Canadian economists say don’t blame COVID for lack of workers

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Canada is in the throes of a serious labour shortage, but economists say it’s not all the pandemic’s fault — it’s the inevitable culmination of a seismic demographic shift decades in the making.

“It’s the slowest-moving train on the planet. It was predictable 60 to 65 years ago, and we have done nothing about it,” said Armine Yalnizyan, an economist and Atkinson Fellow on the Future of Workers. “We knew this transition was going to happen.”

The numbers behind all those help wanted signs are startling.

According to Statistics Canada, the unemployment-to-job vacancy ratio — a key measure comparing the number of Canadians looking for work to the number of available jobs — is currently hovering at a historic low in every province. In fact, the ratio is significantly lower now than it was before the COVID-19 pandemic began.

The reason isn’t that there are fewer jobs opening up — remember the help wanted signs? It’s that there are fewer workers available to fill them. And the reason for that, economists say, can be traced back to the post-war baby boom.

While those 55 and older have been steadily exiting the Canadian workforce — an exodus that some economists believe was accelerated by the pandemic, as many older workers opted for early retirement — there simply aren’t enough younger workers to replace them.

In fact, participation in the workforce among those ages 25-54 approached 88 per cent in May, up more than one percentage point from February 2020, before the pandemic had taken hold in Canada.

“That’s what happens when a baby boom finally starts exiting from stage left, and there’s not enough people entering from stage right,” Yalnizyan said. “We’ve actually got a higher share of the working-age population working than ever.”

According to Statistics Canada, that has led to virtually unprecedented labour shortages across nearly every employment sector.

In particular, the construction and manufacturing sectors are having a difficult time recruiting skilled workers, followed closely by accommodation and food services, which includes hotels, restaurants and bars. 

“People are finding other places to work. There just aren’t enough people willing to do poorly paid jobs that are marginal at best,” said Yalnizyan.

“Workers have a lot more choices now,” Ian Lee, associate professor at Carleton University’s Sprott School of Business. agreed. “If you have more choices and you don’t have to work in that industry, you’ll go and work in an industry where there’s a better career stream and where the wages are higher and the hours are more predictable.”

That could force employers in certain industries to raise wages, Lee said.

“I’m not suggesting that the demand for these jobs is going to go away. It’s not,” he said. “It suggests to me that we’re going to see some pretty serious wage inflation in these industries over the years ahead.”

Read more via CBC

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