Addressing labour shortages

From: Employment and Social Development Canada

Current labour market conditions

Unemployment rates have been falling and job vacancies increasing in most regions, leading to labour shortages

• 30.3 million – Size of the total working age (15 and above) population in Canada
• 19.8 million – Size of the labour force, reflecting a 65.4% participation rate
• 18.7 million – Number of employed, reflecting a 61.6% employment rate
• 1.16 million – Number of unemployed, a 5.8% unemployment rate
• 527 thousand – Number of vacant jobs, reflecting 3.2% of labour demand
• 0.6 percent – Average real hourly wage growth in 2018. Suggests there is little evidence of significant upward pressure, despite higher shortages in some regions

Figure 1 – Text version

Table 1: Labour market pressures at-a-glance

Province	Unemployed to job vacancy ratio	Labour shortage characterization
British Columbia	1.1	Higher
Alberta	2.9	Medium
Saskatchewan	3.0	Medium
Manitoba	2.3	Higher
Ontario	2.1	Higher
Quebec	1.7	Higher
New Brunswick	3.3	Medium
Nova Scotia	2.7	Medium
Prince Edward Island	3.8	Lower
Newfoundland and Labrador	6.7	Lower

Note: Provinces characterized with having “Higher” labour shortages are those who have 2.5 or less unemployed persons per job vacancy. Provinces with between 2.5 and 3.5 unemployed persons per job vacancy are deemed to have Medium labour shortages and provinces with more than 3.5 unemployed persons per job vacancy are characterized as having Lower labour shortages.

Source: Statistics Canada, Labour Force Survey and Job Vacancy and Wage Survey.

Figure 1.1 – Text version

Table 1.1: Unemployment rates and job vacancies over time – Canada

Year	Unemployment rate (Percent)	Lowest unemployment rate since 1976 (Percent)	Job vacancies (Thousands)
2004	7.2%	5.8%	N/A
2005	6.8%	5.8%	N/A
2006	6.3%	5.8%	N/A
2007	6.0%	5.8%	N/A
2008	6.1%	5.8%	N/A
2009	8.3%	5.8%	N/A
2010	8.1%	5.8%	N/A
2011	7.5%	5.8%	237.1
2012	7.3%	5.8%	254.5
2013	7.1%	5.8%	220.8
2014	6.9%	5.8%	230
2015	6.9%	5.8%	230.8
2016	7.0%	5.8%	211.4
2017	6.3%	5.8%	272.3
2018	5.8%	5.8%	340.9

Source: Survey of Employment, Payrolls and Hours from Statistics Canada

Figure 1.2 – Text version

Table 1.2: Unemployment rates and job vacancies over time by region – Atlantic

Year	Unemployment rate (Percent)	Lowest unemployment rate since 1976 (Percent)	Job vacancies (Thousands)
2004	10.7%	9.1%	N/A
2005	10.4%	9.1%	N/A
2006	9.8%	9.1%	N/A
2007	9.1%	9.1%	N/A
2008	9.3%	9.1%	N/A
2009	10.5%	9.1%	N/A
2010	10.7%	9.1%	N/A
2011	10.1%	9.1%	12
2012	10.3%	9.1%	12.2
2013	10.2%	9.1%	10.4
2014	10.0%	9.1%	9.9
2015	10.0%	9.1%	11.7
2016	10.0%	9.1%	10.6
2017	9.7%	9.1%	12.4
2018	9.2%	9.1%	15.5

Note: The Atlantic region here consists of the provinces of Newfoundland and Labrador, New Brunswick, Prince Edward Island and Nova Scotia.

Source: Survey of Employment, Payrolls and Hours from Statistics Canada

Figure 1.3 – Text version

Table 1.3: Unemployment rates and job vacancies over time by region – Prairies

Year	Unemployment rate (Percent)	Lowest unemployment rate since 1976 (Percent)	Job vacancies (Thousands)
2004	4.9%	3.8%	N/A
2005	4.3%	3.8%	N/A
2006	3.8%	3.8%	N/A
2007	3.8%	3.8%	N/A
2008	3.8%	3.8%	N/A
2009	6.0%	3.8%	N/A
2010	6.1%	3.8%	N/A
2011	5.4%	3.8%	65
2012	4.7%	3.8%	84.2
2013	4.7%	3.8%	68.5
2014	4.7%	3.8%	66.6
2015	5.8%	3.8%	47.9
2016	7.5%	3.8%	39.9
2017	7.2%	3.8%	47.7
2018	6.4%	3.8%	54.5

Note: The Prairies here consist of the provinces of Manitoba, Saskatchewan and Alberta.

