By Jock Finlayson

The BC government recently published an updated labour market outlook covering the period to 2019.  With the front-end of the baby-boom generation now reaching retirement age, the number of people leaving the work force is set to balloon.  According to the government’s projections, BC will have 1.1 million job openings in the next decade.  Some of these will arise as current workers retire, while others will reflect economic and population growth.  Specifically, 675,000 of the 1.1 million job openings over the period 2009-2019 are expected to occur due to retirements, while the remainder will be attributable to economic growth.

Where will the new workers come from?  The government forecasts that 650,000 young people will graduate from the province’s educational institutions over the next ten years.  This leaves an initial “labour supply gap” of some 450,000.  Part of this will be met by international immigration – the dominant source of population growth in BC.  A smaller portion of the gap will be filled by in-migration from other provinces.

Nonetheless, even with regular inflows of international and inter-provincial migrants, BC’s labour market is destined to move toward a state of relative “scarcity” in the future.  Many employers will find that the pool of qualified candidates to staff vacant positions is becoming progressively smaller, and also that it takes longer to fill positions.  In addition, a tighter job market promises to put upward pressure on compensation costs in many industries and occupations.

The changing labour market described above is not unique to British Columbia.  Indeed, as the world economy continues to recover from the 2008-09 recession, talent scarcity is quickly becoming a global-scale phenomenon.  As a new report jointly authored by the World Economic Forum and Boston Consulting Group (BCG) puts it:

“Despite today’s high unemployment rates, the global talent risk is growing.  Soon, staggering talent gaps will appear in large parts of the world.  Economies will struggle to remain competitive while organizations…compete for talent on an unprecedented scale.”

Across the developed world, steadily aging populations and the retirement of the huge baby-boom generation will present employers with big challenges around the management of workforce quantity, quality and costs. Globalization has extended its reach to the job market: talent mobility is rising, as an increasingly well-educated global population becomes more comfortable with the idea of working in a different country, culture or industry.  Both individual employers and regional economies will be competing for the best and the brightest in fields ranging from IT to health care, management, skilled technical occupations, the professions, and scientific research.

Faced with an emerging world of growing talent scarcity, how should employers respond?  The World Economic Forum/BCG study and our own work at the Business Council of BC points to a number of strategies:

Undertake strategic workforce planning. Modeling workforce demographics and labour supply and demand dynamics for different job families and occupations is becoming commonplace in large organizations.  Governments are also following this path, as evidenced by the BC government’s latest labour market projection study.

Ease labour migration across borders. Economic success increasingly will hinge on the ability to access global talent pools.  Outsourcing is one way to do this, but it is no panacea.  Canada is fortunate because we attract substantial numbers of educated newcomers.  However, recent immigrant cohorts have been faring poorly in the job market.  It’s time for the employer community to step up its engagement with immigration issues to ensure that Canada’s immigration regime is tailored to meet the country’s economic and labour market needs.

Increase skills. Improving skill levels, including literacy skills, across the population can expand the size and improve the productivity of the labour force.  A top priority is to build and adaptable, efficient education system that encompasses both practical and theoretical skills along with life-long learning and upskilling of the existing workforce.  It is also important to continue to raise the proportion of the working-age population with a post-secondary education.  In BC, more than three-quarters of new jobs are expected to require some type of post-secondary credential (a degree, diploma, or recognized trades qualification); today, 67 percent of the province’s workforce meets this test.

Expand the domestic labour pool. Governments and employers have a shared interest in boosting labour market participation rates among traditionally “under-represented” groups – aboriginals, the disabled, older workers, and new immigrants – as part of a broader effort to increase labour supply.

These measures can help to expand the supply of qualified labour and make better use of existing endowments of human capital.  However, even if governments, employers and educators take action in all of the above noted areas, demographic forces mean that talent scarcity increasingly will be the new reality facing human resource managers everywhere.

Jock Finlayson is the Executive Vice President of the Business Council of BC.

(PeopleTalk: Spring 2011)