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One in four recent university grads in Canada who were working in 2005 were underutilized, or working in jobs that required lower skills, a report by the CGA says. (Kevin Van Paassen/THE GLOBE AND MAIL)
One in four recent university grads in Canada who were working in 2005 were underutilized, or working in jobs that required lower skills, a report by the CGA says. (Kevin Van Paassen/THE GLOBE AND MAIL)

The real youth jobs crisis: underemployment Add to ...

Youth joblessness tends to garner all the headlines, but the more troubling trend may be the more hidden one: underemployment.

A paper to be released Tuesday is urging more examination of the extent of youth underemployment in Canada and more research into the causes that are driving it.

“Contrary to the highly visible issue of youth unemployment, underemployment is seldom spoken of,” says a 61-page paper by the Certifi­ed General Accountants Association of Canada, which periodically publishes research on various aspects of the Canadian economy.

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For youth, “the consequences of underemployment for an individual may appear through the erosion or loss of skills, knowledge and abilities, diminished current and life-long income, job dissatisfaction and emotional distress which, in turn, may lead to deteriorating health.”

For society as a whole, underemployment dampens the potential for a country’s well-being, and can reduce economic activity and productivity “due to a waste of excess qualifications,” while potentially displacing lower-skilled workers.

One in four recent university grads in Canada who were working in 2005 were underutilized, or working in jobs that required lower skills (which the OECD has noted is among the worst rates among industrialized countries). Since then, any improvements would be “highly unlikely,” the CGA says, given the labour market's bruising from the last recession.

It looks at the causes of underemployment, and suggests our economy has generated more low-skill jobs as manufacturing positions disappear and services jobs increase, while inter-provincial migration has decreased. Growth has shifted towards natural resources jobs, which may also be playing a role.

Today's youth are much more educated than generations past. But -- unlike other countries -- the advantage in the jobs market of having a higher education is diminishing.

Despite the declining proportion of youth with lower levels of education, the proportion of youth employed in lower-skilled occupations remained unchanged between 1990 and 2011, it says.

And paper says more extensive research is needed on an issue that “often remains undetected by the policy radar.”

“Deeper research on the prevalence, and the causes of underemployment, would be highly beneficial to policy makers and to Canadian workers,” says Rock Lefebvre, the CGA’s vice president of research and standards.

Other measures of youth in the labour market are mixed.

The paper begins with the bright news on Canada’s youth labour market: the duration of youth unemployment tends to be short-lived and there’s little evidence to suggest older workers are crowding younger ones out of the labour market.

Youth unemployment is still high, at 15 per cent, but it is nowhere near that of other countries, such as Spain or Ireland. Nor did joblessness in the past recession reach the heights of prior downturns in Canada.

And while the quantity of jobs has not come back since the recession, the quality of jobs -- in terms of higher-wage occupations -- for young people has improved.

In short, “what we have learned is that the younger worker scenario is much more encouraging than one might expect,” the report said.

Moreover, “with retirement on the horizon for many Canadians, opportunity should not be as scarce for younger workers as it may have been for others before them.”

That is the good news on what has been one of the weakest pockets of the labour market since the recession.

The study recommends better labour market information that efficiently matches job seekers to employers, more bridging programs, improving the mix of jobs in the economy and boosting awareness of underemployment.

This being a report by accountants, there are plenty of interesting statistics in the report, most of them based on Statistics Canada data. Among them:

-- youth unemployment levels may seem high now, at 15 per cent, but their peak in the last recession was notably lower than in previous recessions when the youth unemployment rate hit 19.2 per cent and 17.2 per cent in 1983 and 1992, respectively.

-- incidences of young people in part time work would really want to be in full time work has doubled since 2007 and the portion of youth willing to work, but not looking because they couldn’t see job opportunities has doubled since 2008.

-- 24.6 per cent of all youth holding a university degree who were continuously employed full-time in 2005 were underutilized as they were working in occupations where job requirements did not call for university education. This situation was most prevalent among youth holding a baccalaureate degree; but one in ten youth workers holding a graduate degree were also employed in occupations not requiring a university degree.

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