How bad are things in Canada’s job market? Bank of Canada Governor Stephen Poloz says bad enough for young people to consider working for free.
Adult children stuck in their parents’ basements because they can’t find adequate employment should take unpaid work to bolster resumes as they wait for the recovery to take hold, Poloz said yesterday in Toronto.
The Bank of Canada estimates about 200,000 young people want to work or work more, and Poloz said they may be scarred by prolonged unemployment that prevents them from moving out on their own. He said he’s been asked for advice on how young people can find work.
“Having something unpaid on your CV is very worth it, because that’s the one thing you can do to counteract this scarring effect,” Poloz told reporters was his advice to discouraged youth.
The Bank of Canada Governor referred to discouraged young workers several times yesterday at a speech and press conference in Toronto.
“I bet almost everyone in this room knows at least one family with adult children living in the basement,” Poloz said in his speech. “I’m pretty sure these kids have not taken early retirement.”
Getting those discouraged young people into the workforce is Poloz’s latest barometer of the health of the economy, and whether it will return to normal in two years.
Job market indicators suggest there’s significant slack in the economy even with an unemployment rate that has fallen to the lowest in six years, Poloz said.
“The unemployment rate as it is today overstates the amount of improvement we’ve actually had because in the background there are discouraged worker effects,” Poloz told reporters after the speech.
Poloz reiterated his remarks about young people taking unpaid work today during an appearance before the House of Commons Finance Committee, saying “When there are those opportunities, one should grab them.”
Emanuella Enenajor, senior Canada economist at Bank of America Corp. in New York, said Poloz is focusing on kids in the basement because chronic joblessness among young people is a “key failure of otherwise successful monetary policy.”
“Unlike workers with experience who lost jobs during the recession, youth who couldn’t find work during the recession face a much greater challenge,” she said in an e-mail yesterday. “With little to no experience and major gaps in their resume, they must compete every year for entry-level positions against a new cohort of starry-eyed bushy-tailed recent grads.”
There may be more signs of trouble. Economists predict Statistics Canada will report a decline of 5,000 jobs last month when it reports labor market data on Nov. 7. That would be the fifth net loss in the first 10 months of this year.
Canada’s labor market has added an average of 12,200 jobs per month since the beginning of 2013, even after adding 74,100 jobs in September. That compares with the 22,600 average between August 2009, as the recession was ending, and the end of 2012.
There are also about 900,000 people working part-time who want full-time jobs, Poloz said.
“We have been creating jobs at a trend rate of less than 1 percent, well below what one would expect from an economy that is recovering,” he said.
To be sure, Poloz said the economy is on track to recover, including in the labor market.
“Over time, as the growth happens, there is sort of a natural draw for those kids to get those new jobs,” he said. “We have to be patient.”