Andrew Grantham’s new analysis found that a disturbing trend has taken hold in Canada. Youth unemployment has skyrocketed to levels typically only reached during national economic recessions. Grantham, who is an economist at CIBC, outlined the disturbing trends hurting the young job seekers. He highlighted the ways that increasing artificial intelligence and other labor-substituting technologies are affecting their prospects.
The second of Grantham’s warning signals is that the youth unemployment rate has jumped by 5.5 percentage points since 2022. This increase is much bigger than the two percentage point increase that prime-age workers get in recessions. He attributes this gap to the nature of jobs that youth hold. These are, by far, the jobs most replaceable by automation.
“The early data is starting to show how AI and other labour-substituting technologies are playing a role,” Grantham said. He argues these innovations will largely be felt by younger Canadians, who will increasingly struggle to find work.
Beyond this, the analysis provides an optimistic view of the job market. Grantham for his part pointed out that where youth employment’s decline is a critical challenge, for other age groups the labor market is far more robust. He is convinced that the reasons for the current weakness are not here to stay. In fact, historically the youth jobless rate tends to increase by at least four percentage points during recessions. Grantham is looking forward to more of this in the future.
To Grantham’s earlier point about rising non-permanent residents from 2022-2024, that influx has added a boost to the labor force as well. This increase on its own cannot explain the immense challenges young job seekers are facing today. With pandemic-related enrollment declines compounded by higher education’s long-term trends, population growth has slowed down fast. As such, this supply factor likely can’t explain the turnaround in youth employment we’ve seen this year, he noted.
The report, which was initially published on August 26, 2025, at 4:38 pm and later updated at 5:25 pm, underscores the need for urgent attention to youth unemployment in Canada. Grantham’s comments really underscore the awful Catch-22 that young people find themselves in today. There’s room for optimism as times are getting better with the shift in economic conditions.
