MONTREAL ― The next recession to hit Canada could have a harsh toll on young people entering the workforce, if history is anything to go by, a new report warns.
“Recessions hit young people and others with less-developed skill sets especially hard,” said the report from RBC Economics, released Wednesday.
“What’s less well known is that the effects of graduating into a recession last long after the recovery has taken hold.”
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The report cited a 30-per-cent chance of a recession in Canada in the next 12 months, but those forecasts vary widely. A recent one from Oxford Economics put the near-term odds of a Canadian recession at 45 per cent, while wealth management firm Gluskin+Sheff puts it at 80 per cent.
The RBC study looked at Canadians entering the workforce during the Great Recession a decade ago, and found they are in worse shape, career-wise, than those who came before them or after them.
This group, currently aged 30 to 34, has seen slower wage growth in the years since the recession, and has had a harder time moving up the ladder. Less than 10 per cent of this cohort are in management jobs, compared to 12 per cent for the same age group before the recession.
Fewer are working in high-skilled jobs ― 37 per cent today, versus 41 per cent before the Great Recession.
“These effects linger for a long time,” said RBC senior economist Andrew Agopsowicz, author of the report. Periods of unemployment can erode your skills and “it becomes harder to move into the jobs you want to do.”
During the Great Recession, as is almost always the case, young people saw the highest unemployment rates. But young men were hit especially hard ― the jobless rate among university-educated males more than doubled that of young university-educated women, at 15 per cent compared to 7 per cent.
“Young women with a bachelor’s degree fared better, probably because they were more likely to be employed in healthcare and educational services occupations that largely avoided any negative employment shock,” the report noted.
Agapsowicz also stresses that women are more frequently employed in service jobs, while it was the goods-producing sector that got hit hardest in the last recession.
One upshot of this could be that, as Canada increasingly shifts to a service economy, the lack of mass layoffs in manufacturing industries might make recessions less harsh, Agapsowicz speculated.
Brush up on your ‘general skills’
So what should you do if you’re facing the possibility of entering the workforce in a recession? Stay in school longer?
“The cost of staying is you start your career later,” Agapsowicz said, though he noted that his own decision to go to grad school a decade ago was influenced by the arrival of the Great Recession.
He suggests young people focus on “general skills,” rather than specific skills ― things that can be carried to various different jobs, such as a strong ability to communicate, teamwork, and willingness to learn new things.
“It might serve you better than something specific like a particular coding language,” he said.
“The key is to be flexible, to change with the times.”