Employers across Canada are employing innovative methods to combat labour shortages, according to a Fraser Institute study.
“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,” says Philip Cross, author of the study and former chief economic analyst for Statistics Canada.
More employers are encouraging employees to delay retirement and work longer hours with more overtime. Nearly one-third of Albertans, for example, work more than 50 hours a week.
In fact, the number of Alberta employees paid to work overtime rose by 57% over the past decade, and 60% in Saskatchewan, compared with a 3.3% rise in the rest of Canada.
But this strategy, notes the study, is unsustainable due to Canada’s rapidly aging population. The number of Canadians 65 years and older (the retirement years) rose to 5.1 million in 2013 from 3.8 million in 2003.
However, the aging workforce doesn’t always benefit young Canadians.
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 with 71.8% for university graduates, and their unemployment rates are 7.3% and 9.1%, respectively. Among young Canadians with a graduate degree, the unemployment rate rises to 9.4%.
But the study notes that 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,” he explains.
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.
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 says.
Finally, on the wage front, tight labour markets in resource-rich provinces (Alberta, Saskatchewan and Newfoundland and Labrador) are driving up wages while the rest of the country has seen only modest wage gains.
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