Understanding Gen Z's Place in Canada's Evolving Labour Market

Generation Z, typically defined as those born between 1997 and 2012, is now fully entering Canada's workforce amid significant economic shifts. Recent studies highlight unique pressures including elevated unemployment rates, underemployment, and shifting expectations around work-life balance and career progression. Data from Statistics Canada shows the youth unemployment rate for ages 15 to 24 reached 14.7 percent in September 2025, the highest September figure since 2010 excluding pandemic years. This generation faces a competitive environment shaped by post-pandemic recovery, population growth, and technological disruption.

Insights from multiple research publications underscore how these challenges manifest differently for Gen Z compared to older cohorts. Employers are noticing higher turnover intentions, with many young workers prioritizing stability and meaningful roles over traditional advancement paths.

Key Findings from Major 2025-2026 Studies

A comprehensive analysis by Randstad Canada, drawing on surveys of over 11,000 global workers including 750 in Canada and examination of 126 million job postings, reveals entry-level job postings have declined by 29 percentage points since January 2024. Gen Z workers exhibit the highest attrition rates, with 22 percent having left a role in the past year. Their average tenure in the first five years of career stands at just 1.1 years.

Employment Hero's Canadian survey of over 800 employees found that 32 percent of Gen Z workers report their current job falls short of their education level, compared to 20 percent of millennials. Nearly half, or 46 percent, are not working in their desired field. Layoff fears remain elevated, with one in four Canadians expressing concern for 2026.

Queen's University research emphasizes that Gen Z values job security, work-life balance, and mental health support above rapid leadership climbs. Only 6 percent cite reaching a leadership position as their primary career goal, reflecting a preference for project-based influence and flexibility.

The Rise in Youth Unemployment and Its Drivers

Statistics Canada data illustrates a persistent climb in youth joblessness. The unemployment rate for ages 15 to 24 hit 14.7 percent in September 2025, while the employment rate for this group fell to 53.8 percent by the end of 2024. Factors include slower hiring in entry-level sectors, an influx of new labour market entrants from population growth, and economic uncertainty tied to trade dynamics.

Younger subgroups face steeper hurdles. Those aged 15 to 19 saw unemployment reach 20.8 percent in the third quarter of 2025. This pattern signals broader concerns about the transition from education to employment, with many graduates encountering fewer openings that match their qualifications.

Underemployment: A Silent Challenge for Gen Z

Beyond raw unemployment figures, underemployment affects a substantial portion of Gen Z. Recent polls indicate misalignment between education and roles, leading to frustration and reduced engagement. Workers in this cohort often accept positions that do not utilize their skills fully, contributing to lower productivity and higher turnover intentions.

Studies link this issue to reduced job vacancies requiring only high school credentials, which dropped 22.3 percent year-over-year in early 2025. The result is a squeeze on entry points for those without advanced degrees, amplifying the need for targeted upskilling programs.

Photo by Andy Holmes on Unsplash

Workplace Expectations and Generational Shifts

Gen Z enters the labour market with distinct priorities shaped by economic volatility and digital upbringing. Research consistently shows strong emphasis on flexible arrangements, mental health resources, and purpose-driven work. Retention improves significantly when organizations align with these values, with some reports noting up to 3.6 times higher likelihood of staying.

Many prefer non-supervisory promotions, avoiding the stress of traditional management roles. This "conscious unbossing" trend challenges employers to redesign career ladders around expertise and mentorship rather than hierarchy.

The Role of AI and Technological Change

Artificial intelligence is reshaping entry-level tasks, with three-quarters of Gen Z expecting impacts within the next year. While this creates opportunities for those skilled in emerging tools, it also heightens competition for remaining positions. Deloitte's global survey highlights that Gen Z prioritizes learning and development to adapt alongside technology, valuing soft skills such as empathy and leadership equally.

Employers report a talent scarcity in certain areas, yet entry-level roles continue to shrink across sectors. This mismatch calls for collaborative training initiatives between universities, colleges, and businesses.

Regional Variations Across Canada

Labour market conditions vary by province. Ontario experienced the largest unemployment increase among provinces from 2023 to 2024. Youth not in employment, education, or training (NEET) rates remain a concern nationwide, representing untapped potential that could expand the workforce if barriers are addressed.

Urban centres show different dynamics than rural areas, with tech and innovation hubs offering more opportunities but also greater competition. National data masks these nuances, underscoring the value of localized insights from government and academic reports.

Employer Strategies and Retention Solutions

Forward-thinking organizations are responding by enhancing onboarding, offering clear progression paths, and investing in mental health support. Randstad findings suggest addressing low pay, workplace culture, and growth opportunities can curb the high attrition seen among Gen Z.

Flexible work policies and meaningful project assignments prove effective. Companies that provide mentorship and development see improved engagement, helping bridge the gap between ambitious young talent and evolving business needs.

Photo by Tom Carnegie on Unsplash

Future Outlook and Broader Implications

Looking ahead, Canada's labour market will continue evolving with demographic pressures and technological advances. Gen Z's emphasis on balance and purpose may drive positive changes in workplace culture, benefiting all generations. However, sustained investment in education-to-employment pipelines remains critical to prevent long-term skill mismatches.

Economic forecasts point to gradual stabilization, yet proactive measures from policymakers and employers will determine how smoothly this cohort integrates. Success here supports overall productivity and innovation across the economy.

Actionable Insights for Stakeholders

Students and recent graduates benefit from building versatile skills, gaining practical experience through internships, and networking strategically. Employers should focus on competitive compensation, supportive cultures, and clear development opportunities to attract and keep talent.

Policymakers can prioritize programs that reduce NEET rates and expand access to training in high-demand areas. Collaboration across sectors promises the strongest outcomes for Canada's future workforce.