Still Unemployed After All These Years: Canada Can Help the Persistently Jobless

03/10/2013 10:53 EDT | Updated 05/08/2013 05:12 EDT

According to numbers released Friday by Statistics Canada, employment rose by 51,000 in February across Canada. This is more than most economists predicted, and a confirmation of the strength of the Canadian labour market. Since the recovery from the last recession began in summer 2009, there are almost a million more Canadians with a job, and at 7%, the unemployment rate is close to its long-term average.

That strength is in sharp contrast to what has been happening in other countries -- the United States, for instance, has yet to simply recoup jobs lost during the recession. And we're in much better shape coming out of this recession than the previous two recessions when the unemployment rate hit 12% and 13%.

So, does that mean jobs are plentiful, and things are back to normal? Not for everyone. Youth unemployment, and to a lesser extent long-term unemployment, still stand at obstinately high levels.

The youth unemployment rate (15 to 24 years of age) is hovering around 14%, and has only decreased slightly since the beginning of the recovery. If you're lucky enough to be 25 years of age and older, things are looking up: the unemployment rate for these relatively older cohorts now stands at 5.8%. Younger Canadians always have more difficulty finding jobs, but things get tougher during, and in the years following, a recession -- and this time is no different. Young Canadians have to compete with a large legion of unemployed, or with people simply switching jobs, many of whom have previous work experience, and simply better job-market skills.

There has also been a marked increase in the number of individuals who have been persistently unemployed. The increase in the number of unemployed for more than 26 weeks -- they represent about 1.5% of the labour force -- reflects the fact that there are still a large number of individuals who have persistent difficulties rejoining the workforce, presumably because their skills are not well suited to the new economic environment.

So what can we do, if anything, about youth and long-term unemployed? In a recent C.D. Howe paper, I argue that the best way to further support the Canadian labour market is with so-called structural policies -- measures that help match people with jobs. Other policies have run their course: Governments are cash-strapped, and so more stimulus spending is not desirable or realistic, and interest rates are already very low and need to gradually return to more normal levels.

What I recommend is better education and skills training programs. More concretely, we need university programs that give students more practical skills, with tools such as formal internships, to make sure they hit the ground running coming out of universities. We also need to make sure that we offer targeted skills-training programs to the long-term unemployed to give them a leg up in their efforts to get back into the workforce. I also argue for looser entry restrictions into skilled trades -- there are limits on the number of apprentices a business can take on. We could scrap those, and replace them with regulations that target directly the work quality of trade workers.

Federal and provincial governments should also improve data and information on Canada's labour market: Better data can be power tools in helping match people and jobs. Better education data for instance can help establish links between programs of study and employment subsequently obtained and the development of more labour-demand driven educational programs. Some provinces do better than others at providing these data, and we would benefit from national, and more timely, data.

Finally, we need to address remaining barriers to inter-provincial labour market mobility. Professional bodies have tended to resist mutual recognition of certifications, which impacts the flow of skills to where they are needed. While efforts such as the Agreement on Internal Trade and other interprovincial agreements have improved matters, much work remains. The federal government needs to show leadership here.

In short, we should feel some level of comfort in knowing that the Canadian economy has been producing jobs, more than elsewhere. But that's of little comfort, I concede, if you're looking for a job and can't find one, whether you're old or young. Having a more flexible labour market, and better education programs and skills training, would help unemployed Canadians find work.

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