Young people are facing a crisis of high unemployment. Here’s how the budget addresses that

As Canada’s young people continue to struggle with a challenging labour market, the federal government has outlined its plans to address a crisis that has produced some of the highest youth unemployment rates in more than a decade.

The plan focuses on work placement and summer job creation for students, and more investments in skills training programs that the federal government says it expects will make it easier for young people to find work, including in the trades and climate-related sectors.

“To the youth, this budget was made for you,” said Finance Minister François-Philippe Champagne during a speech on Tuesday before he tabled the budget in the House of Commons.

Young people tend to be the first and hardest hit when economic conditions are weak. In the years since the pandemic, inflation has surged, elevating the cost of living. Population growth has also ballooned — especially among the student-aged cohort — outpacing the number of available jobs in recent years, though growth has levelled off this year.

“There’s very much a shift in terms of expectations of what someone’s life is going to look like, and that is a huge challenge for young people,” said Rob Gillezeau, an assistant professor of economic analysis and policy at the University of Toronto.

Now, the country is teetering on the edge of a recession as a bruising trade war with the U.S. leads to layoffs and a pullback on hiring and investment. And that doesn’t bode well for younger generations, added Gillezeau.

“Most recessions are relatively short in duration, but if this one is being driven by the Americans essentially having completely wild economic policy that appears intent on damaging our country, the economic harm can be much longer lasting,” he said.

“That’ll have a disproportionate impact on young people.”

“Overall, when I look at this in this budget, I think what they are trying to do is signal that they’re aware that youth are being most impacted right now,” said Rebekah Young, a vice-president at Scotiabank Economics.

However, “when we think about this transformation the Carney government is trying to do … I think they’re going to have to go deeper in terms of how [are] the education and the university systems equipping younger Canadians to enter and stay in the workforce.”

For its Student Work Placement Program, the federal government is planning to set aside $635.2 million over three years, starting in 2026-27, for 55,000 “work-integrated learning opportunities” — basically, skills training and short-term job placements — for post-secondary students.

It’s also proposing $594.7 million over two years toward the Canada Summer Jobs program, an initiative it began exploring a few years ago that it says will support 100,000 jobs for youth next summer. 

Among the more targeted proposals is a “Youth Climate Corps” — a paid skills training program for young people in which they will be “trained to quickly respond to climate emergencies, support recovery and strengthen resilience in communities across the country.”

The program allocates $40 million over two years to Employment and Social Development Canada, though it’s not clear how many young people will benefit.

The government says it will also allocate $307.9 million over two years to a Youth Employment and Skills Strategy. The funding goes toward jobs, training and other supports starting in 2026-27, including mentorship, transit and mental health counselling.

The initiative gives money to various government departments which then disperse it to programs for young people who face “employment barriers,” which could include groups like women and racialized people.

The budget also includes a previously announced plan to pump money into skills training for the trades, which isn’t necessarily directed at young people but could benefit them. 

That portion allocates $75 million over three years to expand union-based training in the Red Seal Trades, a list of designated trades that includes jobs like carpentry, heavy equipment operating, ironworkers, machinists and plumbers. 

While the programs might address some issues that young people face right now — like giving a clearer path to entry-level jobs, which some experts worry could be replaced by artificial intelligence — the best thing the federal government can do for young people right now is avoid a recession, said Young.

“We’re in a trade war, there’s pervasive uncertainty. Fortunately, there’s not a lot of layoffs going on en masse, but there’s not any hiring going on either. So especially youth that are looking to integrate into the labour markets, they’re finding a really tough time,” said Young.

“They’ve just come out of a tough few years, including when we had explosive population growth that also made it really hard to define employment. So I think I read this as signalling [that] they’re trying to be responsive.”

The budget lines aimed at youth unemployment amount to “small promises,” said Paul Kershaw, a professor at the University of British Columbia and the executive director of Generation Squeeze, which he said “reinforces” a lack of concern for the struggles facing younger people.

“I would certainly like to see a budget in the future try to find a better balance between new dollars later in the life course versus new dollars for young people at this critical moment as they’re trying to launch their career, start families and make our economy more productive,” he said.

How did the Gen Z job market get so bleak?

The government is scaling back dramatically on admissions for temporary workers, which some economists have argued contributed to a youth labour market that saw more people competing for fewer jobs. But trade war uncertainty has added another layer of complications. 

“It’ll certainly — theoretically — help, but we’re also seeing jobs just not growing right now because of that uncertainty,” said Young. “So it’ll remove in theory some of the competition for those jobs, but I would argue also that the government should be thinking — how do we get youth into other jobs?

“I find that it’s the [Youth Employment and Skills Strategy] and [the Student Work Placement Program] that could have a more meaningful impact on youth, kind of having that longer term vision.”