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Look Harder - Youth Unemployment in Canada

  • William Hope
  • Nov 19
  • 5 min read

Overview

Youth unemployment has been a persistent issue in the Canadian economy. Recently, Ontario Premier Doug Ford stated that young people are not looking hard enough for work[1]. According to Statistics Canada, the youth unemployment rate in July 2025 was 14.6%, the highest since September 2010. Similarly, returning students aged 15 to 24 saw a 17.5% unemployment rate, the highest since July 2009[2]. The effects of youth unemployment are significant. They pose long-term impacts such as lower lifetime earnings, mental health challenges, and missed networking opportunities, among others[3]. It would cost the economy billions if not addressed due to the loss of productivity and tax revenue [4]. From students struggling to find summer jobs to the rising national unemployment rate, the issue is complex here at home and abroad.


Government Spending and Employment Programs

Since the release of the 2024 federal budget, the government has noted the challenges youth face to find employment. The government allocated $207.6 million in 2025-26 to support the Student Work Placement Program. Moreover, it set out $13 million to enhance the Youth Employment and Skills Program to support 1,200 jobs for youth in the agricultural sector. Other notable policies were the increase in Canada Student Grants by 40%. Additionally, from 2019 to 2023, the Youth Employment and Skills Strategy (YESS) program allocated up to $600 million to support youth who face barriers in the labour market through federal government summer job opportunities [5]. However, these policies have not provided the necessary changes to combat youth unemployment. The current issue stems from various challenges such as the COVID-19 pandemic, an increase in labour supply, and other challenges[6]. The Canadian Centre for Policy Alternatives cites a lack of employment services to support young people. While employment services exist, the effectiveness of these programs is questionable. It is possible that the labour market has not adjusted to those changes. To understand why these policies have not worked, looking at broader policy changes can gauge more insights.


Interest Rates, Unemployment, and Economic Theory

The Bank of Canada (BoC) always has a trade-off between inflation and high unemployment. Since the COVID-19 pandemic, the BoC increased the policy rate to combat inflation, incentivising businesses to spend less money on risky investments such as hiring and expansion[7]. For those unfamiliar with economic theory, when the BoC increases rates, various effects such as less hiring occurs in the economy, a prime example of economic downturn in business cycles[8]. Since one of those risky investments is hiring more young people, among other reasons, the BoC was inclined to tackle the inflation issue first. The BoC in recent decades has normally tackled inflation first before tackling output or GDP concerns[9][10]. Thus, when the economy gets worse, those with less experience such as new graduates from university will face worse labour market outcomes. This is a naturally occurring function of economies, whether locally or internationally. Interestingly, it would also be important to understand how Canada fairs to other developed countries in the world regarding the youth unemployment issue. With that said, taking a broader view of youth unemployment is imperative.  


International View of Youth Unemployment

When looking internationally, it is clear Canada is not the only country experiencing severe youth unemployment. For example, young people in countries such as Spain and Sweden experienced the highest unemployment rates in the first quarter of 2025. While Canada’s unemployment rate is above average, Canada is not among the countries experiencing the worst youth unemployment effects[11]. There are macroeconomic trends that are persistent in the international economy. Some of these stem from the new tariffs from the Trump administration, lasting effects of the COVID-19 pandemic, and the cooling of the Canadian economy . For example, when shutdowns occurred at the beginning of COVID, the demand for restaurants declined, causing BoC to lower policy rates. The attempt of lowering rates was to stimulate the economy such as it would not enter a severe recession. Additionally, those lasting effects on top of the Trump administration tariffs led to more economic uncertainty in Canada, playing into businesses slowing their hiring as the economy cools down.  

While the macroeconomy tells us that Canada is not alone, here at home, there are also groups of young people who are suffering more from unemployment. When considering racialized groups, the unemployment rate is significantly higher compared to the general youth unemployment rate. For example, racialized groups such as Black, Chinese, Filipino, and South Asian youth saw unemployment rates at 23.4%, 20.5%, 19.4%, and 17.1%, respectively[12]. While these statistics are daunting, there is still hope for the labour market. Luckily, there are supports that youth can take into their own hands to increase their chances of getting a job.


Networking and Career Development Skills

Examples of ways people can differentiate themselves are to network, volunteer, work on personal projects, tailor resumes and cover letters, and more. Firstly, networking is one of the most important aspects of the labour market. Estimates suggest that up to 70% of job postings are not public[13]. Students and new graduates hear from their co-op department that attending job fairs, employer information sessions, and utilizing coffee chats are wonderful way to network. However, simply attending these events are not enough to guarantee a job or interview. According to Sarah Felice, the quality of your network is what makes it effective[14]. If there is one tip employers give, it is to network, be vulnerable and authentic. Secondly, volunteering and personal projects are great ways to highlight key soft and technical skills, from communication and teamwork, to performing a DCF analysis and using Python. Lastly, tailoring resumes and cover letters provide employers with more context and information they require, while also giving those applying a way to differentiate themselves. One way is to take the job posting and split the soft and technical skills into separate categories. By using that method, individuals can understand whether a job is more technical or more people based. Using the keywords and researching the company via its website or social media, anyone can finetune their professional and personal experiences. Through various methods such as carefully identifying what a company is looking for can tremendously improve job prospects over a generic application . Although the labour market is tough right now, there are ways the youth can increase their chances of getting employed.


Conclusion

Overall, there are factors that can explain why youth unemployment is high. From policy to macroeconomic trends, youth unemployment has severe long-term effects on those trying to enter the labour market. However, there are ways to improve chances. The hope is that students and new graduates will read this article and not only gain insights to the persistence of youth unemployment but take away key strategies to improve their chances of getting work. The labour market is tough right now for the youth, so instead of looking harder, it is time to look smarter.  


[10] For those in economics, or anyone interested in learning more about how the Bank of Canada decides on its policy or overnight rates, I suggest reading the paper I have cited by our very own Economics faculty Ke Pang and Christos Shiamptanis.

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