Education, training need rethinking amid changing job market dynamics: BoC

A senior Bank of Canada official says we need to rethink our approaches to education and training as young people face a difficult labour market marked by low turnover and high long-term unemployment.

In a speech in Montreal, Nicolas Vincent, an external deputy governor at the Bank of Canada, said the job market is particularly challenging for young people.

He said not only are young people overrepresented in the ranks of the unemployed, but they also make up almost a quarter of the long‑term unemployed — a share that has more than doubled since 2022.

He noted that when the economy slows, unemployment tends to rise more sharply among young people, but the magnitude of the rise in youth unemployment suggests other factors are also at work.

“We will be closely monitoring indicators such as the availability of entry‑level positions, trends in occupations that are exposed to AI and the impact of shifts in immigration policy,” said Vincent, according to a prepared text of the speech.

“If young people fare better as the economy recovers, then their recent challenges may be more cyclical. But if demand for less experienced workers remains weak, it would suggest a more structural problem.”

Statistics Canada reported earlier this month that the unemployment rate rose to 6.9% in April, up from 6.7% in March, while the jobless rate for those aged 15 to 24 climbed to 14.3% compared with 13.8% a month earlier. The increase came as the economy lost 18,000 jobs in April.

Canada continues to deal with the fallout from U.S. tariffs and faces uncertainty about the future of the trade agreement with the U.S. and Mexico with a review set to begin later this year.

Vincent said Canada has a “low hire-low fire labour market,” making it difficult for the unemployed to find work even while there has not been an increase in layoffs.

He also noted that if you don’t have a job, it is taking longer to find one.

However, Vincent said what the central bank can do is limited as monetary policy can address cyclical weakness, but it cannot be used to deal with structural issues.

“While monetary policy can, to some extent, help the economy transition during periods of restructuring, it cannot compensate for lower supply caused by factors such as trade friction or population aging,” he said.

Vincent said Canada will need to keep seeking out new trade partners and diversifying exports.

He said we need to ask how we can better prepare young people for the new realities of the labour market, how we can make it easier for people who lose their jobs to find new opportunities and how we can establish a system of lifelong learning and promote training on the job.

“These questions are more important than ever, and we need to think about them — collectively. In the presence of structural change, we all have a role to play in ensuring that Canada remains competitive and able to meet current and future challenges,” he said.