Employers innovate to overcome labour shortages

Fraser Institute study cites later retirement, more overtime as workarounds.

TORONTO — Canadian employers are using innovative methods to combat labour shortages, says a new Fraser Institute 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.

He cites delayed retirement and working longer hours with more overtime as an example. Nearly one-third of Albertans work more than 50 hours a week and the number paid to work overtime rose by 57% over the past decade, he writes. In Saskatchewan, it’s 60% compare to a 3.3% increase in the rest of Canada.

But the study warns Canada’s rapidly aging population makes such a strategy unsustainable. The number of Canadians 65 years and older (the retirement years) rose to 5.1 million in 2013 from 3.8 million in 2003.

But this aging workforce is benefiting young Canadians as much as you might think.

The employment rate for young high school graduates with a post-secondary certificate or diploma (from a trade school, for example) is 77.2% compared to 71.8% for university graduates, and their unemployment rates are 7.3% and 9.1% respectively. And the unemployment rate for young Canadians with a graduate degree rises to 9.4%.

The study finds 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.

He contends 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.

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.

The Fraser Institute is a public policy think tank with offices across Canada.

Click here to download the report.

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