"The numbers speak volumes, Canada is in a crisis" —National youth unemployment is costing billions of dollars in GDP as numbers hit historic levels

Fixing the youth unemployment crisis

Youth unemployment reached 14.5% in August, the highest rate since September 2012 except for 2020 and 2021 during the pandemic.

The King’s Trust report finds that acting on the crisis would help with:

• The creation of 228,000 jobs
• An increase of $5.3 billion in government revenue due to higher tax revenues from increased employment
• An increase of $9.2 billion in greater wages and salaries
• A boost to Canada's annual GDP growth rate (from 1.98% to 2.04%) over ten years

There are over 850,000 people between the ages of 15 and 29 that are neither employed nor engaged in education or training.

Young workers comprise a relatively small share of the total labour force — 14.1% of all workers are aged 15 and 24 years old. However, young workers account for 27.9% of those unemployed, based on 2023 data. In other words, one in every four unemployed persons in Canada is under the age of 25.

Rates of temporary employment have also tripled for youth since 1989.

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Effects of youth unemployment

Wage scarring, or a negative wage disparity, is a common effect of youth unemployment or underemployment.

For example, a person who experiences a period of unemployment lasting six months at the age of 22 could expect to see an average reduction of eight percent in their wage rate at the age of 23, according to the report.

This wage reduction persists, remaining more than 5% below their expected level until the age of 26. Even at the ages of 30 and 31, wages are still two to three percent lower than they would have been without the period of unemployment.

As well, the effects of long-term unemployment are psychological, and can result in a deteriorated mental health and even substance abuse.

"Unemployment in the early stages of a career can have long-lasting effects, delaying the development of productive skills and a professional network," Trevin Stratton, the Americas economic advisory leader at Deloitte Canada said in a statement.

"When youth are unable to find suitable employment, they are unable to fully contribute to the economy and society. Ultimately, the exclusion of young people from the world of work comes at a steep cost. Canada has an opportunity to empower the next generation, build a resilient workforce, and fuel economic growth for a better country for all."