Is employment keeping pace with population growth?

In the 12-month period ending in June 2023, total employment in Canada—as measured in the Labour Force Survey (LFS)—increased by 470,000, or 2.4%, surpassing the average annual employment growth (+2.0%) observed from 2017 to 2019. As employment has increased, unmet labour demand has eased. After reaching a record high of 1,003,200 in April 2022, the number of job vacancies in Canada has trended down to reach 759,000 in May 2023, their lowest level since May 2021.

Employment growth in the past year has occurred in the context of historically high population growth. According to official population estimates, the Canadian population grew by over 1 million people in 2022, and the annual growth rate (2.7%) was the highest since 1957 (3.3%). This trend continued in the first quarter of 2023, when the population increased by 292,232. On June 16, 2023, Statistics Canada announced that Canada’s population had reached 40 million people.

The employment rate—the proportion of the population aged 15 years and older who are employed—provides a direct and simple way of assessing whether employment growth is keeping pace with population growth. When the employment rate holds steady over a period of time, this is an indication that employment and population have grown proportionally. An increase in the employment rate is an indication that employment is growing faster than the population, while a decrease signals that job growth is not keeping pace with population gains.

Employment growth keeps pace with population growth in the 12-month period ending in June 2023

Canada’s employment rate stood at 62.2% in June 2023, little changed from a year earlier (62.1%). In other words, in the 12-month period ending in June, employment growth, on average, kept pace with population growth. Prior to June, the monthly employment rate had reached a peak of 62.5% in January 2023, before falling to 62.1% in May, as employment growth slowed in the first half of the year.

Trends in the employment rate often differ across demographic groups. For example, while the employment rate for young men (aged 15 to 24 years) was little changed year over year in June (57.9%), it fell 2.9 percentage points to 58.1% for young women over the same period. Meanwhile, the employment rates for core-aged (aged 25 to 54 years) women (81.7%) and men (88.2%) were each virtually unchanged from a year earlier.

The employment rate had been slowly trending up in the years leading up to the COVID-19 pandemic—it reached a peak of 62.5% in April and May 2019 before edging down to 62.1% in February 2020. In March and April 2020, as lockdowns and public health restrictions were put in place to slow the spread of COVID-19, employment declined by over 3 million, and the employment rate (51.9%) fell to its lowest level in the history of the LFS. It took nearly two years for the employment rate to recover to its pre-pandemic level, reaching 62.2% in February 2022.

Immigration contributes to population and employment growth

A notable aspect of recent population growth has been the contribution of record-high temporary and permanent immigration. In the first quarter of 2023, for example, official population estimates showed that Canada welcomed 145,417 new immigrants and saw an additional net gain of 155,300 non-permanent residents.

While new immigrants and non-permanent residents contribute to the economy and labour market in all regions of the country, they are more likely to reside in one of Canada’s large urban centres, including the three largest census metropolitan areas (CMAs) of Toronto, Montréal and Vancouver. According to the 2021 Census of Population, over half of recent immigrants (53.4%) and non-permanent residents (58.9%) lived in one of these three CMAs in 2021.

LFS results indicate that in these three CMAs, employment growth in the past year has kept pace with population growth. As of June 2023, the employment rate in both Toronto (64.2%) and Vancouver (64.2%) was little changed from a year earlier, while in Montréal (65.1%), it was up 1.6 percentage points.

As the economy and the labour market evolve and change, the LFS will continue to monitor changes in the employment rate and other key indicators of labour market conditions. The next LFS results will be available on August 4, 2023.