Since 2020, the labour market has been incredibly tumultuous.

At the beginning of the pandemic, unemployment skyrocketed. As unemployment lessened, we saw extreme labour shortages and the Great Resignation.

Now, as we move into 2024, our data shows the labour market is returning to pre-pandemic levels. This means you should have an easier time filling openings and retaining employees. Perhaps you’ve already seen evidence of this.

However, this does not mean you should forget about offering competitive salaries, benefits, and other rewards. These things are still crucial to attracting top talent.

We are going to explore the current state of the job market at the end of 2023 and the outlook for 2024, and we will highlight any challenges that remain along with sharing some key strategies for attracting and retaining the best employees.

What does the job market in Canada currently look like?

The unemployment rate in Canada has returned to pre-pandemic levels, hovering between 5% and 6%. This is a good indicator that the Great Resignation is over and employees are sticking with the jobs they have instead of trying to find something better.

While some sectors are still experiencing labour shortages — manufacturing, accommodations & food service, and admin/support — most industries are seeing record-low job vacancies. In addition, large-scale layoffs have been isolated to big-name tech companies.

All these factors combined are helping ease the labour market into something we are familiar with and know how to work with.

Key factors in the Canadian labour market

Canada is a country with a diverse population and unique needs. Based on our recent studies, we have identified 3 key macroeconomic realities that will affect the future of the Canadian workforce.

1. Aging population

The average age of people living in Canada continues to rise. This aging population will need support in the coming years as they retire. Data indicates immigration will play a larger role in helping support the Baby Boomer generation by driving population growth.

2. Size of the labour force

Many Baby Boomers are delaying retirement to older ages. This has helped maintain the size of the labour force across much of Canada. However, in most rural markets, the labour force is shrinking.

3. Skilled workers

With the influx of immigrants with high-level skills along with the continued growth in the number of young people earning university degrees, the Canadian labour force will increasingly include a large share of highly skilled workers. This will be increased even further as more Baby Boomers retire over the next decade.

Key concerns for workers in Canada

The cooling down of the labour market gives employers a key opportunity to focus on their employees and their needs. After 2 years of multiple existential crises and economic turmoil, employees are worried about their well-being and financial stability.

Here are the top 5 concerns we identified in the Mercer 2022 Inside Employees’ Minds Study:

• Short-term financial health: Covering monthly expenses is the top concern for workers in Canada — a big change over the 2021 study.
• Work-life balance: Fifty-four percent of workers in Canada report feeling exhausted on a typical day at work. Employees need more time and flexibility to focus on personal fulfillment.
• Physical health: The third most common concern for Canadian workers was physical health. How can your business help your employees improve their physical well-being?
• Long-term financial security: Only about 45% of Canadian workers are confident they can turn their retirement savings into a consistent source of income to last the rest of their lives. Can you offer more retirement investment programs?
• Mental health: Across all demographics, mental health was the number 5 concern. However, for LGBTQ workers and those under 35, their mental health was the number 2 top concern. How can you help your young, vulnerable workers?

Pay attention to salary trends

Your compensation strategy will be a driving force in your workforce success in 2024. According to our Mercer QuickPulse Survey™: Total Rewards and Recognition edition, 50% of Canadian organizations plan to adjust their compensation structure in 2024. As you put your future compensation plans into action, it is crucial to know where you stand when compared to your competition. Our salary survey packages can give you the key data you need.

In addition to this hard data, you should pay attention to the pay transparency movement, which is being pushed by many localities

With Mercer on your side, you can feel confident that you are offering not only competitive salaries but appealing Total Rewards packages. You gain useful insights from your employees and know what you need to do to turn those insights into action.

To get started with the data and insights you need, contact a Mercer consultant today.