Dwindling Labour Supply Squeezes Employment Growth: Canada’s Two-Year Household Income and Employment Outlook

Document Highlights

• Tightening labour supply will constrain employment growth over the coming quarters.
• Having now fully recovered from their pandemic-induced drop, labour force participation rates will gradually decline because of Canada’s population aging.
• Robust labour demand and tight supply will keep the unemployment rate low this year and next.
• Expansion of the Temporary Foreign Worker Program is offering firms some targeted relief, but the implications for the economy are mixed.
• Recent declines in labour productivity are a reminder that weak productivity growth remains a key challenge for Canada.