Youth Unemployment Essay

1.0 Introduction

In this study, youth unemployment in Canada is taken into consideration. Canada is a nation situated in northern North America and the population of Canada is around 37 million people. In this study, the trend of unemployment in the period from 2000 to 2019 will be stated clearly by giving the measurement of the unemployment rate in Canada. Besides, the factors of youth unemployment in Canada need to be defined and clarified. In addition, the impacts of unemployment on Canada's economy and the ways to overcome youth unemployment in Canada will also be explicitly mentioned.

1.1 Unemployment

The definition of unemployment is someone who is out of work at the moment but is eligible for jobs and has been constantly looking for work in the past month. The three major types of unemployment are frictional unemployment, structural unemployment, and cyclical unemployment. Frictional unemployment is short-term unemployment due to the method of linking workers with jobs. Examples of frictional unemployment are voluntary, relocation, newly entering the workforce, and re-entering the workforce. Structural unemployment refers to unemployment caused by a persistent mismatch between workers’ skills or attributes and job requirements. Examples of structural unemployment are advances in technology and job outsourcing. Cyclical unemployment is triggered by the contraction of the business cycle. An example of cyclical unemployment is demand-deficient unemployment.

1.2 Youth Unemployment trend in Canada

The line graph shows the percentage of youth unemployment rate in Canada from 2000 to 2019. In 2000, the youth unemployment rate in Canada was 12.6%. The graph rose by 1% to 13.6% from 2000 to 2003. In 2004, the figure stands at 13.6%. The youth unemployment rate in Canada dropped dramatically from 2005 to 2007. The lowest youth unemployment rate during the period was 11.1% in 2007. The figure increased rapidly from 2008 to 2009 by 3.8% to 15.3% and is the highest youth unemployment rate during the period. The graph declined marginally in 2010, then continued to rise in 2001 and 2012. The youth unemployment rate in 2013 was 13.7%. The graph gradually decreased from 2013 to 2018 but in 2019 the figure increased by 0.3% to 11.8% of the youth unemployment rate. Overall, in 2007 it had the lowest youth unemployment rate while in 2009 it had the highest youth unemployment rate.

2.0 Factors of Youth Unemployment in Canada

There are a few factors that can affect the youth unemployment rate in Canada such as lack of experience and skills, advances in technology, voluntarily and fewer jobs than job seekers.

2.1 Lack of experience and skills

The youth unemployment rate tends to be greater than other demographic groups due to a lack of experience and skills. This makes it more difficult for young people to find work. They cannot gain the practical experience that they need unless they can find someone willing to hire them. Most companies prefer to hire experienced workers rather than those without work experience. This is because experienced employees can easily get the job done and they will not spend so much time learning their work compared to employees without experience. When employees lack experience, they may not complete work on time. In addition, a lack of skills may be rejected by a company. Job candidates require skills such as communication skills, computing skills, self-arrangement, and others. People with no skills or lack of skills may not qualified for the company and hard to get employed.

2.2 Advances in technology

Advances in technology have brought a lot of benefits to the world and helped people improve their standard of living, but also made people feel anxious. This is because machines will replace more repetitive tasks since machines can improve accuracy and safety in many work areas. It makes human skills obsolete and at lease devalues them. Technological unemployment occurs when developments in technology and work practices cause certain employees to lose their jobs. For example, by integrating labor-saving equipment into the production cycle, a company may get rid of jobs and manufacture the same amount of products as before. Therefore, certain employees could lose their jobs.

2.3 Voluntarily

Voluntarily is when someone decides not to work and volunteers to quit the job. Most of them quit their job because they did not want to accept low-paid jobs. In addition, there are a few reasons for voluntary unemployment including that they are satisfied with the amount of unemployment payment provided by the government makes them feel that their work is not ideal, high marginal tax rate which decreases effective take-home pay, some jobs are considered demeaning such as security guard and others. Some of them are not working because they are finding jobs with higher salary and benefits. This can happen when the equilibrium pay rate is lower than the salary required to encourage people to provide labor.

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2.4 Fewer jobs than job seekers

One of the factors of youth unemployment is that fewer jobs than job seekers. This is an economy’s overall demand for goods and services that cannot fully support employment. In technical terms is known as demand-deficient unemployment. This will happen during the decline phase of the business cycle and when aggregate demand in the economy is not enough to provide jobs for everyone who wants to work. Demand for goods and services is reduced, less production is required and fewer workers are needed. Low market demand has forced the company to lose too much profit and a decline in revenue. They do not expect sales to pick up at the moment so they must fire workers. The greater unemployment, which is cyclical, leads the market demand to slip even more. It contributes to substantial unemployment.

3.0 Impacts of Unemployment to Canada

Unemployment can affect a country in every perspective including economic, social, political, and others. This includes increasing government borrowing, crime rates increase, and Gross Domestic Product of the country will decrease

3.1 Increasing government borrowing

High unemployment leads to less consumption of goods and services, as fewer people pay income taxes and reduce spending. While underpayment of taxes leads to increased demand for government borrowing. The government should take action to compensate for the cost of unemployment. They must raise funds or increasing expenditures by trying to cover all these benefits in another way. In addition, the government does not only pay unemployment benefits, but it also needs to pay a family who has unemployment to receive housing benefits and income support. According to a new report by TD Economics, the increase in youth unemployment in Canada during the latest recession will cost Canadian youth $23.1 billion in lost wages over the next 18 years.

3.2 Crime rates increase

Getting out of work can affect people's lives in many ways. It is not only a loss of income, it may lead to negative emotions. In underdeveloped countries, poverty and unemployment tend to be other causes of crimes such as robbery and theft. A man who loses his job and has no money to feed his family might resort to stealing. When the unemployment rate increases, crime rates tend to increase. According to a 2016 Journal of Quantitative Criminology study, people who are unemployed due to socially unacceptable reasons and do not want to find jobs are more likely to engage in theft and robbery.

3.3 Gross Domestic Product will decrease

When the unemployment rate increases, the gross domestic product will decrease. The relationship between the unemployment rate and gross domestic product is inversely proportional. High unemployment suggests that the economy runs below the maximum potential and is inefficient. This would result in decreased production and profits. The unemployed are also unable to purchase many items, so they would lead to reduced spending and lower production. A rise in unemployment will hurt multipliers.

4.0 Ways to overcome the unemployment among the youth

There are a few ways to overcome unemployment among youth as tertiary institutions should equip students with more skills, encourage youth entrepreneurship,

4.1 Tertiary institutions should equip students with more skills

Nowadays, people are living in a fast-changing world where the job market changes so dramatically. People with no skills or a lack of skills can be replaced by other experienced and skillful people. Lack of experience and skills is one of the factors of youth unemployment. The government should try to fix this issue by running a range of programs to help youth in developing new skills. The government should set the syllabus for tertiary institutions to equip students to graduate with more skills. Those skills that they need to learn should be transferred across different industries such as the ability to learn new things quickly, teamwork, thinking analytically, and others. Besides, they also need to include good working attitudes such as honesty, respect, and others.

4.2 Encourage youth entrepreneurship

Young people must be empowered to start businesses. In many countries, very few young people are willing to run a business after graduation. Young people should start their businesses to create more employment opportunities for others. Entrepreneurs are essential to creating wealth and driving economic growth, innovation and employment. The government can provide them with entrepreneurship courses and teach them how to manage and run their own business. This will be the first step in nurturing a more independent and driven youth generation in a country. The young generation was exposed to the Internet earlier, so they have a broader vision of the world and better creativity compared to the previous generation. Governments must develop incentive programs for youth entrepreneurship to help and motivate them more.