The jobs paradox: Canada seems to have dodged a recession — so why is it so hard to find work right now?

Working as a tutor helps pay the bills, including $1,500 a month for a shared Parkdale townhouse, but he says “I don’t know how much longer gig work can sustain me.”

Bilopavlovic is now running out of money and fears he’ll soon have to move back with his parents in Hamilton.

The Canadian economy might have dodged a recession, but for job seekers like Bilopavlovic, it sure doesn’t feel that way.

The country’s unemployment rate, while rising, is still below historical averages, and wages are climbing. And yet, something weird is happening with the labour market. It seems to have split in two: an affluent group of haves and a smaller group of have-nots.

But those trying to break into the market — recent grads, newcomers — and those who work in areas like tech where many jobs have vanished, are all struggling.

Overall unemployment in Canada has slowly trended up to 6.4 per cent from 4.9 per cent since 2022. But jobless rates for newcomers and young Canadians aged 15 to 24 have spiked to 11.6 per cent and 13.5 per cent from lows of 6.9 per cent and 9.3 per cent in 2022, according to the Bank of Canada’s July report.

Meanwhile, a larger share of those in Statistics Canada’s “professional, scientific and technical trade services” designation, which includes tech workers, are out of work.

So why are some pockets of the population struggling to get hired, while those who have already secured employment are prospering and enjoying pay raises? 

The Star took a closer look at the troubles faced by three job seekers representing workers in three hard-hit groups to find out. 

Bilopavlovic thought he had a real shot at success when a friend who works at a popular sports betting firm offered a positive reference for two junior data analyst positions that had just opened up. A month later, he was less optimistic.

“Thank you for applying,” he said, describing the email message he got in response to his application. “There were a lot of people that applied — over 6,000 — so we’re going to take a little while to go through all these applications.” 

Bilopavlovic didn’t get called for an interview, nor has he heard from the company since. 

It’s an all too familiar story for young workers. Employment fell by 13,000 positions among men aged 15 to 24 in June, according to Statistics Canada, while the overall youth employment rate fell 4.4 percentage points to 54.8 per cent since April 2023. 

At stake is the long-term well-being of almost an entire generation, as research shows that those who graduate amid tough economic conditions earn less for at least 10 to 15 years and face greater risk of an early death from worse health behaviours than those entering the labour market in more prosperous circumstances. 

Most industries find themselves in an “employer’s market,” which is traditionally tough on youth, says Timothy Lang, CEO of job consultancy Youth Employment Services.

“The employers have a better talent pool to choose from,” says Lang. “So they’re choosing people with better qualifications,” and more experience.

As companies cut costs, they’re also offering fewer permanent positions with perks and job security, and more part time jobs.

“Unfortunately, the pendulum has swung the other way,” said Lang, “and a lot of big banks and big employers have cut back. Now, even students with engineering degrees are having a hard time finding a job.” 

Bilopavlovic says it’s frustrating to see friends get opportunities — a rarity in the current market — and “slowly but surely work their way up,” while he grapples with the possibility of returning home. 

“They’re getting full-time benefits, raises or new responsibilities. Must be nice, I guess.” 

Even with a Master’s degree in economics, Favour Umeh, 32, can’t seem to find employment beyond “survival jobs.” 

On weekdays, the Nigeria native, who immigrated to Canada from Ukraine in 2021, makes ends meet as a rideshare driver. On weekends, he runs a landscaping business with friends. 

“This is what I’m doing now to keep my head above the water,” he said, adding that pay and work hours are unreliable for gig workers. What he really wants is to be a project manager — a position he’d held in different industries, including health and tech, for nearly a decade. 

He has now submitted almost 1,000 applications for jobs in his field, but landed only two interviews in the span of six months.

“The kinds of jobs at a stable company that will give you the peace of mind,” he says, are “seriously very hard to come by.”

Two months ago, Umeh sought help from Acces Employment, a GTA-based organization that helps integrate newcomers into the Canadian job market.

“The kinds of opportunities that are out there are not aligning with the skill sets that both Canadians and newcomers have,” said Allison Pond, CEO of Acces Employment. 

In many cases, foreign workers either have the right skills but struggle to get them recognized by their industry in Canada, Pond says, or they lack the training to gain certain vital skills. 

The unemployment rate for immigrants who landed in the country five or less years ago peaked this year at 12.6 per cent in June, rising 3.5 percentage points since January, according to StatCan data.

While the federal government has recently been scaling back on immigration numbers, Canada needs those foreign workers to address its dropping fertility rate. 

Pond says the country must “have pathways that are clear for newcomers to be able to bring their skills and contribute to the labour market. That to me is our biggest challenge — and our biggest opportunity.” 

Despite having more than a decade of tech sales experience, Matthew Eatough, 38, recently found himself applying for entry-level positions. 

“I don’t think my pride would have let me do that a year ago,” said Eatough, who has been hunting for a full-time job for more than a year.

With money running low, he’s living in a “student apartment” — a starter unit near the University of Toronto campus where he intended to live until he could make a deposit on a home. Now, he relies on meal replacement products like protein shakes and bars to stay on budget, and is considering selling long-term investments to pay off credit card debt.

“It doesn’t feel great to be almost 40 and living like this.” 

Eatough was among some 370,000 tech company layoffs in 2023 and 2024. While the pandemic boosted tech hiring as more people relied on a virtual world, post-pandemic many of those same firms realized that they’d over-hired and, amid inflation and rising interest rates, slashed workforces. 

In a lot of tech companies, said Eatough, “I would feel like I was showing up to a party five minutes before the booze ran out.” 

“There would be a lot of talk about ‘oh, we are growing so fast,’” he explained. “But then I would get there and there would be just a lot of trouble.”

While unemployment in the industry has been traditionally low, the gap between it and the national jobless rate has been narrowing. 

In June, the unemployment rate for Statistics Canada’s “professional, scientific and technical trade services” category was 3.7 per cent — almost a full percentage point higher than the 2.8 per cent recorded at the same time last year. It fell from this year’s peak of 4.5 per cent in March, representing “a significant increase” in a short period for a single industry, RBC economist Nathan Janzen told the Star. 

There’s less movement in the tech sector now, said Eatough. Those who have jobs are hanging onto them, while others seem to be “floating around” the job market.

“It’s really weird,” he said, “we’re not in a recession, but it feels like a recession.”

The problem is that the Canadian labour market is frozen. 

Compared with past recessions, fewer companies are announcing mass layoffs. But most companies have hit the brakes on hiring, making it harder for entrants in the job market, especially those without Canadian work experience, to find employment. The new-hire rate in June was 28 per cent less than its pre-pandemic norm, according to Brendon Bernard, senior economist at jobs site Indeed.

The paradox of the current labour market is borne out by Employment Insurance data showing that while unemployment is rising, the number of EI claimants is not.

That’s largely because recent grads and immigrants have limited access to EI as it requires a minimum number of hours of insurable employment, among other restrictions. 

Demand for labour is low for a couple of reasons. One, is that the number of jobs available has fallen since a post-pandemic surge, and employers are not looking to fill as many positions as they were before.

Another is that a long period of high interest rates has limited companies’ ability to grow their workforce. Fearing the worst, tech firms shed jobs bracing for a recession, and while it never materialized, many of those displaced workers continue to drift.

The supply of labour is also growing as Canada welcomes record numbers of immigrants chasing fewer job opportunities.

Now, even Bank of Canada governor Tiff Macklem says he is worried that high interest rates could slow the economy too much. 

And it’s important that it does, said Bernard. These labour market scars can linger.

“I think so far we’re still in a soft-landing world. It’s just been an unfair soft landing.”