By Jock Finlayson

Concerns over skilled and more general labour shortages continue to be voiced by employer organizations across the country. The Canadian Federation of Independent Business, the Canadian Chamber of Commerce, and the Conference Board have all pointed to shortfalls in the supply of qualified workers as a priority policy issue and a significant impediment to business growth.  Such sentiments are widespread in business circles, including here in British Columbia.

Economists and other social scientists interested in this topic tend to be resistant to anecdotal stories or the earnest pleas of small business owners scrambling to hire entry-level employees.  They are trained to favour quantitative evidence to inform a well-grounded understanding of relevant trends in the economy.  Overall, it is fair to say that academic researchers evince a pronounced skepticism toward the claim that Canada is struggling with either a broadly-based labour shortage or severe and persistent skill deficits that are hindering economic growth in a meaningful way.

Labour Market Fears Unwarranted?
In fact, a review of recent peer-reviewed academic and policy research on trends in labour supply and demand in Canada finds little reason for alarm.

• To start with, there is no evidence of a national labour shortage, either today or in the foreseeable future.  Unlike some other advanced economies, Canada is set to experience ongoing growth in the traditional working-age population (people aged 15 to 64) until at least 2030.  This mainly reflects the impact of immigration, as well as modest increases in women’s and older workers’ participation in the labour force.
• Many more people aged 60 and over are staying in the job market and working longer before fully retiring.
• Canada has sizable “under-utilized” populations from which additional workers can be drawn in the future.  Such groups include aboriginals, youth, disabled persons, and unemployed/under-employed first generation immigrants.

Notwithstanding the above points, pockets of labour and more specific skill shortages do exist in Canada, particularly in the west where economic activity, until recently, has been more robust than in other parts of the country.

Rather than a general shortage of labour, arguably the toughest “talent” issue for Canada is attracting and retaining the top-flight skills needed to provide leadership and build successful enterprises in today’s increasingly competitive global economy.

Realigning Canadian Skills for 21st Century
The above observations are not meant to minimize the human resource challenges facing individual employers, industry sectors or regions.  In Canada’s market-based economy, occasional skill shortages and mismatches are to be expected. Persistent skill shortfalls, where they exist, can be a sign that the “supply side” of the labour market isn’t performing optimally.

In the Canadian post-secondary education and training system, there continues to be a mis-alignment between the types of graduates and credentials being produced on the one hand, and the pattern of labour market demand on the other—although the extent of this problem is hotly debated. It is clear that as a country, we could be doing a better job in matching the supply and demand for skills, and also in helping students and other young adults make the transition from school to the workplace.  This realization recently prompted the Canadian Council of Chief Executives to launch an important new initiative on “Jobs and Skills for the 21st Century.”

Local Impacts and Global Inputs
It is also clear that some communities outside of major metropolitan centres are grappling with shrinking working-age populations—a situation that makes it hard to sustain existing businesses, let alone to allow for economic growth.  Meeting the needs of such communities is one justification for maintaining a temporary foreign worker program as a component of a larger immigration strategy that is geared to advancing Canada’s economic prosperity.

All of that said, Canada is better positioned, from a broad labour perspective, than most other affluent economies.  The aggregate supply of labour is still growing, workers are becoming better educated, immigration provides a steady net influx of skills and willing hands, more people over the age of 60 are staying engaged in productive work, and our education and training systems—despite some shortcomings—offer flexible entry points and different pathways for young people seeking to acquire skills.

Jock Finlayson is executive vice president and chief policy officer with the Business Council of BC.

(PeopleTalk Fall 2015)