Unemployment and unemployment rate

Understanding unemployment and the unemployment rate 

What is the unemployment rate?

The unemployment rate is the share of the labour force that is not currently employed but is actively looking for work. It is one of the most widely reported, accessible labour market indicators. 

In unemployment rate calculations, a person is considered unemployed if they are not currently employed, are available for work, and have actively looked for work in the preceding four weeks. LMIC recommends using the definition from Statistics Canada’s Guide to the Labour Force Survey (2020), which considers a person unemployed if: 

• they are without work during the reference week, and have looked for work in the previous four weeks 
• they have been temporarily laid off and expect to return to work 
• they are not working, but expect to start a job within four weeks 

Higher unemployment rates can indicate that people seeking work are having greater difficulty finding jobs, which can indicate a labour surplus. The unemployment rate is an important and widely understood indicator of how difficult it may be to find work in a given labour market.  

Employment and Social Development Canada (ESDC) considers regional unemployment rates when determining eligibility for employment insurance benefits across Canada (Statistics Canada, 2024d). 

What does the unemployment rate tell us about imbalances? 

The unemployment rate is not a direct indicator of labour market imbalances on its own. However, when interpreted alongside other indicators in this guide, it can help reveal where imbalances may exist or where they might emerge.  

Because the unemployment rate reflects how workers and jobseekers experience the labour market, it can serve as a useful “gateway” indicator when exploring potential imbalances.  

Table notes

• The unemployment rate is calculated as the number of unemployed persons divided by the total labour force 
  • Data is based on Statistics Canada’s Labour Force Survey (LFS) 
  • Data for provinces is available from January 1976 onwards, while data for territories is available from March 1992 onwards for Yukon, and January 2001 and January 2004 for Northwest Territories and Nunavut, respectively. 
• Data is collected separately for provinces and territories; overall Canadian rates and totals reflect provincial data only, while territories data is provided as three-month moving averages due to sample size constraints.