July 31, 2014
TORONTO—Employers across Canada are employing innovative methods to combat labour shortages, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.The study, Do Labour Shortages Exist in Canada?, by Philip Cross, former chief economic analyst for Statistics Canada, spotlights demographic and geographic employment trends across the country.“While the breadth of Canada’s labour shortage is debatable, tight labour markets exist in certain parts of the country including Western Canada, where employers are taking steps to enhance their existing labour force without hiring new workers,” Cross said.For example, more employers are encouraging employees to delay retirement and work longer hours with more overtime. Nearly one-third of Albertans, for example, work more than 50 hours a week. In fact, the number of Alberta employees paid to work overtime rose by 57 per cent over the past decade, and 60 per cent in Saskatchewan, compared to a 3.3 per cent rise in the rest of Canada.But this strategy, notes the study, is unsustainable due to Canada’s rapidly aging population. The number of Canadians 65 years and older (the retirement years) rose to 5.1 million in 2013 from 3.8 million in 2003.Does this aging workforce benefit young Canadians?It depends which young Canadians you’re talking about. The employment rate for young high school graduates with a post-secondary certificate or diploma (from a trade school, for example) is 77.2 per cent compared to 71.8 per cent for university graduates, and their unemployment rates are 7.3 per cent and 9.1 per cent respectively. Among young Canadians with a graduate degree, the unemployment rate rises to 9.4 per cent.Why?The study finds that many university graduates lack the skills necessary for available jobs in construction or the trades, a worrying trend for employers.“A portion of university graduates are trained for jobs that are unavailable while employers are seeking workers for jobs where labour is scarce,” Cross said.Because employers are reluctant to hire young people who lack the right skills, and are increasingly reluctant to provide in-house training, there’s a large gap between adult and youth unemployment in Canada.Ottawa’s recent decision to tighten restrictions on the Temporary Foreign Worker program will place added strain on the Canadian labour market.“The Temporary Foreign Worker program has helped alleviate labour shortages in certain locations across Canada and in certain industries. But the new red tape and increased fees will likely discourage many employers from participating in the program,” Cross said.Finally, on the wage front, tight labour markets in resource-rich provinces (Alberta, Saskatchewan, Newfoundland and Labrador) are driving up wages while the rest of the country has seen only modest wage gains.