Source: Survey of Employment, Payrolls and Hours from Statistics Canada

Figure 1.4 – Text version

Table 1.4: Unemployment rates and job vacancies over time by region – British Columbia, Ontario and Quebec

Year	Unemployment rate (Percent)	Lowest unemployment rate since 1976 (Percent)	Job vacancies (Thousands)
2004	7.2%	5.6%	N/A
2005	6.8%	5.6%	N/A
2006	6.5%	5.6%	N/A
2007	6.3%	5.6%	N/A
2008	7.0%	5.6%	N/A
2009	8.7%	5.6%	N/A
2010	8.3%	5.6%	N/A
2011	7.7%	5.6%	159.0
2012	7.6%	5.6%	157.0
2013	7.3%	5.6%	140.6
2014	7.2%	5.6%	150.4
2015	6.9%	5.6%	170.0
2016	6.5%	5.6%	160.3
2017	5.8%	5.6%	211.4
2018	5.6%	5.6%	269.9

Note: British Columbia, Ontario and Quebec were grouped due to similar recent trends in unemployment and job vacancies.

Source: Survey of Employment, Payrolls and Hours from Statistics Canada

… population aging will continue to put downward pressure on labour force participation and labour force growth

Figure 2 – Text version

Table 2: Population aging will continue to put downward pressure on labour force participation and labour force growth

Year	Participation rate (Actual)	Participation rate (Projected)	Share of Canadian working age population aged 55 and above (Actual)	Share of Canadian working age population aged 55 and above (Projected)
1990	67.1	N/A	24.9	N/A
1991	66.6	N/A	25	N/A
1992	65.7	N/A	25.1	N/A
1993	65.3	N/A	25.2	N/A
1994	65.2	N/A	25.3	N/A
1995	64.8	N/A	25.4	N/A
1996	64.7	N/A	25.5	N/A
1997	64.9	N/A	25.7	N/A
1998	65.1	N/A	26	N/A
1999	65.5	N/A	26.2	N/A
2000	65.8	N/A	26.5	N/A
2001	65.9	N/A	27.2	N/A
2002	66.9	N/A	27.7	N/A
2003	67.6	N/A	28.3	N/A
2004	67.5	N/A	28.8	N/A
2005	67.1	N/A	29.2	N/A
2006	67	N/A	29.8	N/A
2007	67.4	N/A	30.3	N/A
2008	67.6	N/A	30.8	N/A
2009	67.1	N/A	31.3	N/A
2010	66.9	N/A	32	N/A
2011	66.7	N/A	32.6	N/A
2012	66.5	N/A	33.2	N/A
2013	66.5	N/A	33.9	N/A
2014	66	N/A	34.6	N/A
2015	65.8	N/A	35.4	N/A
2016	65.7	N/A	36	N/A
2017	65.8	N/A	36.6	N/A
2018	65.4	65.4	37.1	37.1
2019	N/A	65.7	N/A	37.7
2020	N/A	65.5	N/A	38.2
2021	N/A	65.3	N/A	38.6
2022	N/A	65.1	N/A	38.8
2023	N/A	64.9	N/A	39
2024	N/A	64.7	N/A	39.2
2025	N/A	64.5	N/A	39.4
2026	N/A	64.3	N/A	39.6
2027	N/A	64.1	N/A	39.7
2028	N/A	63.9	N/A	39.8

Source: Calculated using Statistics Canada’s Labour Force Survey and the Demographic Projections from Statistics Canada, ESDC COPS 2019 Projections (2019 to 2028).

Possible pathways to address labour shortages

New labour market participants

Increasing skilled immigration levels and improving immigrant participation rates would help address labour shortages. However, new graduates will continue to be the largest source of new labour...

Figure 3 – Text version

Table 3: Major outflows and inflows of labour market participants

Labour force flows	2006	2016	2026
Total outflows	-280,000	-425,000	-484,200
Deaths and emigrants	-72,400	-75,900	-83,900
Retirements	-207,600	-349,100	-400,300
Total inflows	503,200	600,900	659,300
New immigrants* (percent of total immigration)	109,500 (43.0%)*	141,100 (44.0%)*	151,300 (45.2%)*
School leavers	393,700	459,800	508,000

Source: Statistics Canada, ESDC Canadian Occupational Projection System (COPS) 2017 Projections

*Note: This percentage reflects the share of all new immigrants that are non-students aged 15 and over who are participating in the labour force.

...but, they may not be adequately prepared to meet labour market needs.

