Canadian Labour Market Snapshot - March 2023
Updated: Apr 3
Introducing our newest monthly series - the Talent Market Snapshot! Our aim is to offer you a speedy overview of the Canadian labour market over the past 30 days. Each month, we'll be highlighting workforce trends, tech investment updates, and sharing the biggest stories that have had a major impact on the job market and tech industry. Don't forget to check out our monthly Artemis Update series for an even closer look at what's happening in the Canadian tech scene on the ground level.
Canadian Labour Market Snapshot
๐ผ 5.0% unemployment rate, just shy of the record low of 4.9%
๐ค+2.1% (+84,000) employment in the tech industry, highest among all industries
๐ฑ 22K net-new jobs across all industries
๐ฐ 5.6% YoY wage growth, reaching $33.16 in Feb
๐ฉ๐ปโ๐ป 60.8% employment rate for women aged 55-64, a record high
๐ป 18.6% of all job openings are remote roles
๐ The story behind the numbers
The Canadian labour market has been making headlines lately, and the February 2023 Labour Force Survey report shows why. Despite a slowdown in the overall economy, employment remains surprisingly strong, with the unemployment rate holding steady at a historically low 5%. While the Bank of Canada has been raising interest rates in an attempt to curb inflation, employment and wage growth have not been crushed as policymakers may have expected.
Interestingly, the tech industry has been a standout performer, with employment in professional, scientific and technical services holding steady in January and February. This industry has seen strong year-over-year growth, with employment up 4.7% and hourly wages up 9.6% over the same period. Hourly wage growth across all industries is also above 5%, although it is highly uneven.
Women have been making strides in the labour market, with women aged 55-64 seeing a record-high employment rate of 60.8%. However, there is still work to be done in closing the gender wage gap, which actually increased in 2022 for the first time since 2016.
The Conference Board of Canada has warned that persistent wage growth could contribute to inflation, and it is clear that there is a mismatch between employment and output growth. With little or no productivity growth, wage growth can fuel consumer demand while increasing supply-side pressure, raising unit labour costs and contributing to inflation.
Looking ahead, the path of growth for the Canadian economy is expected to slow to a near stall in the early to mid-part of 2023, with inflation continuing to ease throughout the year. This could hit businesses harder, as a weaker inventory build eases demand through the supply chain for merchandise, affecting trade, transportation, and manufacturing. However, conditions are expected to improve by the end of the year, with growth ticking up slightly in 2024 as the economy regains some of its lost momentum and borrowing costs begin to ease.
Overall, while the Canadian labour market is showing resilience despite a slowdown in the economy, there are still challenges to be addressed, including the gender wage gap and the potential inflationary effects of persistent wage growth. The tech industry, however, is one bright spot in an otherwise uncertain economic landscape.
Read more of our analysis on the current state of the tech labour market here!
๐ Click images to enlarge
Sources:
Labour Force Survey - February 2023, Statistics Canada
Reviewing The State Of The Labour Market โ February 2023, Read Passage
February Forecast Update, Conference Board of Canada
Monthly jobs and employment report, Canada, Adecco
Employment in Canada Continues its Upward Trend, Bevertec
Tech Investment Trends in Canada
2022 Q4 vs 2023 Q1 (Jan 1 - March 31)
๐ -64.2% decrease in total tech investment
๐ -8.9% decrease in Series A+ deal volume
๐ -28.4% decrease in Series A deal size
๐ -42.1% decrease in Seed deal volume
๐ 53.7% increase in Seed deal size
๐ Click images to enlarge
Source: Briefed.in Canadian tech ecosystem trends
Analysis and impact on the tech labour market
The decline in tech stocks and the Nasdaq's second-worst quarter since the 2008 financial crisis have prompted venture capital firms like Sequoia Capital and Y Combinator to advise startups to prepare for worsening conditions. The poor public market performance of tech companies is starting to significantly impact VC investing, in contrast to the bullish market of 2021. Startups are now focusing on extending their cash runway to last at least two years, anticipating less favourable future financings. This situation is causing significant changes in the tech labour market, with companies slowing down hiring processes, and layoffs occurring in both public and private tech firms to reduce costs and extend their cash runway.
As a result, fewer job openings and increased competition for available positions are expected, along with potential wage stagnation or decline due to reduced demand for tech talent. A shift in skill demand may also occur as companies prioritize cutting costs and improving efficiency. However, opportunities might still arise for top talent to join companies that seize the chance to hire skilled professionals made available by hiring freezes and layoffs at other organizations.
Adding to these challenges, the recent closure of Silicon Valley Bank (SVB) in Canada has impacted the Canadian tech ecosystem, causing concerns about access to funding for Canadian startups. This closure may further exacerbate the struggles faced by startups and the tech labor market in the short term.
Read more about the impact of the SVB closure on the tech labour market in our story here.
Despite these challenges, the tech industry has historically been resilient, and new opportunities are likely to emerge as the market adapts to these changes. Venture firms emphasize that great companies can emerge from difficult times, and opportunities still exist to build and invest in influential technology companies.
