Labour force participation in Canada
Labour is one of the main factors behind economic growth. When more people are working, demand for goods and services is stimulated, which helps grow the entire economy.
Labour force participation is relatively high in Canada. About two-thirds of people of working age are part of the labour force. That’s a little higher than in the United States or the average of the European Union. Labour force participation in Canada is shaped by:
- more women working than ever before
- high levels of immigration
- our aging population
- the state of the overall labour market
Let’s take a closer look at these issues.
More women working than ever before
Programs that help families with the cost of raising children have helped increase labour force participation, particularly among women. These benefits can be used to offset the costs of child care, so people can return to work sooner if they choose. This has helped increase the labour force participation among women aged 25–54 to all-time highs in recent years.
High levels of immigration
Most newcomers to Canada are of working age and seek work when they arrive. So high levels of immigration tend to increase labour force participation.
Our aging population
Statistics on labour force participation count everyone 15 years and older as working age but have no upper age limit. So as the baby boomer generation gets older and more people retire, labour force participation declines.
The state of the country’s labour market overall
During difficult economic times, workers could find it hard to get a job. Frustrated job seekers sometimes stop looking for work, which reduces labour force participation. But during good economic times, finding a job can be so easy that people who have left the labour force choose to return, such as a recent retiree who takes on part-time work.
The state of the labour market also affects young workers. As the economy emerged from the pandemic and workers were in high demand, labour force participation among people aged 15–24 was strong. Demand for workers has since declined, and youth labour force participation has followed suit.
Why labour force participation is important
No single piece of information tells the whole story of what is happening in the labour market, so economists use different data to piece it all together. Labour force participation tells us how many people are active in the labour market and how many have dropped out of it. It is just one piece of a larger puzzle, but it is essential to understanding what is happening in the labour market—and in the economy overall.
