Back to Work: Canada

Improving the Re-employment Prospects of Displaced Workers

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Job displacement (involuntary job loss due to firm closure or downsizing) affects many workers over their lifetime. Displaced workers may face long periods of unemployment and, even when they find new jobs, tend to be paid less than in their prior jobs. Helping them get back into good jobs quickly should be a key goal of labour market policy. This report looks at how this challenge is being tackled in Canada. While the Canadian government uses several measures to prevent unnecessary layoffs, the focus is placed on assisting workers after they have lost their job via the Employment Insurance system and the core labour market programmes operated by the Provinces. Re-employment assistance tailored to meet the specific needs of displaced workers also plays a useful role, but needs to be reinforced so as to start the adjustment process earlier for workers receiving advance notice or a large severance payment and to reach  workers affected by small-scale displacements. Targeted programmes for older displaced workers with long-tenure who are hardest hit have yet to reach a large share of this group.

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Assessment and recommendations

Job displacement – defined as involuntary job loss due to economic reasons such as firm closure or downsizing – affects many workers over the course of their working lives. Around 2.2% of Canadian workers with at least one year of tenure are displaced on average every year. Once displaced, some workers find suitable new jobs relatively quickly while others experience long periods of unemployment. In Canada, just under half of displaced workers are re-employed within one year after displacement, and almost two-thirds are re-employed within two years. In an international comparison, re-employment rates for displaced workers are lower in Canada than in Australia, New Zealand, Sweden and the United States, about the same as in Japan and Korea, and well above the re-employment rate in France.

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