Educated youth struggle to find good jobs: CIBC

By Staff | June 20, 2013 | Last updated on June 20, 2013
4 min read

Canadian youth are more educated than ever but are facing challenges their parents didn’t and are increasingly struggling to find lasting and meaningful jobs, finds a new report from CIBC World Markets.

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“The economic reality for youth today is very different than that of previous generations,” says CIBC deputy chief economist Benjamin Tal.

“While young Canadians are resourceful and capable of adjusting to the pulse of an ever changing labour market, they are faced with problems unknown to their parents. The current environment of part-time work, temporary jobs, corporate and government restructuring and downsizing is especially tough on young people whose lack of experience and seniority make them much more vulnerable to labour market changes.”

The CIBC report notes that while the youth unemployment rate is at its historical average, the ratio between youth unemployment and the unemployment rate for older Canadians is now at a record high. “With youth unemployment running at nearly 2.4 times that of Canadians aged 25 and older, one begins to see the growing challenges for younger Canadians to find lasting and meaningful work.”

Tal, who delivered his report to a group of Grade 10 scholarship students from across the country in downtown Toronto today, notes that getting the right education is no longer enough. “While more education is positive, increasingly, students are completing their education without any work experience and are more likely to be caught in the no job-no experience, and no experience-no job cycle.

“In fact, one in five youth aged 15-24 not working today has never held a job. That is 40% higher than the long-term average. Statistics show that youth who gain work experience and receive on the job training while studying are much more likely to find suitable and sustainable employment.”

To truly understand the economic impacts of youth employment, Tal looked at youth aged 15-19 separately from those 20-24 and distinguished between those in school and those not.

He found there are about 225,000 youth who are neither in school or in the labour market — with the majority (68%) being in the 20-24 age group. “When you add this group to those who are not enrolled in school but registered as unemployed, you get a clearer picture of youth unemployment. From a policy perspective, this is the pressing problem as this combined group consists of 420,000 economically at risk youth, or nearly one in ten of young Canadians.

“This target group accounts for 5.9% of total youth aged 15-19 but a significantly higher 12.5% of those aged 20-24. These youth face a harsh job market environment, real entry barriers and likely do not have the skills necessary to compete. This group will likely remain chronically unemployed without action to re-educate or provide themselves with skills training.”

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On the positive side, Tal notes that school enrolment is at a record high with 83% of those 15-19 in school and 44% of those aged 20-24. At the same time, for the older age group, the labour market participation rate fell to a record low of 76%, reflecting a tougher job market and the need for additional education.

Tal’s study found that once leaving school youth are becoming increasingly under-employed. About 22% of teens and 14% of those aged 20-24 who are non-students are only working part-time. This is a record high for both age groups and a significant increase from previous cycles.

“About 70% of these youth working part-time are doing so involuntary—meaning they want to work full-time. Moreover, we have seen a significant increase in the share of young workers in temporary and contract or term employment from about 8% in the late 1990s to just under 12%. This is a much greater increase in these positions than we have seen in the aged 25+ category.”

The report suggests that classifying 15-18 year olds who are enrolled in high school and also searching for part-time employment as “unemployed” really overstates the magnitude of youth unemployment. “A point can be made that many of these high school students should not be classified as unemployed as their main activity is learning,” says Tal.

“Adjusting for this factor brings the unemployment rate for this age group down from close to 20% to only 5.4%. This factor also works to reduce the national unemployment rate from the headline 7% to 6.4%. However, to the extent that this phenomenon represents the growing proportion of high school students that need to participate in the labour market in order to financially support their families, this should be seen as a worrying trend.”

Tal believes that the improved understanding of the dynamics of the youth unemployment problem means that initiatives taken by the government and corporate Canada can be more focused and effective in preventing further worsening. “One of the priorities of the Canadian education system needs to be more innovation and flexibility in combining education and work-related training.

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“Research is also needed to better understand how concepts such as team-work, creative thinking, problem-solving and leadership skills enhance the employability of students and then, to find ways to incorporate these concepts into the curriculum. For Canada’s economy to grow and our standard of living to remain high, this is an imperative.” staff


The staff of have been covering news for financial advisors since 1998.