A rise in the number of temporary residents and new immigrants contributes to the high unemployment in Canada.

July 8, 2024
unemployment in canada

The unemployment in Canada is on the rise, especially among temporary residents and immigrants in the recent past. Although Canada has been experiencing a record wave of immigration to meet labour demands, immigrants are now facing hardships to find jobs.

Increased unemployment among temporary residents

The average unemployment rate of temporary residents, which includes foreign employees, overseas students, and refugees, was 11% in June, as per the Bloomberg data. However, the unemployment rate for all workers was slightly lower at 6 percent on average during the same period, while the health sector’s growth rate stood at 2 percent. Such a difference shows that temporary residents face several more challenges in securing employment than the general population.

Challenges for Recent Immigrants

Employment is also difficult for immigrants to Canada, especially those who arrived in the last five years, because their unemployment rate is as high as 12 percent. undefined On BNN Bloomberg Television, Derek Holt, an economist from Scotiabank, pointed out that temporary residents are now the largest source of the increasing unemployment rate.
As cited by the governor of the Bank of Canada, Tiff Macklem, the flexibility of the Canadian labour market has become unkind to youth and immigrants. These groups, likely to be renters, are worse off financially in the wake of tough employment prospects.

Government Response and Future Perspective

The Trudeau-led government of Canada is weighing the idea of reducing the intake of temporary residents with the aim of averting continued tightening of the country’s labour market. The government wants to decrease the number of temporary residents to 20% within the next three years; this may contribute to maintaining an appropriate supply and demand for labour.

Those who have become unemployed include the growing population of temporary residents and recent immigrants, who now constitute almost one-fifth of the unemployed workforce, as they are about one-tenth of the labour force. This important contribution to the overall unemployment rate has increased by more than half in less than two years.

Using data obtained from Bloomberg, it was computed that the unemployment rate for temporary residents was 5%, their lowest record. undefined However, the decision to relax measures for foreign students and workers during the pandemic might not have paid off, particularly when many of them are now facing challenges of unemployment given the shortage of jobs.

Integration Difficulties and Future Dynamics

This has characterised new immigrants as going through a long, socially constructed cycle of labour market integration in Canada. A recent survey revealed a startling insight: the unemployment rate of the immigrants who have entered Canada recently is about 2.2 times higher than that of the Canadian-born workers. But it takes them a decade or more to get employment, and then they get an employment opportunity just like any other maritimer or any other native-born Canadian.

The labour market is increasingly divided into two distinct groups: employed working Canadians and Canadians in vulnerable employment. As documented by Brendon Bernard, an economist at Indeed, it has been the long-term employees with high career stability that have not been as negatively impacted, it is the temporary or gig workers that have borne the burden. There is more people but employer’s demand is less which lead to large number of candidates for fewer vacancies.

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