Remedy for labour shortages

Where have all the workers gone?

The number of job vacancies in Canada has reached a new high of over one million, while the unemployment rate recently hit a record low below five per cent.

The most common complaint from employers is about the scarcity of labour. It is not only happening in the retail and hospitality sectors, but in virtually every sector of the economy.

Despite record immigration numbers, labour shortages are everywhere, including in Atlantic Canada where unemployment levels are at historically low levels.

Indeed, Atlantic Canada has, in a very short period, been transformed from an economy with an oversupply of labour to an economy with an undersupply of labour.

What has led to this situation, especially given that populations in the region (except Newfoundland and Labrador’s) are now growing at a national pace for the first time in the last half-century?

IMPACT OF DEMOGRAPHICS

The current labour shortage has been decades in the making. Atlantic Canada, largely due to stagnant population growth over a prolonged period, has the oldest population in the country and proportionately a smaller workingage population.

Recent population growth is beginning to reverse that demographic trend. This is particularly the case in P.E.I., where the median age of the population actually declined in the most recent census.

Population growth will lead to growth in the size of the labour force over time. This is one of the main benefits of immigration.

I have spent much of my career studying demographics and one thing that has been clear for a very long time is that baby boomers have had a

profound impact on our social and economic fabric since the day they were born.

Now nearing the end of their careers, the number of boomers exiting the workforce is emptying the labour market through their sheer volume. Simply put, there are insufficient numbers of new workers entering the workplace to replace the boomer generation.

For sure, population growth is helping, but there continues to be a gap. In Atlantic Canada, there will be 265,000 more people 65 years or older by 2030 than was the case in 2015. Given participation rates, this equates to nearly 200,000 jobs that will need to be replaced over this period.

The pace of those leaving the workforce accelerated during the pandemic, as many of those near retirement took the opportunity to retire early. Statistics Canada reports that over 300,000 Canadians have retired in the last year, up nearly 32 per cent from the year before.

Despite all the known demographics, employers are surprisingly unprepared for the current labour market reality.

This is the case for every sector, but is most evident in the health-care sector, where there seems to have been no long-term manpower planning to replace the large number of those about to retire.

As an example, the number of those being trained as doctors and nurses remained constant, for the most part,

despite the knowledge that pending retirements were ballooning. This is a failure in management and government policy.

It is now clear that many more medical professionals will need to be trained over the next decade or so. Nova Scotia recently increased the number of seats for nurses in the province, which is helpful, although not particularly timely.

CHALLENGE OF PARTICIPATION

In Canada, the labour force participation rate is 66 per cent (July 2022). The participation rate reflects the percentage of those of working age (15-64 years old) active in the economy.

The comparative number in the U.S. is 62 per cent. This difference may be at least partially attributed to better and more affordable access to child care. The participation rates in Canada for women should increase even further when the new child-care program is fully implemented across the country.

In Switzerland, the participation rate is 84 per cent, which provides some insight into the opportunity to increase the labour force in Canada.

In Atlantic Canada, there are significant differences in participation rates by province. More importantly, likely as a consequence of having the oldest populations in the country, the participation rates across Atlantic Canada are much lower than the Canadian average. Newfoundland and Labrador has the lowest participation rate (56.9 per cent in August with the highest unemployment rate (10.5 per cent).

Prince Edward Island has both the highest participation rate in the region (66 per cent and the lowest unemployment rate (6.7 per cent).

Both Nova Scotia (61 per cent and an unemployment rate of 7.6 per cent) and New Brunswick (60.1 per cent and an unemployment rate of 7.6 per cent) have much lower participation rates than the national average.

With growing populations, the opportunity of increasing participation rates (excepting P.E.I.), should be a policy priority for governments across Atlantic Canada. Providing affordable access to child care is a policy that should increase labour force participation among women.

UNDER-REPRESENTED MINORITIES

Both the Indigenous and Black communities provide opportunities for employers as sources of labour. Indigenous communities’ populations in particular are both younger on average and growing faster than the Canadian population at large. Some employers like the Halifax Shipyards have purposely targeted these communities with training programs.

Employers should be looking at their diversity hiring policies and looking at not only minority groups, but new Canadians in their recruitment strategies.

RETAINING OLDER WORKERS

Some have argued that with life expectancy at their current levels, the age of retirement should be increased from 65. On average, older workers are healthier and more active than their predecessors.

Employers should consider retaining older workers beyond a normal retirement age by perhaps considering alternate working arrangements to entice these valuable workers from entirely leaving the workforce with their skills and knowledge.

Flexible working arrangements like reduced hours and working-from-home alternatives may allow employers to retain this segment of their labour force.

Older workers who retire from their current jobs are an opportunity for other employers as a source of experienced workers. To be clear, not everyone reaching the normal retirement age wants to continue to work, but a sizable number do. High inflation may be adding to that motivation to continue to work.

LOOKING AHEAD

Unless Canada experiences a major recession, the demand for talent is not going to slow down anytime soon.

The competition for talent has never been greater, driving up the costs of labour and forcing employers to be ever more creative in their recruitment (and retention) strategies.

Given the work-from-home trend, the competition for local talent from national employers only further heightens the challenges of a tight labour market.

The good news is that Atlantic Canada is now attracting Canadians from other parts of the country. This means that employers in this region can now recruit more aggressively outside the region for workers.