The widening gap in Canada's labour market

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A fault line is splintering Canada's labour market into those who can't find work and those who can't find workers.

There's no shortage of people looking for work. Some 1.4 million Canadians are unemployed, the jobless rate is still above pre-recession levels and youth unemployment is nearly 14 per cent. Despite this, employers across the country say they can't find the right workers for all kinds of available jobs.

The imbalance has implications for both the health of the labour market and the broader economy. Groups with high jobless rates such as aboriginal people, recent immigrants and those with disabilities are struggling to land good jobs, limiting their ability to climb the economic ladder.

At the same time, employers from Newfoundland and Labrador to the Prairies say shortages are constraining their ability to grow, innovate and compete. The Canadian Chamber of Commerce cites a shortage of highly skilled labour as the top barrier for businesses, and the mismatch has recently landed on the radar of policy makers, including central bank Governor Mark Carney.

Structural shifts in the labour market mean "workers in declining industries may not have the skills or experience to match immediately the needs of employers in expanding industries," Mr. Carney said in a speech last week.

Unemployment is high, even as the number of job vacancies continues to rise, he noted. Indeed, as of December there were 222,000 vacancies across the country, according to Statistics Canada. The Bank of Canada's business outlook survey, released Monday, showed a slew of employers are struggling to fill positions. The survey showed 27 per cent of firms reported a labour shortage this spring, near a three-year high, though below levels seen last decade.

THE VIEW FROM EMPLOYERS

In the tech hub of Waterloo, Ont., plenty of companies are expanding – or trying to.

"It has always been difficult finding highly qualified scientific and technical personnel," but the problem has become more acute in recent years, says Brian Doody, CEO of electronics firm Teledyne Dalsa Inc., a company that started as a spinoff from the University of Waterloo.

"The lack of young people pursuing further education in engineering and science and technology, is definitely a strain on our ability to grow," he said. There are some jobs in some microelectronics disciplines where "we have been looking for people for more than a year."

Despite the presence of the local universities churning out tech graduates, he estimates there are about 1,900 current vacancies for technical jobs in the Kitchener-Waterloo region "that are unfilled and have been for some time."

Other employers, such as Scott Calver, CFO of trucking firm Trimac Transportation Ltd., say the shortage is serious and getting worse.

Young workers are not as motivated by money as older ones, Mr. Calver said. "The older generation considered that their success was based on the number of hours a week you worked, and how much money you made. The people in their 20s and 30s are not as motivated by money, and they value success on working fewer hours, not longer hours."

Trimac and other trucking firms are having trouble getting unemployed drivers to move to places where there are jobs. "What is disappointing is how limited Canadians are in their ability to relocate," Mr. Calver said.

"It is tough to get these professional truck drivers to move from Woodstock, Ontario, to Dawson Creek or Grande Prairie or Fort McMurray where we need drivers and they are paid considerably higher than what they were making in Southern Ontario."

One solution for the trucking industry is to bring in foreign workers, from places like England, Ireland, Jamaica and elsewhere. The problem is that most drivers can only get a temporary one-year work permit, because driving is not considered a professional skill set, Mr. Calver said.

In Alberta – a province familiar with labour shortages in the pre-recession days – the government expects there will be 114,000 more jobs than people to fill them in coming years, a trend that will "slow economic growth, costing jobs and reducing government revenue to support vital government social and economic programs such as hospitals, schools and roads," the Alberta Coalition for Action on Labour Shortages said last month.

Last month it called on the federal and provincial governments to work with employers to find strategies to overcome expected shortfalls.

Labour shortages aren't yet as acute as in 2006 and 2007, but concern over finding skilled workers is growing among smaller firms, said Ted Mallett, chief economist at the Canadian Federation of Independent Business.

Employers are having a tough time getting workers to toil in remote locations and adjust to an economy that runs around the clock and may require irregular hours, he said.

THE VIEW FROM WORKERS

Larry Henderson, a marketing executive, has been actively looking for work for the past four months, and has witnessed the disconnect in the job market up close.

Most employers are only looking for contract work, he says – short-term fixes to problems without a long-term commitment to hiring.

"The root issue of this disconnect is that most workers aren't trained to survive in today's workplace, schools don't prepare people to be resilient. The job market now is defined by constant change," says Mr. Henderson, 57, who has learned how to use Twitter, Facebook and Google Plus and landed a short-term consulting project last week.

At the same time, companies share part of the blame. Of the few positions that are officially posted, most have a very narrow set of requirements, he says. And rather than invest in providing new hires with the skills they need, they prefer to find someone "who can hit the ground running."

Some labour economists refute the very notion that there's a labour shortage in the first place.

There is "no meaningful way in which Canada is experiencing anything resembling a labour shortage," says Jim Stanford, economist at the Canadian Auto Workers, given that unemployment and underemployment are still so elevated.

"If particular businesses can't find the right workers with the right skills at the right place and time, they have only themselves to blame for their failure to provide adequate planning, training, and incentives to the workers they will need in the future."

WHAT'S TO BE DONE?

The disconnect isn't just a problem in Canada. It's materializing throughout advanced economies. And this "disequilibrium" in many national labour markets will only be resolved through new approaches, says a paper released last month by the McKinsey Global Institute.

It says improving skills and workplace training should become a national priority, and recommended more companies make a "strategic decision to take a direct role in creating the skilled workforces and talent pipelines they need."

In Canada, part of the problem is that many people haven't pursued careers in areas where all the job growth is happening. Mining and energy extraction are, by far, the fastest-growing segments of job growth in Canada over the past year, with employment gains of 5.7 per cent.

And policies that promote labour mobility and careers related to natural resources should pay dividends.

The onus of preparing workers for work has, in prior decades, fallen largely on governments, but that should shift, experts say. That means more-efficient partnerships between employers and universities and colleges, as in Germany.

Meantime, the labour market imbalance "is the largest threat to our economy," says James Knight, president and CEO of the Association of Canadian Community Colleges.

A monumental effort – akin to building the railroad more than a century ago – is required among governments, civil society and businesses to "get more Canadians to play a part in our economy," he says. "We need to bring them into the economic mainstream because they are the workers of the future."

Without that effort, he estimates 1.5 million jobs could go unfilled in 10 years' time.