Desjardins economists warn of long-term damage if labour struggles are not addressed
Canada’s labour market may appear steady overall, but the situation is increasingly precarious for young workers and a new report warns that this could have long-term financial consequences.
The youth unemployment rate climbed from 10% in 2022 to 14% by mid-2025, marking the sharpest rise outside of the pandemic in over a decade, with almost one in five of those aged 15-19 unable to secure work despite keen to find employment. Unemployment among those aged 20-24 increased more moderately, from 9% to 11%.
Desjardins’ report was authored by economists Kari Norman and LJ Valancia, and deputy chief economist Randall Bartlett. It highlights that unemployment among Canadians aged 15 to 24 has spiked to levels usually seen in a recession
“Youth unemployment consistently exceeds the national average, underscoring the persistent challenges young people face in gaining stable employment,” the authors noted. They stressed that unemployment early in a career often results in reduced earnings not only now but throughout a person’s lifetime.
The report notes that the rise in youth unemployment isn’t just cyclical, there are several contributing factors.
A surge in young temporary residents, particularly international students, swelled the labour pool after restrictions were lifted in the post-pandemic years, but at the same time, sectors traditionally reliant on youth workers such as retail, food services, and recreation, have been reshaped by rising labour costs, automation, and the expansion of the gig economy.
Federal and provincial budget cuts are also eliminating many seasonal and entry-level public service jobs, historically a stepping stone for young Canadians.
Young people are more likely to work part-time involuntarily, with 4.5% in that position in July 2025, compared to just over 1% of core-aged workers. Seasonal employment remains uncertain, with returning students in May 2025 facing unemployment above 20%, the highest in 25 years outside the pandemic.
Read: Youth unemployment is rising, what does that tell us about the wider Canadian economy?
Although minimum wage hikes have lifted earnings somewhat, living costs like rent and food have climbed faster, eroding any real gains. With fewer secure pathways into the labour market, many young Canadians are delaying financial independence, education choices, and even long-term life decisions.
The authors argue that stronger coordination between governments, post-secondary institutions, and employers will be essential and “could give Canadian youth more of the training and early experience they need to succeed in today’s labour market.”
