This country note provides an overview of the labour market situation in Canada drawing on data from OECD Employment Outlook 2024. It also looks at how the transition to net-zero emissions by 2050 will affect the labour market and workers’ jobs.
OECD Employment Outlook 2024 - Country Notes: Canada
Labour markets have been resilient and remain tight
Labour markets continued to perform strongly, with many countries seeing historically high levels of employment and low levels of unemployment. By May 2024, the OECD unemployment rate was at 4.9%. In most countries, employment rates improved more for women than for men, compared to pre‑pandemic levels. Labour market tightness keeps easing but remains generally elevated.
In Canada, the unemployment rate was 6.4% in June 2024, slightly above the pre‑pandemic rate of 5.6%, and above the current OECD average of 4.9% (Figure 1). In June 2024, the youth unemployment rate was 13.5%, slightly above both the pre‑crisis level (10.8%) and rate recorded in June 2023 (11.4%). At 74.8% in Q2 2024, the employment rate among the working age population was only slightly lower than one year earlier (76%) and about the same as the pre‑crisis level in Q4 2019 (74.6%). The employment rate for women aged 25‑54 was 80.9% in Q2 2024, below the rate of 87% for men in this age group.
According to OECD projections real GDP growth is expected to increase from 1% in 2024 to 1.8% in 2025, driven by improving global conditions, the easing of monetary policy, a surge in private spending and increased labour supply due to immigration. The labour market is projected to continue to grow over the next two years with total employment forecast to grow by 1.5% in 2024 and 2025.
The undersupply of reasonably priced high-quality childcare has long been an issue in much of Canada. Although employment rates of women with young children have risen in recent decades there are large differences across provinces and territories in access to affordable childcare. A major federal-provincial initiative was launched in 2021 aimed at substantially increasing access to high-quality childcare. This has led to an expansion in the number of licensed childcare places available in most provinces and territories and a decline in the average cost of a full-time place. Despite progress, challenges persist, such as evidence of staff shortages and concerns about the fiscal sustainability of the target of CAD 10 per day childcare cost without indexation.
Real wages are now growing but there is still ground to be recovered
Real wages are now growing year-on-year in most OECD countries, in the context of declining inflation. They are, however, still below their 2019 level in many countries. As real wages are recovering some of the lost ground, profits are beginning to buffer some of the increase in labour costs. In many countries, there is room for profits to absorb further wage increases, especially as there are no signs of a price‑wage spiral.
In Canada real wages are still 2.4% lower than they were just before the pandemic in Q4 2019 (Figure 2).
Nominal wages (compensation per employee) in Canada are projected to increase by 2.3% in 2024 and 2.3% in 2025. Although these increases are significantly lower than in most other OECD countries, they will allow Canadian workers to start to regain some of their lost purchasing power by 2025, as inflation is projected to be 2.4% in 2024 and 2.1% in 2025.
Figure 1. Unemployment rates remain at historically low levels in many countries
Unemployment rate (percentage of labour force), seasonally adjusted data
Note: The latest data refer to March 2024 for the United Kingdom, and June 2024 for Canada and the United States.
Source: OECD Employment Outlook 2024, Chapter 1.
Statutory minimum wages in real terms are above their 2019 level in virtually all countries
In May 2024, the real minimum wage was 12.8% higher than in May 2019 on average across the 30 OECD countries that have a national statutory minimum wage. The average figure is driven in part by particularly large increases in some countries, but the median increase was also quite significant, at 8.3%.
In Canada the nominal (weighted) minimum wage rose by 20.8% between May 2019 and May 2024, while the real minimum wage rose by only 2.1%, well below the average real increase in OECD countries.
Canada is one of only five OECD countries (for which there is available data) that has seen real wages in low-pay industries fall relative to wages in middle‑pay and high-pay industries. This suggests that recent increases in minimum wages relative to average wages have not been as effective in providing protection for the most vulnerable workers, and also spreading the cost of inflation among workers at different pay levels, as in other countries.
Figure 2. Real wages remain below 2019 levels in most countries
Note: * For Canada, Japan, Korea and Mexico, the annual growth refers to Q4 2022‑Q4 2023 and the cumulative percentage change to Q4 2019‑Q4 2023. OECD is the unweighted average of 35 OECD countries (not including Chile, Colombia and Türkiye).
Source: OECD Employment Outlook 2024, Chapter 1.
Climate change mitigation will lead to substantial job reallocation
The ambitious net-zero transitions currently undergoing in OECD countries are expected to have only a modest effect on aggregate employment. However, some jobs will disappear, new opportunities will emerge, and many existing jobs will be transformed. Across the OECD, 20% of the workforce is employed in green-driven occupations, including jobs that do not directly contribute to emission reductions but are likely to be in demand because they support green activities. Conversely, about 7% is in greenhouse gas (GHG)-intensive occupations.
In Canada, 20.6% of the workforce is employed in green-driven occupations, compared to 20% on average across the OECD (Figure 3). Of these green-driven occupations, only 16.8% are truly “green new or emerging occupations”. The highest share of green-driven occupations can be found in Alberta, the lowest in Nova Scotia. Conversely, about 5.9% of Canadian employment is in emission-intensive occupations, compared to an OECD average of 7%.
In Canada, men are more likely to be employed in green-driven and GHG-intensive occupations, while older workers are more likely to be employed in emission-intensive occupations.
Green-driven occupations tend to pay higher than average hourly wages. In Canada about 24% of high-wage employees work in green-driven occupations (above the OECD average), and only about 11% of low-wage employees work in green-driven occupations (below the OECD average).
Differences in the earnings losses following job displacement between workers in high-emission and low-emission industries are among the smallest among the countries studied, averaging 29% and 25% over five years, respectively. This compares to losses of 36% for workers in high-emission industries, and 30% for workers in low-emission industries on average in other OECD countries. This stems in part from the capacity of the labour market to smoothly reallocate jobs across firms and sectors.
Figure 3. One out of five workers is employed in green-driven occupations
Percentages, average 2015‑19
Source: OECD Employment Outlook 2024, Chapter 2, Figure 2.3.
Contact
Glenda QUINTINI (✉ glenda.quintini@oecd.org)
Andrew AITKEN (✉ andrew.aitken@oecd.org)
This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Member countries of the OECD.
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