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Summary

Canada’s labour market is shaped by long-term fundamentals such as demographics as well as short‑term, temporary factors such as fluctuations in oil prices. In assessing labour market performance, it is important consider the interaction between these forces and not focus solely on one or two variables. In this report, PBO evaluates how a broad group of labour market variables have performed over the last year during which the Canadian economy experienced a large external shock from falling commodity prices and where they are relative to long-run PBO benchmarks.

The goal of this report is to provide parliamentarians with a comprehensive assessment of the state of the labour market. It shows how labour market indicators are performing relative to their trend estimates, how these indicators compare to other countries, important regional/sectoral shifts as well as a special analysis on educational credentials and occupational requirements.

Some important labour market trends are not captured by standard indicators but may be relevant to parliamentarians. Given discussions over “precarious” jobs and underutilization of younger workers, PBO looks at the how the labour market outcomes of recent university graduates correspond with the educational requirements of their occupations.

The main conclusions reached are:

PBO finds that at the national level, labour market indicators have improved or are unchanged over the last year. However, many remain below their trend estimates, suggesting continued slack in the Canadian labour market;

Although the national labour market has performed well since the oil price shock, labour conditions have deteriorated in major oil producing provinces and industries but this has been offset by improvements elsewhere in Canada and service sector employment; and,