Employers urged to rethink hiring of younger workers as Ottawa boosts funding

As students across Canada return to school, the federal government has announced a $26.1-million investment in six national projects under the Youth Employment and Skills Strategy (YESS) Program, aiming to usher more youth into the labour market through education and training opportunities.

It also announced incentive grants and wage subsidies for employers to hire youth with disabilities and other hiring programs.

Statistics Canada data released in July 2025 revealed that due to “challenging labour market conditions”, Canadian youth ages 15 to 24 had the lowest employment rate that month (56.3%) since November 1998 (excluding 2020 and 2021).

For Sunil Johal, professor of public policy and society at the University of Toronto, the funding represents a growing challenge for employers in Canada: as the workforce ages and the economy evolves, the ability to not only attract but also integrate young talent is becoming a critical business issue.

“We're going through a massive demographic shift in Canada right now. We’re going to have a lot of baby boomers retiring in the next several years,” he says.

“For most employers, there are real risks to not starting to plan for that exodus of the baby boomers from the workforce, in terms of not stocking up your organizational talent cupboard.”

The case for hiring young talent: innovation and tech adaptation

The government expects the youth funding programs to create 162,000 opportunities for young workers in 2025–26.

For employers, the risks of not hiring youth go beyond immediate staffing needs, Johal explains; Canada’s demographic reality means organizations must be proactive in building a pipeline that can step into leadership roles as older workers retire.

However, succession planning isn’t only about replacing retiring boomers – it’s also about the continuity of organizational knowledge and culture, he says.

“A shortage of internal candidates who are who are younger, earlier on in their careers, who are well-versed in your organization's culture and context, that's going to lead to succession challenges as those older workers retire.”

Further, failing to integrate young employees early can lead to innovation gaps at the organizational level, Johal points out.

“If you don't have representation from the markets that you serve on your team, you start to become distanced from the realities of what the market wants and what the market is thinking about,” he says.

“If you don't have some of those feedback loops within your company … I think that's a real risk for lots of companies in the market today.”

This is especially true now as digital technologies take hold of core processes and systems – without fresh eyes on these sorts of challenges, organizations risk losing touch and falling behind.

“Younger people generally tend to be a bit more comfortable with some of these technologies,” Johal says.

“If you need people to interact with the generative AI models or design prompts and work in concert with these technologies, then young people might be really well-positioned to do that for your company, because they've grown up with a lot of these technologies in a way that us older folks have not.”

Employer perceptions and impact of economic cycles

There has been a lot of public discourse in recent years around bias against younger workers and whether that may be a barrier to their employment.

Johal thinks not; for him, the biggest barrier lies with typical hiring patterns during economic fluctuations.

“I think it's more of an economic reality, availability calculus by employers at the current time,” he says, pointing out that during downturns, employers typically stop hiring before they start laying off existing staff, which disproportionately affects young people trying to enter the workforce.

This dynamic is particularly important for HR professionals to understand, he notes. When organizations freeze hiring, it can lead to a bottleneck effect where fewer young people make it past the first stage of employment to start building real organizational knowledge.

This weakens the company’s pipeline for future leadership.

“That flow of new employees into a company, that tap is going to be turned off, and that's where young people, largely, obviously, are going to be getting their positions,” Johal explains.

“Whereas mid-career workers, they've got the role, they can kind of batten down the hatches and weather economic downturn until things pick up.”