Even though Canada has a relatively comfortable unemployment rate of 5.8 per cent, businesses are scrambling to fill vital positions. The government has embraced immigration as one solution and is hoping to attract 350,000 new immigrants per year by 2021. So far, this hasn’t been enough. While foreign workers can make up some of the shortfalls, a more fundamental problem is perpetuating the country’s economic headwind.
Canadians who lose their jobs today take nearly as long to find new work as they did during the Great Recession. This is because Canada isn’t experiencing a labour shortage, so much as a geographic skills shortage. The country has many available workers, but not the skills that its businesses need in the places where they’re needed. To resolve this, businesses and the government need to work together to upskill workers, and to ensure that those who have critical skills are able to find employment.
Yesterday’s economic boom built today’s skill shortage
Prior to the financial crisis, Canada relied fairly heavily on resource extraction industries, that is mining, oil and gas, quarrying, forestry, and fishing. The financial crisis led to massive layoffs in these sectors in the late 2000s. Then, during the recovery, Canada joined the US in its massive shale oil boom, hiring rapidly to try to cash in quickly, and culminating in a collapse in oil prices in 2014. Today, the oil industry has recovered, but oil and gas jobs have not. Due to repeated pressure on the industry, oil companies have become significantly leaner, extracting more resources with less labour, and leaving their former employees with few serious prospects for future employment.
In the wrong place with the wrong skills
Those unemployed workers, for their part, settled down and started families where they used to work. They’re mostly located far away from the country’s major economic centres and are unwilling or unable to move. Worse, some simply have the wrong skills. Canada’s fastest growing industries are overwhelmingly white collar jobs in technology, healthcare, software development, and alternative energy. Those fast-growing businesses are overwhelmingly located in major urban centres, and have little use for a drilling engineer, no matter how skilled or experienced.
Improving flexibility is key
A major part of the problem for Canadian employers is that they’re located in cities, while available workers are much more common in smaller cities and rural areas. By embracing more innovative staffing solutions, businesses can circumvent this problem for a number of critical positions. Specifically, white-collar workers in IT, marketing, programming, finance, and other similar fields no longer always need to be physically present to fulfil their role.
Flexible and remote working is a great way to get access to skilled workers who are unwilling to relocate, and too far away from a prospective employer to commute. This is an issue particularly in Canada’s most expensive cities, such as Vancouver, where skilled middle-income workers have no realistic prospects of home ownership. A flexible working arrangement, where select employees only need to commute a long distance to the office perhaps once per week, greatly extend the area in which businesses can hire. Some positions, on the other hand, can be filled entirely remotely, allowing businesses to take applicants from all over the country, or all over the world.
Hiring flexible workers lowers costs
Urban workers face far higher costs of living than those living in suburban or rural areas. Because of this, those workers tend to command far higher wages. By hiring remotely, businesses can access workers who are not only willing to work for less but who will enjoy a higher quality of life on that income.
Businesses need to drive skills development
The other option for businesses is to adapt the existing workforce to their needs. That means introducing and expanding in-house training programs and working together with the government and educational institutions to increase the number of available workers with appropriate skills. These are also relatively long-term fixes, however, and require a great deal of investment. To begin filling roles in the near term, businesses can instead opt to up-train current employees with more industry experience, effectively vacating a lower level easier-to-fill position to fill a more complex role.
Immigration and market forces will eventually lead the labour market to adapt to the needs of employers. Unfortunately, waiting for this to happen organically will take years, and will leave a significant portion of Canadian workers without real prospects. To address the issue in the near term, businesses need to take innovative and proactive measures to manage rising labour costs and to develop the skilled workers they need to succeed.