Canada’s young workers: the group the economic recovery left behind

By Julian Beltrame, The Canadian Press

OTTAWA – Canada’s falling unemployment rate is hiding an unpleasant truth — tens of thousands are leaving the labour market in frustration, and none more so than young workers.

Last week’s labour force survey for November presented a distorted hall-of-mirrors picture of employment — with the jobless rate falling to a two year low of 7.6 per cent on the strength of little job creation.

For young workers in the 15 to 24-year-old category, the picture was even more distorted — the unemployment rate plummeted from 15 per cent to 13.6 per cent with virtually no new jobs added.

The mathematical disconnect comes about because Statistics Canada does not measure the number of workers against those who want jobs, but against those who are actively looking for work. There have been fewer of those.

Young people are leaving the labour force in droves. According to the agency, the youth participation rate is the lowest in over a decade.

What’s more, while the economy has created over 440,000 jobs since the recession there are 228,000 fewer young people employed.

“A lot of young people are throwing in the towel, saying forget it,” said Brian Bethune, chief Canadian economist with IHS Global Insight.

“There’s an inter-generational imbalance happening. You have a big bulge of baby boomers who have gotten into established positions entitled to three and four weeks vacation and young people can’t find jobs.”

Canadian Auto Workers economist Jim Stanford says there is another “perversity” in the challenge facing youth. As governments toy with the idea of raising the retirement age, young people can’t break into the market at all because older workers are tying up jobs.

Ironically, Canadians 55 and over have done the best since the recession and are the only age group that has seen the participation rate rise in the past year.

Statistics Canada cannot say for certain why more young people have been leaving the workforce, although analyst Lahouaria Yssaad notes that since the numbers are not as stark in the over 20-24 age sub-category, many in the youngest cohort may have gone back to school.

What is obvious, however, is that young people were disproportionately left behind during the recession, and one year removed from the official start of the recovery, they are still having a difficult time re-connecting with the economy.

Nancy Schaefer, president of Youth Employment Services in Toronto, calls it a “crisis” in youth unemployment, and is calling on governments to offer incentives for employers to hire young workers.

YES, which has units across the country, sees the wide range of youth, from those who have never had a job to those who were laid off during the downturn; from those with little education, to graduates. Many struggle, she says, but particularly those with less than a college or university education.

Young workers like 20-year-old Chantelle of Newfoundland, who left her job as a restaurant manager in August and moved to Toronto because she had been told it was a city of opportunity.

It was a decision she wishes she could take back because five months later, she has run out of money and has had to move into a homeless shelter.

“I’ll take anything, but there’s nothing out there,” she says, asking her full name be withheld. “People say they’ll call back, but they never do. I’m not going to stop looking, though, because I want to get out of here.”

Single mother Huda Eldardiry, 23, went through retraining because she was unable to keep working nights as a shoe saleswoman, but has been unable to find work since October. She is not given up, however, so technically she is not yet a frustrated worker.

Unless she gets lucky, though, the data suggest the odds of her finding a job quickly are slim. Schaefer says she’s seen university grads take up to a year to find a job, and in many cases they’ve had to settle for part-time or work outside their area of expertise.

The repercussions for the individual lives in terms of anxiety and living conditions can be severe, but there is also a societal cost to long-term unemployment, she says.

“I hate to say this, but they might find alternative means of employment — working under-the-table or doing illegal activities and that’s not good for anybody.”

Human Resources Minister Diane Finley’s office says the government has programs to help young workers, including for training and tax incentives to employers to hire apprentices. It is unclear whether the next budget will contain any specific measures for youth, although Finance Minister Jim Flaherty has signalled there will be no significant new spending.

What’s happening to youth is an indication that the government’s boasts about a recovering economy are hollow, responded Scott Brison, the Liberal finance critic. He said it is clear some segments of the population are still suffering through a recession.

Analysts consider youth unemployment a the litmus test of labour market strength overall, and by that measure, Canada has still a long way to go before employment stages a comeback.

The trouble with trumpeting that all jobs lost during the recession have been recouped, as the government does, is that it doesn’t take into account that Canada’s population has grown by about almost one million since, and those people need jobs too, says Stanford. As well, many of the added jobs are part-time, or lower-paying service jobs.

Stanford’s analysis of labour trends since the recession shows that if the lower participation among youth and also core workers, those in the 25-54 age category, is taken into account, the jobless rate would be 9.1 per cent, 1.5 percentage points higher than the official rate.

And the number of unemployed would rise to 1.71 million — about 600,000 more than before the recession..

Stanford says there are risks that if the situation persists, cyclical unemployment caused by a recession could become a permanent state of affairs for some workers.

“Sometimes long-term unemployment becomes structural unemployment,” he explained. “Economists call it hysteresis where individuals get used to not working, they lose their contacts, their skills become less sharp and that makes it all the harder to get back to work when conditions improve.”