Mr. Chair and members of the committee, I want to begin by thanking you for your kind invitation. I'm very honoured.
As a macroeconomist, I'll look at youth unemployment as a whole.
The first thing to observe is that the national unemployment rate in Canada has increased by two points in the last 30 months, going from 5% to 7%. This is due first to high interest rates and then to greater trade uncertainty. The hiring rate has slowed down, and many workers have been hurt.
If we are focusing on the youth labour force, there are four questions to ask. First, by how much has its unemployment rate increased? Second, by how much has this increase exceeded that of the unemployment rate of mature adults? Third, how much higher than in the past has this excess of youth unemployment been, and fourth, why so?
I will offer answers to these four questions.
Between the summer of 2023 and the summer of 2025, the unemployment rate for older adults increased by 1.2 percentage points. Meanwhile, the unemployment rate for people aged 15 to 24 increased by 4 percentage points. Therefore, the increase in the unemployment rate in this category is three and a half times higher.
There's nothing new about this trend. When hiring slows down, youth unemployment always rises more than that of older adults. The labour market always follows the last in, first out rule.
Is this time different? Is the 2023-25 magnification factor of 3.5 times for the increase in youth unemployment worse than in earlier job setbacks?
Definitely yes. Checking on this with Statistics Canada data, in the 40 years from 1976 to 2015, the magnification factor for youth unemployment was a modest 1.2 times the mature adult rate on average, but then, in the last 10 years, from 2016 to 2025, this factor has risen to 2.6 times on average and has included the above-mentioned shoot-up to 3.5 in the last two years.
Why has the spillover of the job decline on the youth unemployment rate been so large since 2016? The most likely cause is the explosion of immigration to Canada, especially since 2022.
Each year, about three-quarters of any new cohort of immigrants enlarges the pool of people who are looking for a first or a second job. In recent years, the huge increase in immigration has blown up the total number of new workers who compete for entry in the labour force and who are the most vulnerable to rising unemployment whenever the economy slows down.
In the labour force in 2016, there were about 25 new mature immigrants for every 100 youths, but by 2025, the ratio had gone up from 25 to 70 new mature immigrants per 100 youths. This is a story about supply and demand. The inevitable consequence has been that the unemployment rates of both groups have increased sharply to nearly 12% for new immigrants and 15% for youth respectively in recent months.
In other words, it is the open door immigration policy enforced during 2016 to 2024 that has made both the new immigrants and the young natives suffer from sky-high unemployment rates as soon as jobs have become scarcer.
Thank God our immigration policy has now begun to turn around toward a more moderate pace. The youths and the immigrants will benefit.
Thank you very much.