Canada’s labor market struggles as job growth lags behind population growth, with employment rising just 34,000 monthly and the unemployment rate slightly up to 6.5% amid uneven wage growth.
Canada’s labor market continued to exhibit signs of a gradual decline in the third quarter of 2024, with employment growth failing to keep pace with rising population numbers. According to a report from Indeed and data from Ottawa’s Labour Force Survey (LFS), employment increased by approximately 34,000 jobs per month in August and September. However, this growth was insufficient to match the strong population increase, a trend that has persisted throughout most of 2024, as highlighted by Brendon Bernard, senior economist at the Indeed Hiring Lab.
Certain sectors displayed robust growth, notably education, healthcare, and arts and recreation, which have seen a relatively swift increase in employment opportunities. In contrast, traditional industries such as manufacturing, retail, and food and accommodation services lagged behind, indicating a shifting landscape in job availability. Bernard observed, “Education, arts, and entertainment, and healthcare have grown relatively quickly of late,” but he also noted a downturn in several key service sectors over the past six months, highlighting the uneven nature of employment recovery.
Canada’s Unemployment Rate and Job Creation Challenges
The unemployment rate mirrored the slower employment growth, rising from 6.4% in June to 6.5% in September. This gradual increase reflects a broader trend observed over the past two years, where the deterioration of the labor market has been relatively slow compared to historical downturns. Bernard pointed out that “the unemployment rate isn’t especially high compared to previous recessions,” emphasizing that the current decline does not follow the typical pattern of sharp joblessness seen during economic crises such as in 1981 or 2008.
Despite relatively low layoff rates—down 10% compared to pre-pandemic averages—job creation in the third quarter remained significantly below historical norms, at 22% below average levels from the same period in 2017-2019. This slow hiring environment has resulted in a dichotomy within the labor market, where job security appears solid for many, yet individuals who do lose their jobs face increasing difficulties in securing new employment.
What About Canada’s Wage Growth Dynamics?
In terms of hiring activity, job postings on Indeed saw a dip despite a minor uptick in October, marking the first notable increase in 2024. As of October 25, Canadian job postings were down 17% year-over-year and stood 2% below pre-pandemic levels. Notably, healthcare occupations have remained a stronghold, with postings rising by as much as 60%, while sectors such as marketing, sales, and software development faced declines of about 30%.
Wage growth presents a complex picture. The LFS reported hourly wage increases of 4% year-over-year in September, with the Survey of Employment Payrolls and Hours (SEPH) showing a slightly higher growth of 4.7% in July. Bernard attributed this elevated wage growth to persistent inflation pressures, even as inflation rates have dipped below 2%. However, he cautioned that advertised wage growth on Canadian job postings might foreshadow a slowdown, with the Indeed Wage Tracker indicating a modest increase of 3.3% in Q3, down from 3.5% in Q2.
Looking ahead, Bernard concluded that “current labor market trends” are likely to continue into 2025, pointing out a growing divide between those enjoying job security and solid wage growth and those struggling to find employment—particularly youth and recent immigrants. This ongoing disparity underscores the challenges faced by certain demographic groups in navigating the evolving job landscape.
