The Canadian labour market is not as healthy as it looks

On the surface, January’s headline jobs figures paint a healthy picture of the Canadian labour market, but a closer look suggests that things are not so rosy. Recent job gains have been mostly public-sector and part-time positions amid growing evidence of rapidly cooling hiring by businesses. Labour demand has not been strong enough to absorb the international migration-led population boom, and there appears to be more underlying labour market slack than the higher unemployment rate suggests.

What you will learn:

• Job gains during the past two months have been dominated by the public sector, while private-sector employment grew slightly and self-employment declined. All of the job gains were part-time, as full-time employment declined and involuntary part-time work ticked higher. These developments raise some questions about the general health of Canada’s market-based economy.
• A surge in international migration has resulted in the labour supply growing at a much faster rate than employment, pushing the unemployment rate up by 0.7ppts over the past year. However, the full impact of the working-age population surge has not yet been reflected in the labour supply.
• When these young people eventually begin to look for a job and enter the labour force − depending on whether they obtain working rights or not − they will boost the participation rate and increase the labour supply.