• 83% of educators say yes
• 44% of graduates say yes
• 34% of employers say yes

Source: McKinsey & Company, 2015

Women, older workers and underrepresented groups

Narrowing the participation gap of groups underrepresented in the labour force would help mitigate the decline in participation rates.

Figure 4 – Text version

Table 4: Participation gap of groups underrepresented in the labour force

Underrepresented and comparator groups	Participation rate (Percentage)	Participation rate gap (Percentage)	Potential additional workers if the participation rate gap were closed (thousands)*	Share of the labour force represented by the potential workers added to the labour market if the participation rate gap were closed (Percentage)
Women aged 15 years and above	61.3%	8.3%	1,200	6.1%
Men aged 15 years and above	69.6%	N/A	N/A	N/A
Canadian older workers aged 55 years and above	37.8%	9.2%	1,000	5.2%
Japanese older workers aged 55 years and above	47.0%	N/A	N/A	N/A
Persons with disabilities with the potential to work aged 25 to 64 years	64.7%	20.3%	445	2.3%
Persons without disabilities aged 25 to 64 years	85.0%	N/A	N/A	N/A
Canadian older workers aged 55 years and above	37.8%	9.2%	369	1.9%
Japanese older workers aged 55 years and above	47.0%	N/A	N/A	N/A
Immigrants aged 15 years and above	63.8%	2.3%	206	1.0%
Canadian born aged 15 years and above	66.1%	N/A	N/A	N/A
Indigenous People aged 15 years and above on and off reserve	61.4%	4%	48	0.2%
Non-Indigenous People aged 15 years and above	65.4%	N/A	N/A	N/A

*Note: These illustrative figures cannot be summed as they are not mutually exclusive, leading to double or triple counting.

Source: Census Data, Labour Force Survey, and Canada Survey on Disability from Statistics Canada; Organization for Economic Cooperation and Development (OECD) data.

Increasing permanently new immigration by 80K (or 25%) would have the same impact on the labour force after 10 years than that obtained from closing a third of all the participation rate gaps. However, additional immigrants would also raise the demand for labour and therefore have a smaller impact on reducing labour shortages.

Figure 5 – Text version

Table 5.1: Impact on the overall participation rate of closing a third of the participation rate gaps of the underrepresented groups by 2028

Year	Overall labour market participation rate (Percentage)	Projected change in the overall participation rate between 2018 and 2028 (Percentage points)
2018	65.4%	N/A
2028 (Projection)	63.9%	-1.50

Table 5.2: Impact on the gross and net impact on the overall participation rate of closing a third of the participation rate gaps of the underrepresented groups by 2028

Underrepresented group	Gross impact on the overall participation rate of closing a third of the participation rate gaps by 2028 (Percentage points)	Net impact on the overall participation rate of closing a third of the participation rate gaps by 2028 (Percentage points)
Women	+0.7	+0.7
Older workers	+0.5	+0.4
Persons with disabilities	+0.2	+0.1
Immigrants	+0.2	+0.1
Indigenous people	+0.04	+0.02
Residual between the net impact on the overall participation rate of closing a third of the participation rate gaps of all underrepresented groups by 2028 and the difference in the projected overall participation rate between 2018-2028.	+0.2	+0.2

*Note: Estimates are approximates. Some individuals can belong to two or more underrepresented groups. For example, there could be older immigrant women with a disability. Efforts were made to count these individuals only once. The overlay of the bars intends to reflect this overlap. 

Source: COPS 2019 Projections, ESDC; and author’s calculations using the Labour Force Survey, 2016 Census and the 2017 Canadian Survey on Disability from Statistics Canada.

Technology will contribute to closing the remaining gap

Technological innovation will affect the size and composition of labour demand in the future.

Figure 6 – Text version

Table 6: Global industrial robot sales doubled between 2013 to 2017 and are expected to continue growing (thousands of units)

Year	Annual worldwide supply of industrial robots (Actual)	Annual worldwide supply of industrial robots (Forecast)	Percent change between 2017 to 2021
2009	60	N/A	N/A
2010	121	N/A	N/A
2011	166	N/A	N/A
2012	159	N/A	N/A
2013	178	N/A	N/A
2014	221	N/A	N/A
2015	254	N/A	N/A
2016	294	N/A	N/A
2017	381	N/A	N/A
2018	N/A	421	N/A
2019	N/A	484	N/A
2020	N/A	553	N/A
2021	N/A	630	65.4%

Source: International Federation of Robotics, 2018

New technologies will require a workforce that is adaptable and capable of upskilling/reskilling and could result in a significant disruption to the labour market (see Changing Nature of Work placemat).