Key points

• Youth unemployment is improving, but remains elevated: Canada’s youth unemployment rate fell from 14.5% in July 2025 to 12.6% in July 2026.
• Youth unemployment does not tell the full story. NEET (Not in Education, Employment or Training) measures help identify young people who are disconnected from both work and education. 
• Canadian and international research links prolonged youth unemployment and detachment to weaker future employment, earnings, and career progression.

Canada’s labour market is showing signs of improvement in recent months. The national unemployment rate fell for the third consecutive month in July, hitting a two-year low of 6.4%. But one group continues to face a much softer labour market: young Canadians.

The unemployment rate among Canadians aged 15-24 sat at 12.6% in July. This was down from a recent peak of 14.3% in April, but remains well above the 10.8% average recorded between 2017-2019 prior to the pandemic. 

A similar trend is observed in Alberta, youth unemployment is sitting at 14.5% down from 20% last July, also still above pre-COVID norms. We discussed some of the Alberta-specific factors behind this in a past Twenty-Four.

Still, the unemployment rate only tells us so much about how young Canadians are faring.

Not all youth are experiencing the same labour market

Part of the challenge in deciphering the headline youth unemployment rate is the breadth of the category itself. A 16-year-old searching for their first summer job is in a different position than a 23-year-old transitioning from university into the workforce.

An age breakdown of youth unemployment illustrates this. In July, the unemployment rate for students planning to return to school was 28.5% for those aged 15 to 16; 17.6% for those aged 17 to 19; and 6.3% for those aged 20 to 24.

Looking beyond unemployment

Unemployment is a crucial metric, but it’s not comprehensive. To be counted as unemployed, someone without a job must be actively searching for one. A person who stops looking altogether is instead considered outside of the labour force and is therefore not part of the unemployment rate.

One way of broadening the lens is the NEET rate, which stands for “not in employment, education or training”.

Canada’s NEET rate for those aged 15-29 rose from 11% in 2022 and 2023 to 12% in 2024 and 2025. But that deterioration wasn’t evenly distributed across age groups. According to Statistics Canada data, in the 2023/2024 academic year, the rate among 15 to 19-year-olds was 6%. Among 20 to 24-year-olds, it was 13%, while the rate among 25 to 29-year-olds climbed to 15%.

For the most part, the increase reflected more people looking unsuccessfully for work rather than leaving the labour force altogether. But there are pockets where disengagement is more apparent.

When a transition becomes something more

Conventional NEET measures often capture temporary, harmless gaps between school and work. To better track sustained detachment, Statistics Canada created "NEETEST," which stands for “not in employment, education or training, excluding short transitions”. This distinction cuts these rates almost in half. In 2022, 12.6% of 20-to-24-year-olds were NEET, but only 6.5% were classified as NEETEST.

New Statistics Canada research released this week followed Canadians aged 20 to 29 who experienced NEETEST status in 2017 for another five years. The differences in subsequent labour-market outcomes were striking.

Five years later, men who had experienced sustained detachment earned an average of $33,100, compared with $70,900 among other men. For women, the trend was similar, but the earnings gap was smaller throughout the period.

Those numbers shouldn't be interpreted as purely causal. Young people who become persistently detached from work and education differ from their peers in many ways. But the gaps remained substantial, even after researchers accounted for a wide range of demographic, educational and socioeconomic characteristics.

Canada's experience fits into a much broader body of evidence suggesting that early labour-market setbacks can have lasting impacts on employment outcomes.

Missing the first rung

Research shows that graduating into a weak labour market was associated with an initial earnings loss of roughly 9%. Half of that gap disappeared within about five years, but it took close to a decade to fully recover.

Graduates entering a weak labour market were more likely to begin their careers at smaller, lower-paying employers and subsequently spent years moving toward better job matches. Labour-market entrants were also much more affected by poor economic conditions than workers who already had a few years of experience.

Evidence from other countries points in the same direction. A 2021 UK study found that each additional month of unemployment between ages 18 and20 was estimated to permanently reduce annual income by about 1.2%. However, the penalty was smaller when unemployment occurred between ages 21 and 23, and dissipated the later it occurred in the worker’s twenties.

Because the early years of a career are critical for development, prolonged unemployment can permanently stunt a person's earnings. The primary economic danger isn't brief periods of joblessness, but rather young adults falling into sustained detachment and missing the first rung of the career ladder altogether.

Answer to the previous trivia question: The largest steel-producing company in the world is China Baowu Group.  

Today’s trivia question: Which OECD country has the highest percentage of youth NEET?