Canada's unemployment rate set to rise in 2023?
Several media outlets are predicting a mild recession at the start of 2023. This is likely to have an impact on inflation, purchasing power and unemployment.
This recession is expected in view of various factors such as: disruptions in the global supply chain caused by the Russian-Ukrainian war, climate changes affecting agricultural production, and a temporary increase in demand for items that were not available during the COVID 19 period.
1- Which sectors will be affected by this recession?
The recession in Canada differs from province to province, as each Canadian region has different industries affected by different variables.
As a result, it will not affect Canadian businesses and households equally.
According to economists’ studies, this recession will have a negative impact on the manufacturing sector, but certain service sectors with strong physical proximity, such as tourism and hotels, could prove more resilient.
Any resilience translates into an increase in the inflation rate and, consequently, a destruction of household purchasing power.
2-The recession's impact on inflation and Canadians' purchasing power
For the recessionary period at the end of 2022 and beginning of 2023, the Canadian authorities reported a slowdown in GDP growth, leading to an increase in the inflation rate to 6.9% in October 2022.
As a result, inflation will push up prices in sectors essential to the Canadian citizen, such as food, oil, taxes, transport, etc., as well as raising interest rates.
Rising inflation will have a direct impact on Canadians’ purchasing power. As will an unemployment rate approaching 7% in late 2022/early 2023.
3-Rising unemployment and the solutions to be adopted
The increase in the unemployment rate in late 2022 and early 2023 is due to several factors apart from the economic downturn, including the scarcity of skilled labor.
This sometimes explains the discrepancy between the number of jobs on the market and the number of unemployed.
As a result, we need to find radical solutions for a labor market that is more balanced between supply and demand.
In this context, we offer the international recruitment solution to fill thousands of vacancies with highly qualified employees.
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