If there is a shortage in the labour market, why are people losing their jobs?
There is an odd labour situation happening in Canada. Unemployment is the lowest it’s been since 1970, sitting at 4.9 per cent, which is 2.2 per cent higher than the pre-pandemic peak. At the same time, job vacancies are growing. In Q2 of this year, Statistics Canada reports that employers were seeking to fill 977,000 empty positions, the highest quarterly number on record.
In a tight labour market, companies are hungry to fill in vacant positions, giving potential employees, specifically those with sought after skills, more leverage to bargain for better pay or remote work. Yet, as employers seek to fill nearly a million vacant positions, some industries are letting people go. The Canadian tech sector is one of them.
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“There’s always a churn in the labour market, and there’s sectors and companies that end up not doing well, and having to lay off workers,” says Pedro Antunes, chief economist and primary spokesperson at The Conference Board of Canada.
Industries shrinking
In early September, Statistics Canada reported that the nation lost 39,700 jobs in August, the third straight month of job loss, surprising some economists. Educational services and the construction sectors were the main drivers of this decline.
While education services might experience changes due to its seasonality, the effects seen in the construction sector suggest that the economy is starting to slow. This is to be expected due to repeated interest hikes by the Bank of Canada this year, in an effort to slow inflation.
