Ottawa Expands Canada Summer Jobs to Boost Youth Employment

The federal government is taking steps to support a historically weak summer job market for students, even as economists warn that difficult employment prospects for younger workers could reflect broader softness across the labour market.

Statistics Canada highlighted these challenges in its May jobs report released last Friday (June 5). The agency found that roughly one in five returning students aged 15 to 24 was unemployed in May — the highest rate outside the pandemic since May 2009.

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Canada Summer Jobs program is expanding

On the same day, the federal government announced an expansion of the Canada Summer Jobs program, which provides wage subsidies to employers who hire young people for seasonal work.

Ottawa plans to add 6,000 subsidized positions on top of the 70,000 jobs originally planned for the annual program. Employment and Social Development Canada, which administers the initiative, will fund these additional positions with $25 million in reallocated internal resources.

Jobs Minister Patty Hajdu said the increase is intended “to address the urgent needs youth are experiencing in the job market.”

Who can apply for the Canada Summer Jobs program?

According to program guidance from Employment and Social Development Canada, eligible youth must:

be between 15 and 30 years of age at the beginning of the employment period
be a Canadian citizen, permanent resident, or a person to whom refugee protection has been conferred under the Immigration and Refugee Protection Act for the duration of the employment
have a valid social insurance number (SIN) at the start of employment and be legally entitled to work in Canada in accordance with relevant provincial or territorial legislation

International students are not eligible for this program. —MoneySense editors

Economic trends contributing to a weak summer labour market

StatCan noted that the unemployment rate for returning students has risen each May since 2022, when just over 10% of returning students were unemployed amid a relatively tight labour market.

Brendon Bernard, senior economist at the online jobs board Indeed, described the current summer labour market as “pretty weak right now.” He added that the weakness is tied to broader economic trends, and that targeted youth policies will only address some symptoms while other structural issues in the labour market remain.

Canada’s overall unemployment is increasing

Canada’s broader unemployment rate has also been rising in recent years, reaching 7% in May. Bernard pointed to recent job losses in sectors such as manufacturing as a particular concern, especially in border communities that depend on trade with the United States.

Younger Canadians who expected to gain early experience in manufacturing in those regions are finding fewer opportunities. As they shift into other fields, they may be increasing competition for limited entry-level positions, further tightening the youth labour market.

The national vacancy rate — the share of jobs left unfilled compared to all positions — was 3% in March, according to the most recent data available. A vacancy rate that low can signal weak hiring demand among businesses or suggest that employers face little difficulty filling open roles.

Employer demand for youth labour has fallen

Demand from employers for the Summer Jobs Program was lower this year than in previous years. Employment and Social Development Canada received 44,821 applications from businesses requesting support for 225,766 jobs during the application period late last year. That represents about 2,000 fewer applications and nearly 9,000 fewer jobs than in each of the previous two years.

Bernard said youth unemployment is higher today than in 2019, the last period when Canada’s vacancy rate was at a similar level. That suggests growing slack among younger workers.

“Something has hit the youth labour market differently than the labour market for older workers,” he said, noting several possible factors.

One is recent population growth that brought a surge of mostly younger workers into Canada in recent years, increasing competition for entry-level positions. Another factor is slow job mobility among older workers, which Bernard likened to a “traffic jam” in the labour market: when mid-career workers stay put, fewer openings arise for younger workers to move into.

Bernard pointed out that the rate of job switching in May was 0.46%, roughly one-third lower than in 2019. In a robust labour market, frequent job changes help create openings for entry-level workers to gain on-the-job experience and advance; when job switching stalls, that upward movement slows and fewer entry-level roles become available.

Because the challenges facing young jobseekers are tied to these broader labour market conditions, Bernard said that government programs alone may not be enough to fully resolve the problem.

Minister Hajdu acknowledged that governments cannot solve the issue in isolation. “Programs like this open the door, but it’s employers, community leaders and organizations who help young people walk through it,” she said.

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