Writing for the Globe and Mail, MLI Managing Director Brian Lee Crowley argues that both sides of the current debate on labour shortages are ignoring the impending shortage of both skills and workers that will exist in the coming years.
Crowley urges governments to start examining the methods at their disposal – tools such as immigration or retirement policy – to deal with the issue.
The Globe ran an edited version of this column.
Brian Lee Crowley, June 27, 2014
The future is an uncertain place. That’s why plans that depend on the future being like the present, despite signs of incipient change, are usually doomed to disappoint. Being appointed to the French aristocracy in 1788 probably seemed like a good idea at the time. Then came 1789. Oops.
This idea that the forces shaping the future are never far beneath the surface of the present seemed particularly pertinent this week as federal Human Resources Minister Jason Kenney was in Toronto hosting a conference on whether skills shortages exist in the Canadian economy. That question, emphasising skills, denotes some of the grief the government has got over the issue of labour shortages. The government and many business groups maintain they exist, some of their critics, most recently the Parliamentary Budget Officer (PBO), say they can only find localized examples.
They’re both wrong.
The issue isn’t whether they exist today. The PBO is probably right that today’s limited statistical snapshots show them concentrated in a few predictable places, like the oil patch, although many employers in the room begged to differ.
The problem is that widespread shortages of both workers and skills will exist within a few short years. And that’s why Minister Kenney was ill-served by the complacency of many of the experts in the room; for them the present obstructed the view of the horizon.
Our workforce is about to be reshaped, again, by the Boomers. It is boring for the young to hear this, but Boomers matter here because there are so many of them. Just as their entry into the workforce helped to cause large-scale unemployment in the Seventies and Eighties, their looming retirement will weigh heavily on our supply of workers.
According to the building trades unions, to pick one example, roughly a fifth of their members will retire in the next decade. If we’re very lucky maybe enough workers will enter the labour force to replace them. Yet this period is likely to see a number of massive new projects come on stream in addition to the oilsands, including LNG plants, pipelines, nuclear refits, dams, electricity generation and transmission, mines, refinery expansions, transit projects, international bridges and much more in every part of the country.
That means a stable workforce is going to confront rising demand, and not just in construction. Canada’s labour force tripled in size over the last 50 years and it will grow a mere 11 percent over the next 50 as the Boomer bulge retreats into retirement. We are in the middle of the 5 year transition between the two periods, as the number of net new workers entering the workforce declines from roughly 250,000 annually to virtually zero.
Some of the worthies at Mr Kenney’s conference sniffed rather dismissively at these numbers as mere “projections” whereas in the real world many things can and will be done to mitigate these changes.
I couldn’t agree more that markets are wonderfully responsive to changing circumstances and that we will adjust. But by definition adjustment requires action. There are no “markets” independent of people like you and me acting in response to incentives and our best understanding of the present and the future. And so in the face of these sobering demographic realities we have to decide to act, lest circumstances present us with less palatable choices in a few years time.
To tame future labour and skill shortages we need to act now as governments have slowly come to see.
Obvious areas are immigration, temporary worker programmes, retirement policy, offshoring to places with surplus labour, increasing mechanisation and reforming social policy like EI to remove disincentives to work.
If workers lack the skills employers need you’ll want to look at the quality of educational institutions, personnel and curriculum at all levels, secondary, college, vocational and trade schools, as well as government and employer sponsored training programmes. You might want to think about whether good information is being given to young people, their parents and institutions about looming job opportunities. You might want to question the easy assumption that a university degree is the best way to improve the economic prospects of many young people.
Wage differentials, credential recognition and other barriers to interprovincial trade and tax policy are all impediments to workers moving where the jobs are. Attacking the barriers to employment that harm groups like young people, immigrants, women, the disabled and Aboriginal people would have to be on the agenda.
That a lot of work to deal with a problem many experts seem sceptical exists. But then there are no real experts on the future.
Brian Lee Crowley (twitter.com/brianleecrowley) is the Managing Director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa:www.mli.dev.pcomms.ca.