The Broadbent Institute’s youth job guarantee is a good idea that will never happen

Murad Hemmadi / Canadian Business

Jobs for every boy and girl—that’s what the Broadbent Institute is proposing, in a paper calling for a Youth Job Guarantee.

The left-leaning think tank wants Canadian businesses and the federal government to put up $670 million each a year to create new jobs, internships and training positions that would guarantee employment to those under the age of 25. That would lower unemployment rates dramatically, it says:

The Broadbent Institute estimates that these investments from both government and business could create 186,000 three-month full-time co-op positions, paid internship or summer job placements that pay a wage of $15 per hour.

Offered on an annual basis (four rounds of positions lasting for three months), the number of unemployed youth in any given month would fall by 46,500 or by one in eight (12.2%). While this is only a practical first step towards a guarantee, it would reduce the current youth unemployment rate as of May 2014 from 13.3% to 11.7% and could be scaled up in the long-term.

Labour force participation rates (the proportion already working or actively looking for work) for young Canadians have fallen since the recession, and unemployment rates are higher for youth than for older workers.

Chart showing youth participation rate in job market from Broadbent Institute

With the workforce set to shrink in the next decade, there will likely be increasing competition for good young talent. But underemployment remains a persistent problem for Generation Y according to the Institute, with many accepting part-time or temporary positions. Baby boomers are taking flak for holding on to jobs longer and crowding out the next generation of budding workers.

Unpaid internships are another symptom of the economic malaise affecting youth, the Broadbent report says. Earlier this year, James Cowan made the case that such positionscreate perverse economic incentives and are just plain unethical:

If young people need real world experience, then let them gain it through co-op programs, where there is tight co-ordination between school and employer. Or just pay them for their work.

The report suggests that funding for a Youth Employment Guarantee could come from the estimated $600 billion in “dead money” that Canadian companies are sitting on.

The chances of the proposal ever becoming reality seem slim. Federal minister of employment and social development Jason Kenney has declared his admiration for Germany’s co-op system and made noises about emulating it here, but there has been no action or investment yet to accompany his endorsement. And corporate Canada will need evidence of a tangible ROI before it opens its purse strings.

There’s some argument that precarious employment is actually good for workers and the economy. Generation Y better hope they’re right — guaranteed youth employment seems a distant dream.