The Certainty and Challenge of Labour Shortages

by Roger Sauvé

Look ahead 10 years or so … the unemployment rate will be down to new lows, worker stress levels will be at record highs, wages will be rising faster than inflation, fewer workers will be supporting the rest of us and government revenue growth will be rising more slowly than in the past. These are all possible … and very, very, very likely.

In fact, the labour shortage situation is already here in both booming provinces and in provinces that are growing more slowly. If you define a shortage as an unemployment rate of 3% or less, then 42% of all occupations and 35% of all industries are currently in a shortage situation. In the short-term, a solid recession would lessen the shortages for a period of time. I think we can all agree that this not the favoured solution. Over the medium-term, one solution would be to double or triple the annual rate of international immigration. The Federal Government recently set a target of some 240,000 to 265,000 immigrants to be admitted to Canada in 20071. This is the highest target rate in 25 years and reflects Canada’s “extraordinary” labour market requirements. During the first quarter of 2007, international immigration was responsible for two-thirds of the total population increase in Canada. The question remains whether Canada can continue to attract this high level of immigration.

According to one of my recent reports, Labour Crunch to 2021, National and Provincial Labour Force Projections, the level of international immigration will need to be within an annual range of 467,000 to 630,000 by the 2017-2021 period. This is way above the quarter-century record noted above. Any less and labour force growth and economic growth will slow sharply within a decade or two. The main cause of this slowdown will be the wave of boomers who will retire as they enter their glorious senior years. I will be one of them along with a whole bunch of you readers out there. It is inevitable.

A Difference of Ability

According to my base case scenario, the absolute size of the labour force has already peaked or will peak within just a few years in five provinces. The projected growth in each of the other provinces, even Alberta, will slow dramatically over the next 15 years. You aren’t sure you want to believe me. A very recent Statistics Canada report2, using four different scenarios, projected that only three provinces will see a larger labour force in 25 years than in 2005. It seems to be unanimous!

And so what does it mean?

• Diversity will increase as the vast majority of new workers will be new immigrants from countries with different languages, customs, attitudes and religions than the “average” Canadian. This will require even more resources to ease the settlement process for both the working-age immigrants themselves and the children they bring along or have in Canada.
• Regardless of the level of immigration, Canada is getting older and will continue to age over the next two to three decades. According to my projections, almost 20% of all workers in 2021 will be 55 years old or older. This is almost double the ratio at the beginning of this century. These older workers may not want to work for large employers … about one-quarter of males aged 55-64 are self-employed and almost half of males aged 65 and over are self-employed.
• Many older workers will be asked to stay around a bit longer, instead of being told to leave at 65 or younger. Older workers certainly bring experience but they also bring along a few more ailments and they actually do take more time off to enjoy or repair themselves.
• Younger and middle-aged workers will be asked to compensate for the lack of workers. This means more overtime, less time for families and more and more work-life conflict.
• Groups that have waited on the sidelines for job and growth opportunities will increasingly be invited to fully participate in the mainstream job market.
• The ongoing tightness in the job market will force companies, cities and provinces to compete for the available workers. This may cause the turnover rate to increase and will bring about a “hollowing out” of areas that are not growing or are not growing fast enough to employ the youth that are entering the labour force. This is already happening in much of the Atlantic region. Even so, the amount of mobility will tend to slow .The reality is that the older you are, the less you are willing to pull up stakes and move to a new location. And if older workers do move, they tend to move back to their home bases.

Are you ready? As career and counselling specialists, you have and will continue to have a major role to play in our aging and increasingly diverse Canadian society. Have you sat down alone or with a group or an organization to try and figure out what this future means for you? Have you planned your career as well as you help others to plan their careers? A parting comment … global warming is here and Canadian worker shortages are here.

References:

1Citizenship and Immigration Canada, Annual Report to Parliament on Immigration, 2006
www.cic.gc.ca/ENGLISH/resources/publications/annual-report2006/section1.asp

1The Daily, Statistics Canada Study: Labour force projections in Canada
www.statcan.ca/Daily/English/070615/d070615b.htm

Roger Sauvé is President of People Patterns Consulting. Roger publishes an annual Canada Jobs Trends Update report. He is available for speaking engagements. For more information please visit: www.peoplepatternsconsulting.com

Last Updated on Friday, 27 February 2009 10:43