It’s becoming increasingly difficult for young Canadians to find a job, and an influx of cheap foreign workers into restaurants and retail after the pandemic could make it even harder.
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Published August 12, 2024 • 4 minutes reading time
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(Bloomberg) — It’s getting harder and harder for young Canadians to find a job. An influx of cheap foreign workers into restaurants and retail after the pandemic could make it even harder.
Michelle Eze began actively looking for work in the Toronto area in October, when youth unemployment began to rise in Canada. The 22-year-old political science graduate looked for teaching and restaurant service jobs to help pay her bills and support her parents, but had no success.
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“I was struggling. I searched on Indeed, searched everywhere, asked friends and so on – nothing,” she said. “It was really demoralizing because I was determined but I wasn’t seeing any results.”
Eze is still searching. Her difficulties underscore a disparity in Canada’s labor market: Entry-level jobs for students and college graduates are much harder to find given the faltering economy, and yet the country has imported hundreds of thousands of temporary foreign workers for jobs, many in the food and retail sectors.
This is contributing to rapidly rising youth unemployment. Two years ago, the unemployment rate among 15- to 24-year-olds was just over 9 percent. Now it is 14.2 percent – the highest level in more than a decade outside of the Covid-19 pandemic.
Among younger immigrants, those who arrived in Canada in the last five years, the unemployment rate is around 23 percent.
A Bloomberg News analysis of government data shows that the number of temporary foreign workers in the food and retail sectors has exploded over the past five years, with the number of workers approved for these two sectors increasing by 211 percent between 2019 and 2023.
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The rapid increase is partly due to increased demand for immigration to Canada after pandemic-related travel restrictions were eased. Many newcomers viewed these temporary jobs as a step toward becoming permanent residents, and many employers relied on the program as the economy reopened.
Business lobby groups argue that the temporary guest worker program – originally designed to help farmers meet their needs for seasonal labor – is critical to filling vacancies.
But in cities like Toronto, the state of the labor market is undermining their position. There is certainly no shortage of young, available workers in Canada’s largest metropolis. In July, there were more than 120,000 unemployed people between the ages of 15 and 24 in the region – an increase of 50 percent in just two years, according to data from Statistics Canada.
“We’ve noticed more young people coming to us, partly due to the influx of new Canadians,” said Timothy Lang, executive director of Youth Employment Services, which helps young Torontonians get training and find jobs. “Unfortunately, some companies hire people with more experience, so they exclude some young people.”
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This is the experience of 17-year-old Alexander Clarke, who spent months applying to grocery stores, fast-food restaurants and clothing stores but never received a response from an employer.
“I think they’re looking for older people more these days,” Clarke said. “There’s a lot less young people being hired – you see a lot of older people working in their jobs, not people my age.”
In response to public pressure, Prime Minister Justin Trudeau’s government has rolled back some of its pandemic-era measures designed to address labour shortages, including limiting the number of work hours for foreign students and announcing a tougher crackdown on companies that abuse the system to hire temporary foreign workers.
Nevertheless, current regulations allow companies to employ foreign workers even in areas with high and rising unemployment.
Canada allowed employers to hire about 240,000 workers last year through its temporary foreign worker program, almost double the number in 2019. About a fifth of those jobs were in occupations most common in restaurants and retail stores, such as cooks, lunch counter servers and cashiers.
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The share of these jobs has increased significantly compared to the pre-pandemic period, while the share of foreign workers in agriculture fell from 54 percent in 2019 to 41 percent last year.
Overall, large restaurant and retail chains make up the largest group of employers using the program to hire these types of workers, but their reliance on the system cannot be quantified because government data widely uses numbered entities.
In Ontario alone, Tim Hortons hired at least 714 temporary foreign workers last year, up from 58 in 2019. But about 92% of those jobs in 2023 were posted at holding companies that did not bear the franchise’s name.
The use of this program may not only make it more difficult for young people to find work, but also lead to lower wages in entry-level positions where they compete with foreign workers.
“In a sense, we are subsidising these companies by allowing them to hire low-wage workers rather than forcing them to pay a competitive wage,” says Christopher Worswick, chair of the economics department at Carleton University in Ottawa, who co-authored a peer-reviewed report that found companies prefer temporary foreign workers because they put in more effort for the same pay.
“Wages should rise until the supply of labor matches the demand for labor,” Worswick said. “Labor shortages should be compensated for by wage increases. The only obstacle to a wage increase is the profitability of the company.”
— With assistance from Jay Zhao-Murray, David Ingold and Amanda Cox.
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