Unemployment levels in Canada have remained persistently high for almost a decade, averaging around 6-7%. This is due to several factors, including a slow economic recovery from the 2008 crisis, high minimum wages, and social issues like drug abuse. Unemployment negatively impacts individuals through loss of income and living standards, and society through increased crime. Solutions proposed include diversifying trade partnerships, reducing interest rates, promoting foreign investment, and addressing substance abuse issues.

1. Unemployment in Canada
Unemployment in CanadaToday, Canada has emerged as one of the most livable countries
around the work. The country has vast natural resources and literacy levels are high. One of
the problems facing the country is persistent high level unemployment in the country. For
almost a whole decade, the country has not been in a position to push unemployment down.
Unemployment levels in the country 2008 were 6 % and 7% to date (Government statics,
2014). The study focuses on the potential reasons that have reduced the ability of the
country to push unemployment down and the economic impact of higher unemployment
levels in the country.Causes and impactsCausesThe year 2013 was a bad year for Canada as
the country shed off 45, 900 people from its labor force (Government statics, 2014). This
indicated the weakest year in job growth since 2009. This led to the Bank of Canada
reviewing interest rate levels in an effort to identify whether there was a need to change it
in order to boost growth in the region. This was against the expectation of experts that the
economy would add 14,600 jobs, boosting the employment levels high in the country
(Government statics, 2014). One of the reasons behind such still high unemployment levels
emanates from the interaction of Canada with the United States. United States is Canada’ s
largest trading partner in the region. The country has not fully recovered from the 2008
financial crises. Consequently, its trading capacity has been maintained at lower levels as
compared to the period before the crises hit the country. A reduction in US economy results
to reduction in the ability of the country to consume foreign goods. Consequently, Canada’ s
trade with US declined. A decrease in trade results to reduction in demand of goods
produced in a country. Reduction on demand of goods exported to Canada resulted to
reduction in production in the country. Shrinking of production processes has the potential
of significantly reducing the need for employees. These results to reduction of people who
are employed, pushing unemployment levels up in the country. Nevertheless, the reduction
in trade between the countries was not drastic and hence it contributed only top a low
percentage to the stagnant unemployment levels in the country.Another cause of rise in
unemployment levels in the country has been inter-sector shift of labor. In the economy,
people often shift from one sector to another as well as from one employment to another
(Bank of Canada, 2014). This results to a period that these groups of people in transition are
out of employment. This leads to rise in unemployment levels in the country. A slow rate of
labor reallocation has the potential of significantly keeping large group of people in
unemployment in the country. In spite of this, these effects are usually temporary, and
resolve themselves with time. Nevertheless, if the re allocation is too slow, it would

2. contribute to unemployment levels over an extended period of time.Another cause of high
unemployment in Canada is the setting of high minimum wages. Minimum wages have been
increased significantly in various provinces. Consequently, this has led to an average
minimum wages in the country. High minimum wages reduces the employment in a country
in various ways. When the government imposes high wages on firms, firms are forced to
hire lower number of employees (Bank of Canada, 2014). Using their existing budgetary
allocation for their staff, it becomes difficult to maintain high number of employees using
the same resources. Consequently, the level of employment levels in the country shifts
down. At the same time, high minimum wages increases the cost of production in the
economy. As a result, the firms may be forced to hire employees but increase the price of
their products to cover these costs. This has the potential of reducing the demand of such
products in the country. This would eventually reduce the ability of such firms to hire more
workers keeping unemployment levels stagnant in the country.The slow economic recovery
in Canada since the 2008 crises has significantly contributed to unemployment in the
economy. Employment emanates from production processes in the economy (Dwivedi,
2010). When the growth in output in the economy slows, the ability of the economy to
engage employees in productive employment reduces. A reduction in growth of gross
domestic product has the potential of reducing demand for labor in the economy. A
reduction in demand for labor in the economy implies that the economy may no longer be in
a position to accommodate more workers in active and productive employment (Dwivedi,
2010). This has the potential of significantly pushing unemployment levels high in the
economy. At the same time, failure of the government to push interest rates down has
equally contributed towards the high unemployment levels in Canada.Finally, one of the key
factors driving unemployment high in Canada is social factors, drug abuse in particular.
More and more adults are consuming drugs in Canada. The most abused drug is alcohol and
Cannabis. This has reduced the ability of these people to engage in active employment. It is
also becoming hard for them to retain employment. Over half of individuals in a survey by
Health Canada indicated were alcohol abusers (Health Canada, 2014). Drugs reduce the
capacity of those involved to work. At the same time, it reduces their chances of enhancing
their skills. This has contributed to unemployment levels in the
country.ImpactsUnemployment has a number of effects in the economy. It results to loss of
the ability of households to provide for their needs. This has the potential of reducing the
level of living standards of the people (Dwivedi, 2010). This reduces the quality of life of the
unemployed. Unemployment has the potential of increasing growth of social vices, such as
prostitution and crime, thus creating insecurity in the country.SolutionsThere are a number
of steps that Canada could take to correct unemployment in the country. The country has
been stagnating for long in its employment level. One such solution to the problem is to
diversify the economy as well as its trade (Deaton, Hailu, & Zhou, 2014). For instance, it is
experiencing economic challenges due to overdependence on United States as the regional
trading partner. There is thus a need for the country to explore other destinations for
exporting their goods. This will diversify its trade and minimize the adverse effects of
overlying on few export destinations. This will boost exports from the country. Growth in
exports would on the other hand boost growth of job opportunities in the country

