What's behind the deterioration of the youth labour market in Canada?

I recently had the opportunity to interview Sylvain Schetagne, an economist with the Canadian Labour Congress, about a number of issues such as: the deteriorating employment prospects for young people, structural labour market problems, the approach governments in Canada are taking towards public policy and the changes that have taken place within the economy. It's a thoroughly fascinating interview and sheds some light on the deep seated problems that are facing young workers in Canada. The interview appears below:

Q. Over the past three decades during recessions youth have been particularly hard hit by unemployment, underemployment and by difficulties transitioning into the labour market. What structural changes have occurred within the Canadian economy over the past three decades that have caused the deterioration in the youth labour market?

A: The search for a cheaper and more flexible labour force based on a supply-side economic development model (more producers competing worldwide for best price), linked to the ongoing movement of jobs from the goods-producing industries to the service industries (also linked to globalization), have significantly transform the labour market in Canada. As a result, many good jobs in the manufacturing sector are now gone, leaving fewer jobs opportunities for younger workers, especially for those with lower levels of education. Growth in industries traditionally providing low paid/low security jobs (food, retail, culture, etc.) combined with an increase in precarious work in many public services (health and education), have significantly reduced the quantity and the quality of jobs for young workers. Finally, the development of a knowledge-based economy, with some exception (like IT), normally benefits those with knowledge and experience (like those born after the second world-war).

Q. Are governments in Canada doing enough to address the high rate of youth unemployment? If not, what more can be done?

A: The Harper government believes that lowering the cost of doing business creates jobs. As a result, they reduced corporate taxes, reduced regulations in many industries and signed trade deals to remove trading barriers, in the hope that it will creates more jobs for Canadians, including young workers. Instead of creating good jobs for all, this policy has created more bad jobs, increased profits of corporations while not investing it in the real Canadian economy, reduced our fiscal capacity to invest in public infrastructure and services, reduced public safety of all Canadians and hurt our economic sovereignty. Many provincial governments are following this path while some others continue to invest in public infrastructure and services, like education, child care. But most have no plan to address the ongoing deterioration of the labour market for all, including young workers.

Q. Income inequality is a continuing problem in Canada and good paying jobs seem to be drying up for young people. A number of commentators have identified the possible emergence of two labour markets with one catering to high-wage, high-skills technical jobs and the other focused on the low wage, low skill jobs in sectors such as service industry. Are there any policy solutions that can be utilized to combat income inequality?

A: To reduce income inequality, we have many options, from targeting economic policies to the development of sectors offering high paying jobs, increasing access to and investment in education, improving our progressive tax system, increasing the minimum wage, improving labour standards and increasing access to collective bargaining. Many of these solutions cost little to governments while providing an environment that helps redistribute wealth.

Q. With post-secondary education becoming increasingly necessary to enter the labour market young people face the prospect of debt, delayed labour market entry, and uncertainty over the value of their credentials. What do you make of the trend of increased participation in post-secondary education and are there any problematic aspects that negatively impact on the youth labour market?

A: Post-Secondary education has become a safe haven, a place to weather the storm of a poor labour market. Young Canadians have the option to go to PSE with better prospects in the future or poor labour market outcomes today. But improved prospects can also be gain with experience in the labour market in areas outside PSE. In reality, what is the best option? A PSE for a part-time or temporary jobs and 50 or 75K debt, or a full-time jobs in a lower paid trade with no debts. It is a hard call.  

Q. Young people in Canada face a reality where they are living in the parental home longer, often need to complete unpaid internships or contract work at the start of their careers, and are putting off major life milestones like cohabitation, marriage, and buying a first home. Do you envision any long-term demographic problems arising from this "new normal"?

A: The deterioration of wages has moved us from one to two, and now two to three income earners per household to maintain or increase our standard of living. With the deterioration of the labour market, Canadians are adjusting, using a form of solidarity that many can count on and that hasn’t been attacked yet...family! I don’t see that as a demographic challenge, but as an economic adjustment.