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The graduating class of 2024 should expect to spend a little extra time applying for jobs compared to those who graduated in the last few years, as economists warn of a sluggish market for entry-level talent.
According to a study conducted by Royal Bank of Canada in January, roughly half of the 0.8 per cent uptick in unemployment since last April is attributed to students and new graduates. The report notes the conditions for young workers look similar to those typically seen during a recession.
“Youth have seen their employment decline since December of 2022,” says RBC economist Carrie Freestone, who co-authored the report. “In [the financial crisis of] 2008, roughly 10 per cent of the uptick in unemployment could be explained by students and new grads, and now it’s 50 per cent.”
According to RBC, the number of employed Canadians aged 15 to 25 has remained relatively flat since late 2022, but the size of that population has grown by about 90,000. Ms. Freestone says the economic challenges that began as interest rates started to rise in March of 2022 did not result in significant layoffs, as typically happens during a recession, but a significant slowdown in hiring, especially at the entry level.
“What that tells us is that it’s a challenging time, unfortunately, for younger people, specifically graduates who are just finishing their degree or diploma,” she says. “It’s taking them a little bit longer to find work right now because we’re in a situation where job vacancies are falling.”
Making matters worse for young people, according to Ms. Freestone, is the fact that those industries most affected by the slowdown in consumer spending — such as retail, hospitality and food services — are typically among the largest employers of young people.
“As spending slows down in discretionary goods sectors we are seeing retail layoffs,” she says. “Even stores that aren’t laying off likely aren’t hiring, which means it’s harder for young people to get those jobs.”
It’s not all bad news for new grads. Ms. Freestone says the labour market is expected to come roaring back toward the end of the year, following a widely anticipated interest rate cut. There are also sectors where demand remains high, most notably in healthcare and skilled trades.
According to a recent survey conducted by recruiting firm Robert Half Canada, demand for entry-level professionals is strongest among administrative and customer support roles, followed by the legal, marketing, human resources, technology and finance sectors.
According to Mike Shekhtman, Robert Half Canada’s senior regional director for recruiting, demand for new grads has declined significantly from the period of labour market shortages that followed the pandemic, but remains in line with historic norms.
“The survey actually showed that 64 per cent of companies expect to look at new grads as an option for hiring, which is down from where we were 18 months back, when the market was frenzied — the percentage then was in the mid-70s, so we’ve seen that number drop — but it’s more normalized in nature,” he said.
Youth unemployment had been trending downward since the 2008 recession, from a high of 16 per cent in 2009 to a low of less than 10 per cent in early 2020, until the pandemic sent youth unemployment skyrocketing to a record 30 per cent that May. By the summer of 2022, however, it dropped to an all-time low of 9.3 per cent. According to the latest data from Statistics Canada, youth unemployment is trending upward again, reaching 12.6 per cent in March, the highest level recorded since 2016, excluding the pandemic years. At the same time, Mr. Shekhtman says employers are demonstrating a level of interest in hiring new grads that are typical of a more balanced economy, suggesting that the spike in youth unemployment may be short lived.
Mr. Shekhtman advises new grads to beef up their online profiles, practice their interview responses, pursue networking opportunities and spend more time researching prospective employers in the face of more challenging market conditions. He also advises entry-level job seekers to be more flexible on salary and focus more on long-term career growth opportunities than short-term compensation.
“When the market is tighter, it’s an opportunity to show your resilience,” Mr. Shekhtman says. “It’s easy to show a level of frustration when you are putting in applications and not hearing back, but building up a level of resilience and determination is crucial; as is not showing signs of frustration.”
Mr. Shekhtman says that despite these challenges a strong candidate is a strong candidate, no matter the market conditions. “It doesn’t matter what cycle we’re in, if you’re a strong performer, there’s always going to be a place for you.”