OECD Employment Outlook 2025: Canada
Table of contents
These country notes provide an overview of the labour market situation in each country based on data from OECD Employment Outlook 2025. This edition has a special focus on how population and workforce ageing will affect the labour market and workers’ jobs.
The OECD unemployment rate remains at 4.9% in May 2025 – the same as one year ago. However, there are signs of weakening, with employment growth decelerating and labour market tightness falling back to pre‑COVID‑19 levels in many countries.
The unemployment rate in Canada remains above the OECD average, and it has increased by 1.8 percentage points, from 5.2% in 2023 to 7% in May 2025 (See figure below). The employment rate, furthermore, decreased by 1.9 percentage points between Q1 2023 and Q1 2025.
The OECD’s 2025 Economic Outlook projects annual GDP growth in Canada to weaken from 1.5% in 2024 to 1.0% in 2025 and 1.1% in 2026, due largely to trade tensions with the United States, with deteriorating employment prospects expected to weigh on household consumption amid deteriorating business investment and exports.
In Canada, there are some indications that the labour market may be beginning to recover. The decline in the number of job vacancies – observed since the summer of 2022 – halted in Q2 2024 and the number of vacancies has mostly remained stable through Q1 2025. Furthermore, job postings in Canada from the online platform Indeed were higher in February 2025 than they had been in November 2024 – the only one of the seven countries with available data where this was the case.
Real wages are growing in virtually all OECD countries, but in half of them, they are still below the levels of early 2021 – just before the inflation surge that followed the pandemic.
Real wages in Canada have begun to recover from the pandemic. Real wages in Q1 2025 increased by 1.9%, year-on-year (See figure below). Nominal wages rose by 4.3% over the same period.
While real wages are now higher than the lowest wage level observed during the pandemic – where wages were 5.7% lower than they had been in Q1 2021 – real wages have yet to fully regain their pre‑pandemic level and remain 1.4% lower than in Q1 2021.
Real minimum wages have kept pace with inflation and with wage growth overall. Since January 2021, real minimum wages in Canada increased by 0.5%; this is more than in in the United States, where real minimum wages fell, but lower than the median for the OECD (4.7% increase) and other G7 members such as Germany (12% increase) or the United Kingdom (11% increase). Though Canada’s real minimum wage increase has been more modest, real minimum wages nevertheless rose from 49% to 50% of the real median wage.
People around the world are living longer and healthier lives than ever before. This remarkable achievement has been accompanied by declining fertility, leading to significant demographic shifts. The number of old-age people per working-age person will rise by 67% by 2060 across the OECD. The share of people employed in the population will fall unless policies change, slowing down annual GDP per capita growth by 0.4 percentage points.
The employment-to-population ratio is expected to decrease by 2.89 percentage points between 2023 and 2060, according to the baseline projections. This means that there will be almost 3 fewer people out of 100 who are in work. Moreover, Canada’s old-age dependency ratio is forecast to increase from 0.32 to 0.50 over that same period.
Older working-age individuals have experienced faster income growth than young working-age individuals in Canada. The equivalised disposable household incomes of younger working-age individuals (aged 25‑34) flipped from being 0.65% higher than those of older working Canadians (aged 55‑64) in 1995 to being 3.6% lower by 2019.
Thus, if Canada successfully prolongs the duration of working lives, it will help relieve the load carried by younger generations, who will face the economic challenges of demographic ageing and the prospect of slow income growth.
Getting more jobs for older workers and promoting gender equality at work could stabilise employment-to-population ratios in most OECD countries. However, GDP per capita growth will still slow in many countries. Only by boosting productivity growth can countries maintain a growth level close to past levels.
If productivity growth continues along its trend from 2006 to 2019, Canada’s GDP per capita will grow at an annualised rate of 0.41%, given current demographic and employment trends (See figure below). This is substantially lower than the average growth rate in the OECD over the same period (1.03%).
Canada can increase annual GDP per capita growth to 0.62% by mobilizing untapped labour resources: in particular, by promoting employment of older workers in good health. Employment rates for late‑career workers (60‑64) are roughly equivalent to the OECD average, at 55%, and could be increased. Canada can help promote employment of older workers by, for instance, reforming policies that restrict people who might otherwise work from doing so if they are receiving early-retirement benefits. This restriction forces these individuals into a choice between work and pension income.
Canada may even increase economic growth beyond 0.62% – to 1.09% per year – if worker productivity growth reaches 1.03% (that is, half of the OECD cross-country median growth rate from 1991 to 2000). By accomplishing this, Canada can offset the drag on growth brought by the demographic transition.
The nature of work is changing, offering older workers a chance to stay productive for longer, but these benefits may be offset by a decline in skills as the workforce ages. To address this, there is an urgent need to shift from the current model where only a third of 55‑65 year‑olds participate in training, to one where people learn throughout life.
Older adults in Canada have lower – and declining – literacy levels, compared to younger adults. Literacy scores among 55‑65 year‑olds in the PIAAC survey in Canada are lower than among 25‑44 year‑olds, and the age gap in literacy is relatively large compared to other OECD countries. Furthermore, by 2023 literacy scores declined by 8% among those who were 50‑54 years old in 2012, while they increased by 6% among those who were 25‑29 years old in 2012.
Adult learning among older adults is key to reverse these trends. Canada has the largest gap in non-formal learning participation between 25‑54 year‑olds (62%) and 55‑65 year‑olds (36%) among the OECD countries (See figure below). In addition to helping maintain foundational skills, encouraging adult learning participation among this older cohort may help extend their productive lives, help workers manage digitalisation and the green transition, and open more fulfilling work opportunities even late into their careers.
There are policy efforts to encourage migrants to participate in adult learning. The Ontario Bridge Training Program (OBTP) continues to help internationally educated professionals transition into the Canadian labour market. OBTP provides specialised, occupation-specific training and support services to help immigrants meet licence requirements and secure employment commensurate with their qualifications. The programme has a focus on high-demand sectors to align with labour market needs.
Contact
Roland TUSZ (✉ roland.tusz@oecd.org)
Theodora XENOGIANI (✉ theodora.xenogiani@oecd.org)
This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Member countries of the OECD.
This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
The full book is available in English: OECD (2025), OECD Employment Outlook 2025: Can We Get Through the Demographic Crunch?, OECD Publishing, Paris, https://doi.org/10.1787/194a947b-en.
© OECD 2025
Attribution 4.0 International (CC BY 4.0)
This work is made available under the Creative Commons Attribution 4.0 International licence. By using this work, you accept to be bound by the terms of this licence (https://creativecommons.org/licenses/by/4.0/).
Attribution – you must cite the work.
Translations – you must cite the original work, identify changes to the original and add the following text: In the event of any discrepancy between the original work and the translation, only the text of original work should be considered valid.
Adaptations – you must cite the original work and add the following text: This is an adaptation of an original work by the OECD. The opinions expressed and arguments employed in this adaptation should not be reported as representing the official views of the OECD or of its Member countries.
Third-party material – the licence does not apply to third-party material in the work. If using such material, you are responsible for obtaining permission from the third party and for any claims of infringement.
You must not use the OECD logo, visual identity or cover image without express permission or suggest the OECD endorses your use of the work.
Any dispute arising under this licence shall be settled by arbitration in accordance with the Permanent Court of Arbitration (PCA) Arbitration Rules 2012. The seat of arbitration shall be Paris (France). The number of arbitrators shall be one.