As hiring stalls and layoffs stay low, organizations and workers face a ‘stable but soft’ market
Canada’s tightrope labour market is expected to edge toward improvement in 2026, but the theme is stability more than strength, as hiring remains subdued and policy uncertainty clouds the outlook, according to a new report.
New analysis from Indeed Hiring Lab characterizes 2025 as a “soft but fairly stable” year for Canada’s labour market, even as the broader economy faced a tumultuous stretch. Labour demand cooled without collapsing, and employers largely avoided large‑scale layoffs, contributing to what the report called “low‑hire, low‑fire” environment in both Canada and the United States.
Indeed’s 2026 Canadian Jobs and Hiring Trends report indicates that, in the three months to November 2025, the layoff rate for employees sat about nine per cent below its 2017‑2019 average, while hiring rates were roughly 22 per cent lower than in that pre‑pandemic period. The result is a labour market that feels stagnant for jobseekers even as many organizations remain reluctant to shed staff.
Employers taking cautious stance
At the same time, recent Labour Force Survey figures from Statistics Canada point to a national unemployment rate of about 6.5 per cent heading into winter, down from earlier in the year but still above the lows seen during the post‑pandemic rebound. That combination of moderate unemployment and weak hiring underscores the cautious stance many employers have adopted.
For HR leaders, the message is that 2026 is unlikely to bring a dramatic reset. Instead, the base‑case scenario is for modest improvement layered on top of today’s slow‑moving conditions, rather than a rapid return to the red‑hot hiring of the immediate post‑pandemic period.
Beneath the numbers, the composition of job growth is changing in ways that matter for workforce strategy. The report highlights sharp employment declines in auto‑parts manufacturing and at community colleges, while social assistance roles including childcare are among the fastest‑growing areas. Health‑related and care‑oriented occupations feature prominently among sectors with the strongest job‑posting momentum.
That evolving mix mirrors broader labour‑force data from Statistics Canada, which allows employers to track employment, unemployment and participation by region and sector over time. The implications are twofold: competition for talent will remain intense in care‑focused and social services fields, while industrial and some education employers may face continued constraints on headcount growth.
‘Low-hire, l
ow-fire’
The “low‑hire, low‑fire” pattern poses a particular challenge for HR leaders trying to refresh skills or rebalance their talent mix. With layoff rates subdued and hiring rates well below pre‑pandemic norms, many workers stay put, limiting the external candidate pool even as fewer new roles are posted. Internal mobility and upskilling therefore become more important levers for closing capability gaps than large‑scale external recruitment.
Adding to the complexity is a shifting policy landscape. The report notes that population growth, which has been a key driver of labour‑force expansion in recent years, is expected to slow further in 2026 as more non‑permanent residents leave Canada. The pace of that adjustment, and its eventual impact on labour supply, remain open questions for employers relying on international recruitment.
At the same time, domestic and international policy changes — including trade tensions — have already shaped which sectors are growing or shrinking. The report points to trade‑sensitive industries such as auto‑parts manufacturing among those experiencing notable employment declines.
Positioning for a cautious recovery
If 2025 was a year of holding steady, 2026 looks set to test how well organizations have used that breathing space. Employers that invested in internal development, succession planning and better workforce analytics may find themselves better positioned if demand picks up, especially in sectors where postings remain strong. Those that deferred decisions could struggle to pivot quickly in a still‑tight, still‑selective market.
