Unemployment Across Canada at a Staggering High

Last month, Statistics Canada released its Labour Force Survey, revealing a troubling trend in the Canadian job market. As of May, the national unemployment rate has climbed to seven percent—the highest level since 2016. Particularly concerning is the outlook for British Columbia, where youth unemployment stands out as the most severe among the statistics.

Even more concerning, 47 percent of people unemployed in May 2025 had not worked in the prior year, which indicates that the issue isn’t just short-term unemployment or that of the seasonal variety.

Professor Kevin Milligan, Director of the Vancouver School of Economics at UBC, echoed this concern to Coastal Front. “People who aren't working aren't going to be spending as much in the economy, and that tends to generate more unemployment,” he said, stressing the overall impact on our economy.

Milligan also expressed the sentiment of an incoming recession, which has been a prominent topic of discussion in recent Canadian economics. “The standard definition of a recession is that the overall economy declines for two quarters in a row, so around half a year,” he said, “so we expect that if unemployment is rising, that's going to be something that likely leads to a technical definition of a recession.”

Statistical Breakdown

(Courtesy of Statistics Canada)

At first glance, when breaking down the national unemployment statistics by demographics, there isn’t a notable difference between groups. Core-aged (between 25-54) men and women roughly sit at six percent altogether, and those over 55 aren’t far behind at five percent nationwide.

The total rate for youth is 14 percent, with that demographic typically expected to have the highest rate. In BC, however, the unemployment situation for youth has become more dire over the past year. With the non-student demographic having a 4.5 percent increase since last May, and students themselves having a staggering increase of over 50 percent, going from 21,500 unemployed last May to 48,800 this year. The total percentage went from 13.5 percent to 27.3 percent. 

This is a jaw-dropping increase for students, which has only taken place in the last year, with numbers seen typically over decades of change. This makes BC a province with one of the highest unemployment rates for youth in Canada. 

“As we discussed earlier, being unemployed leads to further unemployment,” Professor Milligan said, “so it really tends to be a sticky situation, that if they [students and young labourers] don't get that experience, it's hard to get that next step in the labour market.”

Looking at statistics released by YCharts in May, another interesting angle emerges. Toward the end of April, youth unemployment began to rapidly increase after the relative stability of the prior nine months, rising from 13 percent to 17 percent during this period. It is unknown what prompted this sudden spike.

Milligan postulates that part of the reason could be seasonal. “In the seasonal employment market, a lot of tourism, restaurants, and accommodation industries are the big employers, maybe firms are worried that people aren't going to have as much money to do that kind of seasonal spending,” he speculated.

“So for that reason, I'm always interested to see the government stepping in with support for summer jobs, for youth employment, whether that be through funded internships, through funded summer employment in the government, or subsidies for private sector employment for students and youth.”

Reaction

(Courtesy of CBC)

While employment technically increased in May for the province by 0.4 percent, this did little to change the overall unemployment average of six percent across the province, which for the prior three months had barely changed. 

Diana Gibson, Minister of Jobs, Economic Development and Innovation, released a statement in response to Statistics Canada’s survey. “Now, more than ever, it’s critical for BC to focus on diversifying our economy and protecting jobs for British Columbians, and we are doing that work,” she stated. Gibsons also pointed out the previously stated fact that overall employment in BC increased by 0.4 percent despite the other negative figures presented in the survey. 

Managing director and head of macro strategy at Desjardins Capital Markets, Royce Mendes, told the Financial Post that despite new jobs appearing in the market, Canada’s jobless rate has breached a “key threshold.” 

Professor Milligan identifies two key factors that could be behind the nationwide unemployment spike: the Bank of Canada and the ongoing tariffs enacted by US President Donald Trump since his administration took power.

Milligan describes how the Bank of Canada has been tightening interest rates since 2022, which “has the impact that firms are going to be investing less, expanding less, because money costs more, people will be spending less because their mortgages may be going up.” Milligan suggests that the Bank should respond to the state of the labour market and adjust their monetary policy to be appropriate to the current situation. He also stresses that while the biggest responsibilities fall to the Bank, the actual implementation falls into the “millions” of decisions made by everyday Canadian private businesses and firms.

As for the tariffs, Milligan says they have accelerated and exacerbated the unemployment figures that the Bank of Canada’s policy was already contributing to. The lack of demand for Canadian exports in one of our largest foreign markets, due to the tariffs, is significantly impacting the job market across the board, according to him.

“The one that's quite different here is that the tariff situation is so uncertain, firms are afraid to invest, not knowing what tariffs they may face in the future,” Milligan said, “that's leading to difficulties here in Canada, but also in the US, where you see signs that [non-Canadian] firms are holding back on investment, which could lead to a recession in the US, which would spill across the border.”