Canadian Workers Dropped Out Of Labour Force In September, Forcing Down Unemployment Rate

Report Shows Canada’s Unemployment Rate At 5.8% In December
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In its latest Labour Force Survey, Statistics Canada says workers are dropping out of Canada’s labour force, meaning many are no longer seeking or holding down jobs. 

In September, unemployment fell in Canada to 5.2 per cent, just shy of the record-setting low unemployment rate of 4.9 per cent seen in June and July, after having risen to 5.4 per cent in August.

And there was a bit of an improvement in the number of people holding down jobs in September as well. 

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During that month, the number of people working full and part-time jobs rose by 21,000 workers.

But foreign nationals eyeing economic immigration programs to come to Canada – like the Express Entry system-powered Federal Skilled Worker (FSW), Federal Skilled Trade (FST), and Canadian Experience Class (CEC) programs or the participating Provincial Nominee Programs (PNP) –  will most likely most care that Canada is seeing workers drop out of the labour force altogether. 

“While elevated job vacancies continued until at least July, both the total size of the labour force – or the number of people who are either employed or unemployed – as well as the participation rate have trended downwards since May,” reports Statistics Canada.

“Specifically, the total labour force was down by 79,000, or 0.4 per cent, compared with May, although it was little changed on a monthly basis in September. 

“The labour force participation rate edged down by 0.1 percentage points from August to 64.7 per cent in September, and was 0.6 percentage points lower than in May.”

Labour Shortages Will Persist Beyond The Next Recession, Say Economists

That drop in the labour force and the decline in the participation rate of workers is leading economists to conclude Canada’s labour shortages will persist beyond the next recession.

In Proof Point: Canada’s Labour Shortages Will Outlive A Recession, RBC economists Claire Fen and Nathan Janzen and economics writer Naomi Powell outlined the grim reality for Canadian employers in late July.

“As of June 2022, businesses posted almost 70 per cent more job openings in Canada than pre-pandemic,” they noted. “But these firms were competing for 13 per cent fewer unemployed workers than were available in February 2020.

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“The impact is severe: more than half of Canadian businesses say labour shortages are limiting their ability to increase production – up from 40 per cent before the pandemic and 30 per cent a decade ago.”

Those labour shortages, which present opportunities for immigrants hoping to gain their permanent residence in Canada, are slowing the country’s economic growth.

“Despite a robust recovery from the lockdowns of the COVID-19 pandemic, Canadian economic growth will continue slowing down due to persistent inflation and an historically tight labour market,” says Nguyen.

“But the real long-term challenge will be the labour shortage, with declining worker participation hitting the health care, hospitality and food services industries particularly hard.”

Wages Rising As Employers Jockey For Remaining Workers

Employers are trying to outbid one another in their efforts to get the workers they need.

Year-over-year wage growth remained above five per cent for a fourth consecutive month in September, with the average hourly wages of employees rising 5.2 per cent, or  $1.57 to $31.67, compared with September 2021.

The wave of retiring Baby Boomers is part of the reason Canada is seeing this acute labour shortage.

In September, there were just under one million – roughly 983,000 – people aged 55 to 64 who cited retirement as their main activity, reports Statistics Canada.

With the Covid-19 pandemic restrictions falling away, fewer Canadians worked exclusively from home in September. The number of those who work remotely all the time dropped to 16.3 per cent. But the number of those who had hybrid work arrangements remained the same.

Education, Healthcare And Social Assistance Saw Increases In Job Numbers In September

As teachers returned to their classrooms in September, Canada saw the number of jobs in the educational sector increase. There were also modest increases in the number of people working in healthcare and social assistance.

Those, however, were largely offset by losses in manufacturing, information, culture and recreation, transportation and warehousing and public administration.

Young women and teenaged girls aged 15 to 24 saw the second consecutive monthly drop in jobs in September but young men and teenaged boys and women aged 25 to 54 years of age saw an increase in employment.

“Employment increased in four provinces, led by British Columbia, while there were fewer people working in Ontario and Prince Edward Island,” notes Statistics Canada.

In June, Canada recorded fewer unemployed workers than there were jobs available to be filled in the country, the first time that had happened since data from the Job Vacancy and Wage Survey became available in 2015.

“This labour market tightness was reflected in the outlook of employers, as results from the Canadian Survey on Business Conditions conducted during the third quarter of 2022 indicate that nearly two-fifths, or 38.7 per cent, of businesses in Canada expected that recruiting skilled employees would be an obstacle in the next three months,” says Statistics Canada.

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