The kids are not alright, according to a new report from one of Canada’s Big Six banks. Statistics Canada (Stat Can) data shows the youth unemployment rate saw a sharp uptick in July, and has climbed to the highest level since 2010 (excluding pandemic). BMO notes that rising unemployment is typical in a recession, but joblessness this concentrated in young adults is not. The bank warns this isn’t due to a lack of demand for workers, but an excess supply of labour from the massive study permit boom.
Canadian Youth Unemployment Rate Is Soaring Faster Than General Joblessness
Canada’s youth unemployment rate is flying high, delivering a blow to the general economy. The seasonally adjusted youth unemployment rate climbed to 14.6% in July, a 0.4 percentage point increase from the previous month. BMO notes this is the highest rate since 2010, excluding the unusual distortion in the first year of the pandemic. This is very high, though nowhere near the record.
“Before 2020, the highest youth jobless rate was set in 1982 at just above 20%. But that sky-high rate was accompanied by the highest overall jobless rate of the post-war era (13.1%),” explains Douglas Porter, chief economist at BMO.
Rising unemployment is typical of entering a recessionary environment, but this is very different from 1982. Canada’s rising jobless rate is almost exclusively concentrated among young adults.
Canadian Labour Markets Unable To Absorb Youth Population From Immigration Boom
The 36-month percentage change of the youth population (annualized) vs the ratio of youth unemployment to workers 25 years and older.
Source: Statistics Canada; BMO Capital Markets.
BMO compares the unemployment rate as a ratio to highlight just how concentrated the stress has become. “One way to drill down to the specific pressure on youth versus the overall population is to look at the ratio of the youth rate (14.6%) vs the rate for those 25 and over (5.7%), which is now around 2.5:1,” explains Porter.
In plain English, Canada’s young adults—aged 15 to 24 and actively seeking and available for work—are 150% more likely to be unemployed than workers aged 25+. Amplified youth unemployment was fueled by the study permit-driven immigration boom that occurred post-2022.
Canadian Youth Unemployment: A Policy Decision, Not Economic—But It Can Turn Into An Economic Issue
The bank’s above chart shows a clear correlation between the demographic’s population boom and its amplified unemployment rate. Youth unemployment surges follow the rare and rapid growth of the demographic, the latter occurring during Canada’s immigration booms.
“…unsurprisingly, when the youth population swells, it tends to drive up the youth jobless rate relative to others,” he explains.
He further adds, “The past few years have seen extreme growth in the 15–24 category, largely due to the large influx of international students.”
Government documents show policymakers sought to grow aggregate demand by rapidly scaling study permit issuance. As the data shows, it’s easier to raise the number of permits than it is to absorb a flood of new labour. A very real problem, regardless of how many times a “labour shortage” is claimed. It’s not an issue of too much demand for workers, but an excess supply of workers that aren’t being absorbed.
Porter highlights this by rhetorically asking, “In one single 12-month period (to July 2024), the youth population surged by 7.2% y/y—is it any wonder the youth jobless rate then spiked?”
Beyond BMO’s analysis, using immigration as a demand stimulus proved counterproductive, concentrating spending on necessities and diverting capital from other sectors. The result is essentials—especially shelter and food—see amplified price growth while discretionary spending takes a hit.
Since one person’s spending is another person’s income, the problem is likely to spread to other areas. Recent changes to immigration are preventing the problem from getting bigger, but corrections tend to take years—not months.
BD is the only outlet that consistently mentions this and I think it’s worth emphasizing this—immigration to drive aggregate demand.
– inflation (and home prices) peaked in 2022;
– low rate stimulus was over, and they knew this was coming so they scaled up study permits
– this works the same way. Low rates are designed to stimulate demand faster than supply to create inflation—it’s called stimulus for a reason.
– they thought adding more people would create that inflation because conceptually it’s the same. Add more people, get more demand. Add more credit, get more demand.
Now here’s the most important part. Everyone is arguing—the immigration is needed; they learned it was a mistake and reduced immigration, etc.. Not the issue.
A government that’s addicted to borrowing needs to inflate the debt away. If prices fall, you have assets backing debt that’s no longer valid. This is a part of why Canada isn’t enforcing “blanket appraisals.” Securitizing assets where the value is not accurate would be fraud, but Canada’s regulatory capacity is non-existent and the country’s elites have a single interest.
This means when everyone says Canada has strict banking regulation, it wasn’t true. There was no scrutiny and no counter-party to scrutinize it. Canada appoints former political people to its organizations to be country head, like the IMF risk officer being the former head of the CMHC. Acknowledging the issues would be her explaining she intentionally overlooked risk. Not going to happen, someone else has to do it—and they won’t.
Serious question though. Why continue to move to Canada if there’s no jobs and they’re going to be on unemployment? I was born here and I’m looking at other countries because the outlook is so bleak.
The ads overseas claim plenty of jobs, affordable student accomodations, in-demand job skills, etc. The gov is effectively running a disinformation campaign to attract low skill students.
Canada used to be known for having some of the highest quality students in the world. Now it’s known for mastering the fine art of strip mall degrees.
That’s why I’m not against study permits but very much against these diploma mill frauds. Canada should be a reward for the best and brightest, not sold as an easy job.
They knew this would happen and didn’t care or they are so stupid they shouldn’t be in power.
That outcome is playing out rn! Look out below!
The Canadian government has an obligation to investigate inflated assets, just as they did with the fraud in chief south of the border.
So what? The kids can live at home with their parents and continue their studies or do volunteer work to get experience to help them compete in the job market. I had to do that after university in the mid 80s – many did at the time when the economy was not that hot.
Alright Boomer, lets get you back to the geriatrics wing.
So in reality this so called international students don’t have the means to support their stay in Canada and rely on finding work to support themselves and while doing so displacing the native young for job opportunities also putting a strain on food banks, health services, housing and expecting to obtain residency and work permit while using fake scholarships and fake bank statements. The government officials are not stupids but for some reason are whiling to play the game in detriment of the Canadian youth, to make matters worse those fake students more often come from totally different cultures opposite and often conflicting the Latin Roman Western European values the fact is that in the past the people coming to Canada the vast majority came from places in Europe holding similar western values poor but sophisticated peoples displace by war who were easily assimilated.
If any region in South Asia or anywhere in the world were to receive an influx of millions of Canadians at once those peoples will find it difficult to absorb and assimilate those millions of Canadians causing a disruption in their cultural values and traditions .