3. significantly reducing levels of unemployment in the economy (Dwivedi, 2010).To solve the
above problem, there is a need for the country to focus on reducing the interest rates. This
would make the cost of doing business in the country. Consequently, it would end up
attracting foreign investors to the economy. Lower interest rates in the economy would
equally increase access to loans among firms. Increased money supply in the economy
would end up boosting production. This would create demand for labor in the economy,
thus reducing unemployment in the country (Salgado, Figari, Sutherland, & Tumino,
2014).The third solution for the country is to create a good investment environment for
foreign investors. This could be done by reducing entry requirements as well as promoting
market mechanism in the country (Deaton et al, 2014). An increase in the overall level of
foreign direct investment in Canada would significantly boost production in the economy.
Increase in production levels would at the same time increase the demand for labor in such
an economy. This would reduce the overall level of unemployment in the economy
(Dwivedi, 2010).Finally, there is a need for intervention by the government in promoting
health lifestyle. This would involve the launch of an effective campaign against abuse of
drugs in the economy. This would boost health lifestyle while at the same time boosting the
ability of individuals to engage in and sustain economic activities as well as productive
employment (Health Canada, 2014).To address the above unemployment problems, it is
evident that there is a need for the government to engage in expansionary fiscal policy. This
will increase government spending while at the same time minimizing taxes (Dwivedi,
2010). . This would increase consumption in the economy. Lower taxes would equally
reduce the cost of doing business. These processes would boost production as well as
employment levels in the economy.ConclusionsFrom the above presentation, it is evident
that although unemployment is not too high in the economy, it has remained stagnant for an
extended period of time. This implies that it has constantly kept 7% of the population,
capable of engaging in work, from work. This has been as a result of slowdown in
production within the economy. It has equally been as a result of weakening of regional
export markets, reducing production in Canada and consequently reducing employment.
Social problems such as abuse of drugs have equally eroded the ability of the young people
to sustain their jobs. The government should thus promote healthy lifestyle, make the
economy good for foreign investment, diversify its export markets in the region and lower
the interest rates.ReferencesBank of Canada (2014). The causes of unemployment in
Canada. Retrieved from http://www.bankofcanada.ca/wp-
content/uploads/2010/04/wp94-11.pdfDeaton, B. J., Hailu, G., & Zhou, X. (June 01, 2014).
Poverty in Canada: Does ManufacturinMatter?. Growth and Change, 45, 2, 362-376.Dwivedi,
D. N. (2010). Macroeconomics: Theory and policy. New Delhi: Tata McGraw Hill Education
Pte Ltd.Government statics (2014). Annual average unemployment rate. Retrieved from
http://www.stats.gov.nl.ca/statistics/Labour/PDF/UnempRate.pdfHealth Canada (2014).
Canadian alcohol and drug use monitoring. Retrieved from http://www.hc-sc.gc.ca/hc-
ps/drugs-drogues/stat/_2011/tables-tableaux-eng.php#t6Salgado, M. F., Figari, F.,
Sutherland, H., & Tumino, A. (May 01, 2014). Welfare Compensation for Unemployment in
the Great Recession. Review of Income and Wealth, 60.