Labour pains: Canada's job market in flux
With trade uncertainty, aging demographics, shifts in immigration policy and changing consumer spending patterns, Canada’s labour market is in flux. In her July report, Soft spots and strongholds: How Canada’s jobs market is handling trade volatility, RBC economist Rachel Battaglia notes that after a brief period of stability in late 2024 and early 2025, unemployment is once again climbing as job vacancies decline. We recently chatted with Battaglia about what this means for grocery supply chains, hiring strategies and the future of retail work.
This interview has been edited for clarity and length.
In your report, you say job losses remain largely concentrated in trade-related sectors, with manufacturing, primary resources, transportation and warehousing hit hardest. What risk does that pose to grocery supply chains?
Transportation, I know, is a big one. A lot of our food in Canada is domestically produced, if I’m not mistaken. But, there are quite a few items that we do get from the U.S. as well as Mexico, which are potentially transported through the U.S. So, there is potential for backlogs and supply chain issues, even though most of our food is compliant with the Canada-United States-Mexico agreement. I think the illusion of tariffs is still a major obstacle for a lot of businesses.
Prime Minister Mark Carney has dropped a lot of retaliatory tariffs. What impact, if any, could this have on the job market?
Now they’re dismantled—that gives businesses a bit more clarity, potentially more certainty, maybe they won’t have to adjust their prices and maybe they can return to hiring. Those things feed through when you have more certainty.
Do you expect a similar slowdown in seasonal hiring heading into the holiday season as we saw with summer jobs?
There’s potential for that, especially if we see consumers pare back on their spending. That’s not something we’ve seen yet. We’ve seen confidence measures plummet, but our cardholder spending data is staying strong. But, we do have layoffs …We also have a lot of sectors implementing hiring freezes because everything is so uncertain. If come the holiday season we have a little more certainty in terms of trade policy, there is potential for some of those hiring freezes to be lifted.
Given the current job market, what does this mean for consumer spending power?
Well, consumers seem to be a little hesitant. If we compare to 2023, we saw businesses pulling up their prices and consumers keeping up—wages were increasing faster than normal. Right now, we are in a very different economy. Consumers don’t seem to have the capacity to absorb the same price increases as in 2023, even though inflation is down to 1.7%. We must remember this is compounded on years of very, very high inflation. Food inflation is somewhere around 20% higher than it was compared to pre-pandemic 2019. So, even though inflation has returned to trend, consumers are still grappling with the fact prices have grown exponentially over the last few years.
Looking five years ahead, what do you think Canada’s employment landscape will look like?
We could see a resurgence of previous themes, I’ll call them, which is the aging workforce. That was one of the reasons we were so aggressive on our immigration strategy in 2022. Because most newcomers to Canada are core working age, we saw a pause and slight down shift of the aging population in Canada. By reshaping our immigration strategy, we are limiting the inflow of working-age newcomers … That could put Canadian demographics back on an aging trend, which will have implications for Canada’s labour market, especially on the supply side.
From a grocery retail perspective, what adjustments might be needed to accommodate older workers?
Just a few years ago, all the talk was about a worker shortage and not finding enough people to fill vacancies. That discourse has obviously changed a lot but, moving forward, that shortage of workers is a theme that could re-emerge given our aging population and [as] we clamp down on our immigration policy. If there’s a way to attract people on a part-time basis or make it more attractive or set yourself up for when that time does come, that could put grocers in a more favourable position.
This article was first published in Canadian Grocer’s September/ October 2025 issue.
