Peter Hall: This is how Canada can fix chronic labour shortages

peter-hall:-this-is-how-canada-can-fix-chronic-labour-shortages

The list of solutions is surprisingly long

Canada’s unemployment rate is at a half-century low, while labour force participation is at a record high. Photo by Winnipeg Sun “Tight” is an inadequate adjective for today’s labour market. Canada’s current paucity of spare labour — at all skill levels — is one of the top complaints of business.

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Unlike certain other complaints, there are few quick fixes for this one. Policymakers shouldn’t use that as an excuse — the problem could’ve been fixed by now, as we’ve known for at least two decades that we’d be in this bind. But let’s not cry over spilt milk. What are our options for dealing with the situation now?

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Before we go there, just how bad is the immediate problem? Anecdotally, it’s awful. Ask anyone in leadership and they’ll say hiring is harder than ever. The data agree: Canada’s unemployment rate is at a half-century low, while labour force participation is at a record high. There is no wiggle room.

Canada isn’t alone. Unemployment in the United States has not been this low since the late 1960s, and the jobless rate in the European Union has never been lower. Key emerging markets are also dealing with chronic labour shortages. The problem is big and bad enough to wonder whether anything can be done. The answer is yes, and the list of solutions is surprisingly long:

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Immigration It’s the perennial Canadian silver bullet. The federal government’s targets have increased significantly, but we’ve seen that before, only to see actual immigration fall short. Last year’s increase was driven by a surge of non-permanent residents. In a typical year, we’d receive about 26,000 of this class of immigrant. Last year, the estimate was more than 400,000, boosted by the influx of Ukrainians fleeing the war. The standard immigration inflow would have to increase by 60 per cent to meet the government’s targets. Then consider that there is intense international competition for skilled immigrants, and that the nations that typically send their talent abroad — India, for example — are now leading the world in economic growth, meaning there is less reason to leave. Higher immigration inflows are a noble aim, but we’ll believe it when we see it.

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Article content Accreditation To be sure, even at current levels, Canada’s annual immigration numbers are impressive. Less impressive is the integration of immigrants into the economy. Professional accreditation is often a considerable hurdle. We’ve all heard stories of immigrants with multiple degrees driving taxis or plying some other occupation where their true skills simply atrophy. Development of transnational standards and accreditation protocols, and a means of fast-tracking skilled immigrants, would go a long way to accelerating engagement in multiple professions where the needs are great. If you broke your leg in Lagos, would you wait for a Canadian physician to be spirited over to tend to your needs? No. Local doctors would do just fine.

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Article content Education All kinds of skilled Canadians graduate from our educational institutions every year. And every year, many of them complain that they can’t find jobs. Imagine a system that perfectly matches needs in the economy to seats in programs, by educational discipline. Revealing gaps alone would go a long way to influencing choices at the policy, education, business and personal levels. Just imagine the productivity gains from a more informed or even targeted system.

Apprenticeship Apprenticeship programs that effectively transfer industrial skills to the the next generation of workers are one of the keys to German manufacturing success, but they have struggled to work well elsewhere. With an entire generation of highly skilled Canadians now exiting the workforce, time is running short to ensure that their skills live on in the next generation of workers. If we are going to latch onto this, there’s no time like now.

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Article content Life-long learning Exponential growth in technology can easily leave many behind. Frustration can lead to unnecessary early exits from the labour force, with seasoned workers taking their skills, corporate memory and other valuable attributes with them. Life-long learning strategies are a known remedy for waning enthusiasm and relevance, by incrementally ensuring that skills are up to date, as opposed to sudden, significant and in many cases unwelcome bursts of training and development.

Retention The Great Resignation is still being assessed, but it’s safe to say that it has exacerbated the labour situation. Doubtless many of these reactionaries wouldn’t mind coming back, under the right terms and conditions. Like the policies that were crafted to attract and retain millennials, policies aimed at oldsters might well lure top talent back, if only on a part-time basis. It’s worth a try.

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Article content Mechanization Displacing people with machines led Ned Ludd and his 19th-century followers to destroy new technology to preserve jobs. Back then, it was a true crisis, as there was an army of surplus labour. Not so today. The ranks of workers are so thin that machines can effectively replace people that don’t exist, and there still should be plenty of work for the humans.

Peter Hall: Why the Bank of Canada’s awful medicine is exactly what the economy needs Peter Hall: Why inflation is not really the problem Peter Hall: Why so many forecasters were dead wrong on inflation Internationalization In contrast to immigration, this involves importing labour without forcing people to uproot their lives. While today’s geopolitics have soured this option, technology still makes it possible to engage and efficiently manage a labour force halfway around the world in population-rich locations. Long-term sustainability requires labour-intensive industries increasingly take this approach — or lose to those who do. True, it robs politicians of photo-ops, but often it is what keeps the lights on.

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Article content Recession There’s nothing that frees up talent like less economic activity. With Canada’s downturn looking more severe than elsewhere, there’s an opportunity for viable firms to go talent-scouting. Nothing wrong with that. Two warnings: there is a risk international employers will prey on Canadian talent and that an economic lull will cause us to take our eyes off the above list of longer-term remedies. Labour shortages are a reality that must be addressed. If anything, recession would buy us time to get ready for the next labour crunch.

The list likely goes on, but there’s enough in this one to keep business and policymakers busy for some time to come. Getting the remedies right is critical — our future viability depends on it.

Peter Hall is chief executive of Econosphere Inc. and a former chief economist at Export Development Canada.


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