The Government of Canada released the latest estimates for the unemployment rate in their update today. Immediately, most individuals jumped to the unemployment rate, sitting at 13%. What our analysts find more interesting is the ever-decreasing size of Canada’s overall labour force – individuals that are able and willing to work. This is a critical number as it sets the basis on which the unemployment rate is calculated – and by extension – provides the most information on Canada’s current employment outlook.
More specifically, from March to April of this year, Canada’s Labour Force decreased from 19.7 million to 18.6 million. This is over a million Canadians that are no longer willing or able to work. The way this number is calculated is based on people that have reported they are looking for work. In many cases, if there were no place to look for work, as in businesses closed or industry uprooted, then those individuals would no longer be reported in the Labour Force.
If these individuals were to be included in the count of “unemployment”, the rate would increase to well beyond the 13% being reported. How so? If we assume the labour force of just over 20.3 million as reported in February of this year and discount the 16.2 million that remain employed at the end of April, the result is a missing 4.1 million. The 4.1 million, which we anticipate represent the full unemployed pool, creates an employment rate of over 20%.
No matter how you look at it, the unemployment rate in April was best described in the Government’s release as unprecedented. Looking historically, we have not had a rise of unemployment as large in magnitude happen so quickly. There is no doubt that many of these will be temporary. However, and much more importantly, the amount that become long-term vacancies due to the changing shape of work will set the tone for Canada’s near future.