Good afternoon. We would like to thank the committee for the opportunity to speak with you today on subjects relevant to your study on youth employment.
In today's presentation, we will be presenting a few highlights focusing on the labour market experiences of Canadian youth. For the purpose of this discussion, youth have been defined quite broadly, from ages 15 to 34, to allow information to be presented on education and transitions into the labour market.
Most of the data being presented today is from the monthly labour force survey or LFS, though in a few instances we'll introduce data from other sources to provide a historical context. As I am sure you're all aware, the labour force survey is a household survey carried out monthly by Statistics Canada and provides high quality estimates of employment and unemployment that are among the most timely and important measures of performance of the Canadian economy. One thing that the committee may not be aware of is that the labour force survey is one of the largest labour force surveys in the world surveying over 100,000 people each month, 15 years of age and over. This makes it similar in size to the equivalent survey that's run in the United States.
To start off, we would like to provide a bit of information on the unemployment situation of Canadian youth in the international context. In 2012, Canada's unemployment rates for youth aged 15 to 24 and 25 to 34 were lower than the OECD averages and the rates observed in many European countries and the United States. Canada's unemployment rate for those aged 15 to 24 was 14.3% in 2012, below the OECD average of 16.3%. For those aged 25 to 34, Canada's unemployment rate was 6.9%, compared to 9.1% for the OECD average.
One thing one has to do when comparing data is to control for conceptual differences between the sources. I have in my speaking notes some information comparing the U.S. and Canadian labour force surveys that are not shown on this graph, but have been adjusted for the difference in concepts between the two surveys. For example, when you adjust for concepts the U.S. unemployment rate for youth under 25 has remained above the Canadian rate since early 2008. In 2013, the U.S. rate was 15.5%, compared to 13.7% in Canada, again still for youth under 25, a 1.8 percentage point difference. Similarly for those aged 25 to 34 the U.S. rate was 7.4% compared to 6% in Canada.
While the previous slide provides how Canada's youth unemployment compares to that of other OECD countries, I'm sure the committee is interested in seeing how Canada's youth unemployment compares to that of other age groups in Canada over the last three decades.
Three points are worth noting. First, regardless of economic conditions, youth aged 15 to 24—and to a lesser extent those aged 25 to 34—are more at risk of being unemployed than individuals aged 35 to 54. For instance, the unemployment rate of youth aged 15 to 24 was 15.2% in 2009, compared with 7.9% and 6.7% for individuals aged 25 to 34 and those aged 35 to 54, respectively.
Second, the recent peak of 15.2% observed in 2009 for youth aged 15 to 24 was slightly lower than the peaks observed during the two previous recessions of the early 1980s and early 1990s.
Third, while the unemployment rate of individuals aged 35 to 54 is now, and by now I mean in 2013, close to what it was in 2007, prior to the onset of the last recession, the unemployment rate of youth aged 15 to 24 is still 2.5 percentage points higher than its 2007 value of 11.6%.
Likewise, the unemployment rate of youth 25 to 34 is still 1.1 percentage point higher than its 2007 value of 5.7%.
If you look at this in an accounting sense, the relatively high unemployment rates observed in a given year among youth—as compared to those for workers aged 35 to 54—could be due to two factors.
First, it could be that youth more often move into unemployment—i.e., more often become unemployed—than do their older counterparts, for example, because they are more are at risk of being laid off than are older workers.
Second, it could be that youth have longer durations of unemployment than older individuals do once they start being unemployed.
The next slide provides information related to the latter factor. This shows that differences in duration of unemployment cannot explain the higher unemployment rate of youth since youth unemployment spells tend to be shorter—not longer—than those for working-aged people between 35 and 54 years of age. For example, according to the data in the chart for 2007, unemployed youth aged 15 to 24 had, on average, eight weeks of unemployment compared to 14 and 20 weeks of unemployment for those individuals aged 25 to 34 and 35 to 54. A similar pattern existed in 2013.
Since higher durations of unemployment cannot explain why youth experience higher unemployment rates than do older individuals in a given year, the implication is that youth higher unemployment is—again looking at it from an accounting point of view—essentially due to the fact they become unemployed more often than do older individuals.
Recent research conducted at Statistics Canada shows that one reason youth become unemployed more often than older individuals do is that youth are more at risk of being laid off than are older workers. The higher layoff rate for youth is, in turn, related primarily to their relatively low levels of seniority as many firms lay off workers on a last-in, first-out basis. We'll be more than happy to provide this report to the committee after today.
Being from Statistics Canada, we do love our numbers, but I'll probably shorten some of the discussion on each slide just so you can get through everything. This graph looks at unemployment by highest level of educational attainment. On the left is the information for men aged 25 to 34, and on the right, for women.
We can see that virtually every year young men and women with relatively high levels of education experience lower unemployment rates than do their less educated counterparts. For instance, men aged 25 to 34—which is the green line on the left chart—with a bachelor's degree had an unemployment rate of 5.5% in 2013, compared with 8.2% for their counterparts with a high school diploma. For women, we see something quite similar. It was 4.9% and 8.5%.
Following the onset of the last recession, less-educated young men experienced a sharp increase in unemployment. From 2007 to 2009, the unemployment rate of young male high school graduates increased by roughly five percentage points, much more than the 1.3 percentage point increase experienced by male bachelor's degree holders.
By 2013, differences in unemployment between young bachelor's degree holders and young individuals with trades certificates were much less pronounced than they were 20 years earlier after the 1990 to 1992 recession.
Now I'll pass the baton over to my colleague René Morissette, who will provide you with information on the employment situation of Canada's youth.