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Recent Immigrants and Students Struggle Amidst Rising Unemployment in Canada

Canada’s Unemployment Rate Climbs to 6.6% in August

Canada’s unemployment rate has continued to climb, reaching 6.6% in August, as the job market slowdown disproportionately affects workers and job seekers. The latest Statistics Canada labour force survey revealed that while the economy added 22,000 jobs last month, this was insufficient to keep up with population growth. The jobless rate increased from 6.4% in July, signaling a weakening job market influenced by high interest rates.

Immigrants Shut Out of Wage Growth

Recent immigrants are among the hardest hit groups, having not experienced wage growth over the past year despite other workers receiving notable raises. Average hourly wages for all workers were up five percent from a year ago, reaching $35.16 in August. However, those who arrived in Canada within the last five years actually saw their average hourly wages decrease by 1.3% over the same period. More established immigrants saw a contrasting fortune with their wages increasing by 6.3%, while Canadian-born workers enjoyed a six percent raise.

Students Face Tough Summer Job Market

The summer of 2023 proved especially challenging for students returning to school in the fall, with their unemployment rate soaring to its highest level since summer 2012 (excluding the pandemic-ridden summer of 2020). Between May and August, student unemployment averaged 16.7%, up from last year’s 12.9%.

Racial disparities further exacerbated these challenges, with Black, Chinese, and South Asian students facing even higher unemployment rates. Black students experienced the steepest rise with an unemployment rate of 29.5%, up an alarming 10.1% from summer 2022.

Economic Outlook and Job Market Challenges

Governor Tiff Macklem has emphasized that the Bank of Canada aims to stimulate economic growth, acknowledging an increase in job market slack.

Janzen noted, “From the Bank of Canada’s perspective, higher unemployment combined with continuous declines in per-capita GDP indicates that inflation will continue to drop, making a strong case for further interest rate cuts from currently high levels.”

The competition for work has intensified, resulting in the number of unemployed individuals rising to 1.5 million in August, a 22.9% increase compared to the same month last year.

Friday’s report indicates that only 16.7% of those unemployed in July found work by August, a lower rate than August 2023.

In August, employment increased in educational services, healthcare and social assistance, and finance, insurance, real estate, rental and leasing sectors. In contrast, it declined in other services categories such as professional, scientific and technical services, utilities, and natural resources.

Mikal Skuterud, an economics professor at the University of Waterloo, observes that recent immigrants have been most affected by the labor market slowdown as they often compete for the same low-wage jobs.

Tracking real average hourly wage growth for low-skill workers, Skuterud noted that wages adjusted for inflation have not risen since 2019.

“If you’re living in immigrant communities like Brampton in Ontario and are competing with newcomers for the same rental housing or jobs because you’re a recent immigrant yourself, you will feel the impact more acutely,” Skuterud explained. “This situation causes anxiety within these communities and undermines support for immigration.”

On August 26, Prime Minister Justin Trudeau announced that pre-pandemic rules for the temporary foreign worker program would be reinstated to limit the number of low-wage migrant workers entering the country.

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