Canada’s labour market faced a significant setback in July 2025 as long-term unemployment climbed to its highest level in nearly three decades. Almost one in four unemployed individuals had been out of work for 27 weeks or more, marking the largest share since February 1998 according to Statistics Canada. This shift highlights persistent challenges for those struggling to re-enter the workforce.
The rise in long-term joblessness followed the loss of 41,000 jobs in July, with younger workers hit particularly hard. Reports noted that youth employment fell to its lowest level in over 25 years, while the overall unemployment rate held steady at 6.9% due to a lower participation rate, as outlined by BNN Bloomberg.
These figures raise pressing questions about the health of Canada’s labour market and the long-term effects on skills, income stability, and economic growth. With fewer opportunities to switch jobs and a growing risk of skill erosion, the issue of long-term unemployment demands closer attention from policymakers and employers alike.
Overview of July Long-Term Unemployment in Canada
Canada’s labour market in July 2025 showed a sharp rise in long-term unemployment, reaching levels not seen in nearly three decades. The data highlights both historical context and the growing share of unemployed individuals facing extended joblessness.
Statistical Comparison to 1998 Levels
In July 2025, 23.8% of unemployed Canadians had been without work for 27 weeks or longer. This represents the highest share since February 1998, excluding the pandemic years of 2020 and 2021.
The unemployment rate itself held steady at 6.9%, but the composition of the unemployed shifted. A larger proportion of job seekers experienced prolonged joblessness, signalling deeper challenges in re-entering the workforce.
The last time long-term unemployment reached a similar level was during the late 1990s, when Canada faced slower economic growth and restructuring in several industries. The comparison underscores how persistent unemployment remains a recurring issue during periods of economic adjustment.
More recent figures show that while total employment fell by about 41,000 jobs in July (Statistics Canada), the concentration of long-term unemployed individuals is what sets this period apart from other downturns.
Definition and Measurement of Long-Term Unemployment
Statistics Canada defines long-term unemployment as being jobless for 27 weeks or more while actively seeking work. This measurement captures individuals who remain attached to the labour force but face barriers to re-employment.
The indicator is expressed as a share of the total unemployed population. For July 2025, nearly 1 in 4 unemployed Canadians fell into this category.
Long-term unemployment differs from short-term joblessness because it often reflects structural challenges, such as mismatched skills or limited opportunities in certain regions. It is not simply a measure of how many people are unemployed, but how long they remain without work.
This metric is closely monitored because extended unemployment can reduce future job prospects, lower earnings potential, and increase reliance on social supports. It also signals potential inefficiencies in connecting workers with available jobs.
Key Trends Observed in July 2025
Employment losses in July were concentrated in full-time positions, particularly in the private sector. About 40,800 jobs were lost during the month, offsetting part of the gains seen in June (CBC).
Despite these losses, the national unemployment rate did not rise, indicating that the labour force also shrank. However, the persistence of long-term joblessness highlights that many displaced workers are not finding new opportunities quickly.
The rising share of long-term unemployed suggests weaker job-matching between employers and job seekers. It also reflects slower hiring momentum in industries that typically absorb displaced workers.
By August 2025, the unemployment rate edged up to 7.1%, the highest in nearly a decade outside of the pandemic period (RBC). This continued upward pressure reinforces the significance of the July figures as part of a broader labour market slowdown.
Economic and Social Impacts
Rising long-term unemployment in Canada has placed pressure on household finances, weakened labour market stability, and highlighted uneven impacts across provinces. The effects extend beyond job losses, influencing income security, consumer spending, and regional economic resilience.
Effects on Canadian Households
Households facing prolonged unemployment often experience reduced income security. Many rely more heavily on Employment Insurance or savings, which can deplete quickly when job searches stretch beyond six months. This financial strain limits spending on essentials such as housing, food, and healthcare.
Families with younger workers are particularly affected. Statistics Canada reported that youth aged 15 to 24 accounted for 34,000 of the July job losses, a group less likely to have substantial savings. This increases the risk of debt accumulation and delayed milestones like home ownership.
The psychological toll also weighs heavily. Long-term unemployment often leads to stress, anxiety, and reduced confidence in re-entering the workforce. These challenges may affect family stability and social participation, further reinforcing economic hardship.
Labour Market Implications
The July labour force survey showed a loss of 41,000 jobs, with the unemployment rate holding at 6.9%. Despite the steady rate, the share of long-term unemployed reached its highest level since 1998, excluding pandemic years. This signals a structural weakness in job recovery.
Private sector employment bore the largest decline, losing 51,000 full-time positions. Sectors such as information, culture, and recreation reported the steepest drops, limiting opportunities for both new entrants and experienced workers.
A rising share of long-term unemployment also reduces labour mobility. Workers stuck in extended job searches are less likely to transition into new roles, which slows productivity growth and weakens overall economic momentum.
Regional Disparities in Unemployment
The employment decline has not been uniform across Canada. Provinces with higher reliance on service industries, such as Ontario and British Columbia, have seen sharper job losses in youth-dominated sectors like retail and hospitality.
In contrast, resource-based economies in provinces such as Alberta and Saskatchewan face different pressures. While energy and agriculture provide some stability, volatility in commodity markets still affects hiring.
These regional differences shape how communities experience unemployment. Urban centres face challenges with rising living costs combined with job scarcity, while smaller towns may struggle with fewer retraining and employment support options.
For more details on the July job market, see Statistics Canada’s Labour Force Survey, July 2025.
Government Response and Policy Initiatives
Canada’s government has expanded training opportunities, adjusted employment insurance rules, and introduced targeted financial supports. These measures aim to help workers transition into new roles, reduce barriers to assistance, and stabilise communities affected by long-term unemployment.
Federal and Provincial Programmes
The federal government has introduced the Canada Retraining and Opportunities Initiative, a $50 million fund that supports community-based organisations offering new skills training. This program responds directly to communities facing exceptional job losses by funding retraining projects that align with local labour market needs.
Provinces and territories also play a central role in delivering employment services. They coordinate retraining for eligible workers, manage regional job placement services, and address labour mobility challenges. Collaboration between federal and provincial authorities helps ensure that training aligns with real employment opportunities.
In addition, the government has worked with provinces to strengthen recognition of foreign credentials. This step reduces barriers for skilled immigrants who face underemployment and helps fill gaps in sectors experiencing labour shortages.
Recent Policy Changes
In April 2025, Canada implemented major updates to its Employment Insurance (EI) system. These changes made EI more accessible by easing eligibility requirements, speeding up application processing, and increasing benefit levels for workers experiencing layoffs or reduced hours.
The reforms also introduced temporary measures to respond to economic instability. By expanding coverage, more workers now qualify for income support during periods of unemployment, including those in non-standard or part-time employment.
At the federal level, new reskilling packages were announced to prepare workers for emerging industries. According to government releases, these measures are part of a broader strategy to build a more resilient workforce and reduce the long-term impacts of unemployment.
Support for Affected Workers
Workers impacted by layoffs now have access to retraining grants, job placement services, and financial assistance. The Government of Canada invests in retraining opportunities that give employees practical skills to transition into sectors with stronger demand.
Support includes partnerships with community organisations that provide career counselling, digital literacy training, and sector-specific certifications. These initiatives aim to help displaced workers secure stable employment rather than rely solely on income assistance.
In addition, the government continues to expand targeted supports for workers affected by foreign tariffs and trade disruptions. By combining financial aid with retraining, these measures address both immediate income needs and long-term career development.