Top Stories in Canadian Tech
โป๏ธ Green is the colour of the 2023 federal budget, with the Liberal government offering huge clean-energy and manufacturing incentives in an effort to keep up with billions of dollars the U.S. is doling out.
Key takeaways:
The 2023 Federal Budget includes significant investments in the innovation economy, including $2.2 billion over five years for green technology, $1.7 billion for life sciences and biomanufacturing, and $790 million for quantum technologies.
The budget also includes new measures to support intellectual property, such as providing $75 million over five years for the creation of a patent collective to help small businesses access and monetize their patents.
Startups, however, have expressed disappointment with the budget, as it did not include new funding for the Venture Capital Catalyst Initiative, which is set to run out of funding in 2024, and no new commitments to open banking.
The budget also includes several tax changes, including increased taxes for high-income earners and a new levy on share buybacks, as well as a new national dental-care program and increased funding for health care and Francophone immigration.
The budget promises to strengthen protections against misclassification for federally regulated workers, including gig workers, and to create a new category of leave for pregnancy loss, such as a miscarriage or stillbirth, which would apply to federally regulated workers.
๐ค Canadian AI governance leaders among an influential group of signatories backing an open letter to pause the training of AI systems more powerful than GPT-4 for at least six months, to develop shared safety protocols for advanced AI design and development that are overseen by independent outside experts.
Key takeaways:
The letter calls for a pause on the training of AI systems more powerful than GPT-4 and the development of shared safety protocols, as well as the acceleration of AI governance systems to manage the risks posed by advanced AI.
AI systems with human-competitive intelligence can pose profound risks to society and humanity. Advanced AI could represent a profound change in the history of life on Earth, and should be planned for and managed with commensurate care and resources.
AI labs are in an out-of-control race to develop and deploy ever more powerful digital minds that no one can understand, predict, or reliably control. Powerful AI systems should be developed only once we are confident that their effects will be positive and their risks will be manageable.
Therefore, all AI labs should immediately pause for at least 6 months the training of AI systems more powerful than GPT-4, and use this pause to jointly develop and implement a set of shared safety protocols for advanced AI design and development.
The letter is signed by a large number of influential tech and thought leaders, including Elon Musk, Steve Wozniak, and Yuval Noah Harari.
๐ At the C100 Summit, Canadaโs tech leaders are optimistic despite the chill.
Key takeaways:
Canadian startup valuations returning to earth is a net positive for the tech sector as it will encourage a focus on business fundamentals and profitability.
Consumer-facing enterprises and those in marketing and advertising are facing challenges due to the current downturn, but enterprise and non-SaaS businesses are still seeing growth.
Despite the large number of layoffs, tech companies still face challenges acquiring talent, as many laid-off workers are not yet keen to reenter the job market.
Many attendees believe that getting people back into the office is important for productivity and team solidarity, as the shift to remote work has led to feelings of isolation.
๐ฆ The collapse of Silicon Valley Bank (SVB) could have a cooling effect on Canada's start-up industry.
Key takeaways:
The collapse of Silicon Valley Bank (SVB) has sent shockwaves through North America's tech and banking industries. SVB's shutdown was triggered by a combination of rising interest rates, panicked clients, and reportedly poor oversight and risky behavior by the lender's executive team.
Losing SVB as a lending option could cause the start-up space to cool, and Canadian start-ups might feel the effects of the collapse when they try to raise capital. Investors and VC firms are on edge, and some aren't looking to back additional ventures right now due to the shaky economic landscape.
If you're working in tech, SVB's collapse doesn't mean there will be mass layoffs in Canada, according to experts. Few Canadian firms had deposits with SVB, and those that did have been granted access to their accounts by regulators, with the FDIC covering losses.
Canadian banks invest in financial derivatives, which are investments that tend to be less affected by interest and exchange rates. Plus, none of Canada's six major banks focus on only one part of the economy. They have depositors from a variety of industries, meaning if one sector tanks, the bank will remain stable.
Canadian regulators are taking actions to protect depositors and creditors, and Canadians can be confident that they are always working diligently behind the scenes
Special Feature:
โกDear Artemis Lightning Round โก
Dear Artemis,
Iโm interviewing with a PE-backed company. Iโve always worked in VC-backed companies. What are some key differences I should be aware of?
Great question! PE-backed companies tend to be different in these ways:
Larger, more mature organizations
The tech company has proven product-market fit and reliable revenue
Often more security and stability in the orgโs growth, and access to capital
Bigger focus on sustainable growth vs โgrowth at all costsโ
Bigger focus on maintaining healthy levels of spend
More experienced leadership teams (and often non-founding executives)
M&A is more likely, as PE firms typically are looking to increase valuation and eventually sell
The PE firm typically has 100% ownership of the company
VC & PE backed orgs have similarities, too. Including:
Both VC and PE investors often provide operational support
Access to their talent network
An evolutionary view of talent, ie wanting to keep great talent within portfolio companies
Artemis Canada is a boutique executive search firm specializing in placing top talent in the tech sector across Canada, the United States, and Europe. Our team of experienced recruiters has a proven track record of finding exceptional candidates for a variety of roles, from C-suite positions to high-demand individual contributors.