Bank of Canada Chief Warns of Labor Market Inequality for Immigrants and Youth

The Bank of Canada Governor, Tiff Macklem, announced that the country's economy is nearing its target inflation rate of 2% despite the labor market slowdown. In his speech at the Winnipeg Chamber of Commerce, he stated that the path to this goal feels like a "soft landing" but he warned that the impacts are unevenly distributed among different population groups.

The decline in inflation, which reached 2.7% in April, is accompanied by a rise in the unemployment rate to 6.2% compared to a historic low of 4.8% in July 2022. This increase occurred amid a reduction in job vacancies and rapid population growth, which helped avoid mass layoffs. Macklem noted that the economy has sufficient reserves to create new jobs without jeopardizing the inflation target.

However, Macklem expressed concern that the labor market slowdown has disproportionately affected new immigrants and young workers. The unemployment rate among new immigrants has reached 11.7%, more than double the national average. A similar situation is among youth: the unemployment rate for those aged 15 to 24 stands at 12.7%, significantly higher than the rate for adults aged 25 to 54.

Macklem emphasized that integrating new immigrants into the Canadian economy is becoming increasingly challenging, and the government needs to consider this when shaping immigration policies. He also noted that Canada has been successful in attracting workers who can integrate into the labor market relatively quickly, but it is important not to lose this success and to continue developing sensible immigration policies that support economic growth.