Low-cost daycare could be key to closing labour-participation gap, Statscan study finds

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When it comes to integrating our next generation of Canadians from school into the working world, a new study from Statistics Canada indicates we don’t have a serious failure-to-launch problem.

But the details of the report suggest there are more things we could be doing to tap into a key segment of the working-age population – including keeping them in school longer and giving them low-cost daycare.

The study, published Wednesday, focused on the 25-to-29 age group – a segment of young workers that’s often overlooked in analysis of youth labour, which traditionally is defined as the 15-24 group. This older age group captures a portion of the working population emerging from postsecondary education and embarking on what will, it is hoped, be long and productive careers.

Or, in the case of some of them, not so much. The study found that in 2017-18, 15 per cent of Canadians aged 25-29 were “NEET” – an acronym for “not in employment, education or training.” That’s 376,000 Canadians who are, for one reason or another, sitting out what should be the start of their prime working years when they are at their most productive. They are missing out – and so is the Canadian economy.

It’s not an inconsequential number. It raises questions about barriers to entry for millennial workers – an important issue as increasing numbers of baby boomers exit into retirement. In an era when maximizing labour-force participation is increasingly seen as critical to offset the demographic exodus of the boomers, we’re nowhere near fully tapping this significant economic resource.

Still, compared both with historical norms and with our global peers, Canada isn’t doing so badly at putting the 25-to-29 cohort to work. Statscan noted the most recent NEET levels for the group are at 20-year lows. They are also well below the OECD average, and have consistently been so for the past two decades. Sure, we could do better, but we could also do a lot worse.

But given the economic imperatives, we’ll focus on the “could do better” side of the equation. The details of the study offer glimpses of how Canada can light a fire under more of these budding careers, to more fully integrate them into an economy that will rely on them for decades to come.

Education is, unquestionably, the biggest difference-maker in NEET levels in the 25-29 age group. The NEET levels for those with a university degree are 9 per cent; for those with only a high-school diploma, it’s 21 per cent. It’s compelling evidence the Canadian labour market values education and skills over work experience, despite the anecdotal grumblings of many young postsecondary graduates.

Another telling finding in the study was that among Canadian provinces, Quebec had by far the lowest 25-to-29 NEET rate, at 12 per cent. Digging deeper, among women who weren’t working by choice (as opposed to being unemployed but seeking work), Quebec’s NEET rate is about eight percentage points lower than the national level. The NEET rate among Quebec mothers in the age group is 11 points below the national rate.

The difference? Quebec’s highly affordable, government-subsidized child-care program. The much lower cost of childcare in the province, compared with the rest of the country, encourages more mothers to join or remain in the work force.

Indeed, the impacts of child care on NEET rates among women first become prominent in the 25-to-29 cohort, as this is a common age during which many women start families. In jurisdictions where low-cost child care is readily available, the impact of having children on women’s participation rates is significantly lower. It’s no coincidence that the two OECD countries with the lowest NEET rates in the 25-29 age group – Iceland and Sweden – also have among the most affordable child care in the industrialized world.

Statscan noted that while having children at home had a significant impact on women’s NEET rates, it had essentially no effect on men’s. It speaks to a major societal gap between the sexes on child-raising responsibilities – one that continues to seriously hinder work opportunities for women.

However, Statscan did uncover one curious and striking statistic in women’s favour. While female NEETs are more likely to have removed themselves from the labour force by choice, male NEETs in the age group are twice as likely as females to be there because of unemployment.

Statscan acknowledges the study leaves plenty of area for further study. But it’s quite clear that much of that study should focus on child care and education. Almost any way you slice the numbers, they point to those factors as critical to integrating late-20s workers into the work force – and, critically, keeping them there.