A report released this month found a sizeable increase in the unemployment rates among Canada’s youth. The report, entitled Canada’s Vital Signs 2009, from the Community Foundations of Canada, calculated close to a six per cent rise in youth unemployment from January 2008 to today.
Young people — defined as those between the ages of 15 and 24 — seem to be some of the biggest victims of the economic slump.
Almost a year ago, U.S. consumers were hit hard by the economic recession and Professor Irwin Lipnowski of the department of economics at U of M says this makes Canada extremely vulnerable.
“In terms of the job market, we export a terrific amount of our goods and services to the United States, so when the American economy tanked, we experienced the unprecedented fall in terms of job loss and fallen sales,” said Lipnowski.
When asked if universities were affected by the recession, Brendan Sweeney, economics professor at U of M, replied, “Definitely.”
“When I started my PhD, I expected a lot more job opportunities to be available, but there didn’t seem to be a lot of faculty positions going around last year, and those that were, were in high demand,” he said.
With money lost from pensions, many professors across the nation began re-evaluating retirement plans, ultimately shutting out many jobs for fresh grad students such as Sweeney. “There’s going to be a backlog of people waiting for jobs, meaning youth are going to face more competition in various jobs over the next few years,” he continued.
Lipnowski has noticed the same “pipeline” effect. In terms of priority, when companies lay people off, it is usually those with the least seniority who go first, unless companies are able to persuade certain workers to take early retirements.
In general, since profits are lower, sales are lower, which has lead to less people being hired, especially among youth. “A lot of jobs disappeared, and it became tougher, for those who are graduating, for those about to come out into the job market and even for people looking for summer jobs,” said Lipnowski.
A report on Canadian university funding by the Educational Policy Institute released in February confirmed the negative impacts that the recession will have on post-secondary institutions over the next few years, and outlined possible solutions, many of which were controversial.
The recent two percentage-point cut in the GST to five per cent is evidence that people aren’t prepared to pay higher taxes. “People’s unwillingness to pay those taxes means money getting yanked from universities, hospitals and other social programs,” said Sweeney.
During the recession, many Canadian companies were forced to adapt to the new circumstances by rationing, downsizing, and sometimes with outright plant closures.
Companies such as General Motors, and the Detroit Auto Manufacturers also needed to cut back on production when inventory simply wasn’t clearing the lot. With a big part of the production happening in Ontario, the province’s entire service sector was impacted with a “general trickledown effect” that shaped, in a negative way, the whole economy, said Lipnowski.
The natural resource sector in British Columbia also suffered. As home building in the states came to a halt, lumber sales dropped.
Lipnowski recognizes the Canadian government’s attempt to mitigate negative effects by injecting money into public projects.
Sweeney also emphasized the value of investing stimulus money into infrastructure projects that produce the “boom” affect. “Various types of infrastructural and human capital such as highway and bridge reconstruction employ a lot of workers, but more importantly have direct physical benefits,” he said. “Businesses need transportation, and people certainly need that kind of infrastructure and those kinds of jobs.”
Another method the government seems to be turning to is what Sweeney terms as “re-training benefits,” money given to people in the form of low interest, interest frozen loans and employment insurance. “People are kept out of the labor market and are also being trained and educated for jobs the government thinks they’re going to need in two or three years.”
Employment Insurance offers temporary financial assistance for unemployed Canadians while they look for employment, or as they “re-train.” In general, EI is considered a vital program for Canadians, however, it can be accompanied by stigma in some areas. “The way that EI is culturally accepted is very different region by region,” said Sweeney.
“One of the things about EI that people have to remember is that if you work, you pay for it. The people that get EI were working at one point and paid into an insurance plan, in the case that they would be out of work,” he said.
The Canadian Labour Force Survey released last Friday showed an overall employment increase for the second consecutive month, up 31,000 jobs in September. The country also experienced its first monthly unemployment rate decline since last year.
In Manitoba, full time jobs continue to increase. Our current provincial unemployment rate is the second lowest in Canada, behind Saskatchewan. The unemployment rate was 5.3 per cent in September, down from 5.7 per cent the month before.
Sonja Stockton, head of recruitment for PricewaterhouseCoopers concluded a recent interview on graduate unemployment on the company’s website by saying: “The future economic prosperity is in the hands of this generation, so rather than blame each other for how we got here, we need to look ahead and work out how to minimize the long-term effects. It will not be a quick fix, but if we get it right, we could have a generation that has learned some of the hardest business lessons, quicker and more effectively than many of the generations in full time employment.”
