underlying trends could have long-term implications for the Canadian economy and workforce.
While an unemployment rate of 6.4% is static from June, it’s still a number that hasn’t been this high (outside of pandemic years) since the early 2010s — a time marked by recovery from the global financial crisis. The similarities to that period are striking — cautious spending, inflation, and global uncertainty are all back on the table. This isn’t just a statistical blip — it’s a sign of deeper economic caution.
Reports from TD Economics suggest that while the overall rate stayed steady, sector-specific fluctuations and demographic shifts indicate a labour market that continues to cool. The private sector shed 42,000 jobs in July, countered by a 41,000 gain in the public sector. Highlighting a growing reliance on public employment, which signals underlying issues in the private market’s ability to create and sustain growth.
Recent immigrants are particularly feeling the pinch, with unemployment among those who’ve been in Canada for less than five years jumping to 12.6%. Even more worrying, immigrant youth faced a staggering 8.6 percentage point increase to 22.8%, underscoring the challenges of integrating into the workforce. For businesses, this is a call to action to create more inclusive hiring practices that tap into this growing segment of the population, providing opportunities for skill development and integration.
One of the more surprising elements of the July report is the continued decline in labour force participation, which fell to 65% — the lowest level since 1998, excluding the pandemic years. This drop is particularly notable among young men and core-aged women. Canada’s youth are stepping back from the job market. This could lead to a future talent gap that businesses need to address now by offering more accessible entry points into the workforce.
The overall labour force participation rate in Canada has been on a gradual decline since the early 2000s, primarily due to the retirement of the baby boomers. By 2041, this rate is expected to stabilize at around 64.6%, slightly lower than today’s rate. However, the study emphasizes that while immigration can bolster the size of the labour force, it has a limited impact on reversing the overall aging trend.
Another factor that could be influencing the reduction of younger people participating in the labour force could be overall job quality. A recent report from Statistics Canada looking at job satisfaction found that while most Canadians are generally satisfied with their jobs, those in entry-level positions and those with low wages and job insecurity found significantly lower satisfaction levels — considerations that could be contributing to the decision of many younger Canadians to step back from the workforce.
For employers, these findings underscore the importance of not just creating jobs, but creating quality jobs. To address the declining participation rate, businesses can focus on improving job quality by offering competitive wages, enhancing working conditions, and providing opportunities for career advancement. By doing so, employers can attract and retain talent, reducing the likelihood of future talent gaps.
This month’s report put a spotlight on the fact that mothers are more likely than fathers to make career decisions that prioritize childcare, such as turning down job offers, transitioning to less demanding roles, or reducing their working hours. While this trend is far from new, it continues to have significant implications for gender equity in the workplace and overall labour force participation.
Earlier this year Statistics Canada shared a detailed labour profile of working parents with young children, underscoring the challenges faced by mothers. The report indicates that, while the number of two-earner households has increased over the past three decades, the burden of childcare still falls disproportionately on women. During the pandemic, this burden became even more evident, as many mothers left the workforce or reduced their hours to manage increased childcare responsibilities. Although employment patterns have largely returned to pre-pandemic levels, the long-term impacts of these decisions on women’s career trajectories cannot be overlooked.
These findings highlight the need for more supportive workplace policies in businesses. Providing comprehensive parental leave, flexible work arrangements, and childcare support are essential steps in retaining skilled workers who might otherwise scale back their careers. Moreover, addressing these disparities can help businesses create a more inclusive and equitable workplace.
As Canada’s labour market continues to evolve, businesses must be proactive in adapting to the changes brought about by the retirement of the baby boomers, the influx of immigrants, and the overall shifting demographics of the workforce while managing the potential economic slowdown facing Canada.
“It’s crucial for employers to understand the nuances within the Canadian labour market,” says Craig Brown, CEO of Agilus. “Businesses must attract top talent and ensure that their workforce is positioned for productivity and growth. By embracing flexibility, inclusivity, and targeted recruitment strategies, companies can not only weather these changes but thrive in them. At Agilus, we are helping our clients turn these challenges into better outcomes.”
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