-- The Canadian job market is not particularly robust at present, but it may be somewhat healthier than headline figures suggest, said CIBC.
The official unemployment rate includes youth aged 15 to 19 who are enrolled in high school, but also actively seeking employment, and this group accounts for a higher-than-normal share of total unemployment at present, the bank wrote in a note to clients.
It is reasonable to argue that many of those high school students shouldn't be classified as unemployed, as their primary focus is education, CIBC said.
When high school students are excluded from the unemployment rate calculation, the total unemployment rate drops to 6.2% from the current 6.7%. In other words, without counting "unemployed" high school students, Canada's unemployment rate is materially lower, the bank pointed out.
Some high school students must work to support themselves or their families, and it is difficult to precisely quantify that group, noted CIBC. However, during economic downturns, those who truly need employment are more likely to continue job hunting, while those for whom work is optional tend to exit the labor force.
This pattern was evident during the COVID-19 pandemic, as high school students' participation rates declined much more sharply than those of other groups.
From a policy perspective, attention should be directed toward youths who are neither enrolled in school nor participating in the labor market, as well as non-student youths who are unemployed. This vulnerable segment of the population now amounts to 470,000, roughly steady from 2019 levels as a share of the total population.
None of this is meant to downplay the real challenges facing young Canadians in the labor market, added the bank. Although the actual youth unemployment rate may be lower than the official figure, it remains unacceptably high.
Additionally, the decline in the participation rate among those aged 15 to 19, while perhaps not a major concern from a macroeconomic perspective, is troubling because it means fewer young people are gaining valuable job market experience that could benefit them in the future.
Another important factor is the quality of employment available to young people. If young Canadians are predominantly working in jobs with limited opportunities for upward mobility, the negative impact is likely greater than it appears, according to CIBC.