Press Release: New Brief on Long-Term Labour Market Scarring on Youth Following Recessions

The Brief was launched as part of the Globe and Mail’s “Future Workforce: How can Canada Compete?” event and highlights the need for long-term policy responses to labour market scarring on youth.

Toronto, May 15, 2023 – Today, Century Initiative, in partnership with The Future Skills Centre, has released an Executive Brief entitled Long-Term Labour Market Scarring on Youth Following Recessions. The Brief outlines the ways in which negative economic shocks, such as recessions, continue to impact youth for decades beyond the initial effects. Where much of the existing research and typical government response focuses on short-term economic concerns, this brief explores the long-term effects on young people who might be completing education, starting careers, or in any other uniquely vulnerable spot when a recession takes shape. The Brief provides five key takeaways:

• Graduating into a recession has long-term consequences for young people. Young people land lower-quality work with lesser pay. This leads to labour market scarring which has lasting impacts on a person’s earnings and career opportunities over time.
• High youth unemployment during a recession risks the well-being and social inclusion of that generation. Unemployment has mental and physical health costs that can last into a person’s mid-life. When some young groups are more impacted than others by a recession, they may be at a greater disadvantage over time.
• The long-term impacts of scarring can also harm Canada’s prosperity, equality and competitiveness for people of all ages. Scarring effects of a recession can impact gender and racial equity in the workplace. Individual consequences of unemployment also harm Canada’s economic productivity and collective well-being as a society.
• Typical policy responses to recessions do not address long-term consequences. The government responds to recessions with short-term policy initiatives. While an immediate response is important, the long-term consequences of a recession require a long-term policy response.
• A long-term policy response to labour market scarring could have long-term benefits. Thinking critically about a long-term policy response could help to prepare Canada for future recessions and result in individual and societal benefits that are worthwhile.

Lisa Lalande, CEO of Century Initiative, said "Even a tight labour market is unlikely to cancel out the challenges faced by youth, who tend to have less stable footing in the job market.  With this brief, we’re looking beyond the immediate aftermath of economic changes to help shape long-term policy responses to the dislocation and underemployment faced by Canadian youth.”

Pedro Barata, Executive Director of The Future Skills Centre, said “We also know that some youth can be more severely impacted than others. Young people with lower levels of education, women, and racialized youth suffer even larger losses of earnings during times of economic uncertainty. Any further uncertainty following closely after recent COVID job losses could compound these inequalities and cause setbacks in gender and racial equality in Canada.”

The Brief is the first output of the partnership between Century Initiative and The Future Skills Centre. It will be followed by an expert workshop on June 28^th, which will bring together academics, researchers, economic development experts, private sector thought leaders, policymakers, and other stakeholders. The workshop will be a place for discussion around long-term policy solutions for youth labour market scarring. Ideas and solutions generated during this workshop will be used to inform a Key Insights report, to be released in Fall 2023.

Read the full Executive Brief on Long-Term Labour Market Scarring for Youth Following Recessions below: