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Labour Market News

Why “hidden unemployment” matters for Canada’s economy

By 29 May, 2023August 21st, 2023No Comments

A man looking frustrated while at their computer. This is what many people in hidden unemployment may be experiencing.

29 May, 2023 — Canada has been experiencing a fluctuating labour market for years, with employment rates increasing and decreasing and participation rates decreasing. However, the hidden unemployment rate often goes unnoticed, which, if addressed, could help alleviate job shortages and stimulate economic growth. In this article, we delve into hidden unemployment, its impact on the economy, and how it can potentially address job shortages.

What is hidden unemployment?

Hidden unemployment, also known as adjusted unemployment, is defined as individuals who do not actively seek employment but would like to work. These individuals are not included in the official unemployment rate as they are not actively seeking work. Hidden unemployment includes individuals who are discouraged from seeking employment because of a lack of job prospects and individuals who have given up on the job search.

Labour supply trends in Canada

From 2022 and continuing into 2023, Canada has witnessed a consistent rise in employment accompanied by an unemployment rate that remains close to its historic lows, indicating a strong labour market. In March, the employment rate for the core-aged Canadian population (between 25 and 54 years old) stood at 84.9%, a slight decrease from the all-time high of 85.3% recorded in January 2023. However, as of April 2023, the number of unemployed individuals has remained largely unchanged, with approximately 1.1 million people in this category.

Barriers to getting people back to work

While there are enough job opportunities, it is clear from the trends that they are not enough to attract people seeking employment. Canada had 883,200 job vacancies across all sectors in January 2023, with the highest number of vacancies in healthcare, social assistance, and retail trade. However, even with job vacancies, many individuals face barriers, such as inadequate skills or experience, limited access to training, and discrimination.

In Toronto, the unemployment rate was 5.6% in April 2023. However, this percentage does not account for the hidden unemployment rate, which is estimated to be significantly higher. In Ontario, the unemployment rate was 5% in 2023, with a labour force participation rate of 60.5%.

Key takeaways about hidden unemployment

  • The employment rate in Canada has increased, but the labour force participation rate has fluctuated, leading to a constant rate of hidden unemployment.
  • Hidden unemployment includes individuals who are discouraged from seeking employment due to the lack of job prospects and individuals who have given up on the job search altogether.
  • The number of NEET individuals in Canada (those not in employment, education or training), has increased, highlighting the need for more job opportunities and training programs.
  • Barriers that prevent individuals from returning to work include lack of job opportunities, inadequate skills or experience, limited access to training, and discrimination.
  • Addressing hidden unemployment can help alleviate job shortages, stimulate economic growth, and provide opportunities for individuals who are currently excluded from Canada’s labour market.

In conclusion, hidden unemployment is a pressing issue that must be addressed to improve the labour market in Canada. By providing more job opportunities and training programs, addressing discrimination and other barriers, while also noting hidden unemployment in labour considerations, Canada can work towards creating a more inclusive and prosperous economy.

It is time for Canada to take action to acknowledge hidden unemployment and include best practices and policy creations to address the problem.