by Heidi Riley
“We are seeing a dramatic shift from finding jobs for people in the ‘70s and ‘80s to now trying to find people to fill the jobs available,” says David Chaundy, President and CEO of The Atlantic Provinces Economic Council (APEC). “This is not going away. This is our new reality.”
At the APEC conference held recently in Charlottetown, David explained that some businesses are not finding enough applicants for advertised positions, and some are finding that the individuals applying do not have the skills and experience needed for the job.
“Surveys of the business community in Atlantic Canada indicate that half of businesses say the labour shortage is a serious issue. Businesses surveyed were from a broad range of industries, large and small, established and new businesses, urban and rural, and from the private, public, and non-profit sectors.
“The unemployment rate in the region has been steadily going down from almost 14 percent in the late 1990s to under 10 percent for the last few years. In our cities, the rate is much lower – in Charlottetown it was under seven percent.
“The number of job vacancies in the Atlantic region has grown from 12,000 to 20,000 in the last three years. One reason for the rise is that more people are retiring, and businesses are trying to maintain their existing workforce.”
Implications of labour shortages:
- Loss of output, lower growth, slowing of the supply chain
- Operating costs increase: more overtime rates, higher recruitment costs, outsourcing
- Loss of knowledge and expertise when someone retires
- More time spent training new staff
- More stress on the existing workforce
“In 1980, for every 10 people retiring, 24 young people entered the labour market. Now, the birth rate is lower than death rate, and the number of people entering the labour market is lower than the number retiring.”
Other factors contributing to labour shortages
- Young people are not attracted to the same jobs they were in the past, such as seafood processing and construction.
- Unwillingness to move away from family and social supports to find work
- People not willing to work as many hours as in the past
- Decline in manufacturing and resource industry jobs, growth in business, finance, and science occupations, growth in service sector, growth in cities relative to rural locations
- small market in eastern Canada for specific occupations
- lower wages, higher tax rates in eastern Canada
Solutions will require new directions
- “In the last few years, an extra 6,000 immigrants per year have come to the Atlantic region,” David says. “We need to attract, integrate, and retain more immigrants and international workers.”
- Increase training to make sure people have the skills employers are looking for.
- Adopt automation.
- Encourage working remotely from home.
- Improve labour market information. “Individuals must be made aware of the opportunities available and the skill sets needed. More labour market information will also help training institutions understand business needs.”
- Education and literacy: “We must make sure that those coming into the labour market have foundational skills such as basic communication, writing, literacy and IT skills so that they can adapt to new technologies and be ready for multiple occupations as they go through their careers.”
- Offer higher wages, benefits, and tailored compensation packages.
Another solution is to increase workforce participation of underrepresented groups such as:
- youth with employment barriers
- older workers
- people with disabilities
- Indigenous workers
- the unemployed: find ways to match their skills with available jobs where possible, integrate them back into the labour market, and provide training to make them more employable.
“No single solution will work,” says David. “The report card APEC produced in January 2019 showed that our labour force in Atlantic Canada has declined by 30,000 in the last six years, even with 19,000 more immigrants, 18,000 additional Indigenous workers, and 14,000 more older workers staying in the labour force. We will have to work on multiple different resources to resolve our labour challenges.”
Keynote address: BDC’s global and national economic outlook
“What goes on around the world has a huge impact here in Canada,” says Pierre Cleroux, Vice President, Research & Chief Economist, Business Development Bank (BDC).
“The world economy is slowing down because of trade tensions between the US and China and the Brexit controversy. The uncertainty is having an impact on world trade.
“Canada saw slow growth for the last quarter of 2018 and the first quarter of 2019. The world price of oil dropped by 40 percent, which slowed the economies of Alberta and Saskatchewan. Canada has also been affected by world trade tensions.
“But the country’s economy is rebounding and the job market is good. Government spending is increasing, exports are strong, interest rates are low, and housing starts are up. The Canadian economy grew by about 1.5 percent in 2019, and should grow about 1.7 percent in 2020.
“We are going into a period of slower growth, and I believe that will be the new normal. We have an aging population in Canada, which is limiting the growth of our labour force, and that affects Canadian businesses, but we are not in danger of recession.”
Positive economic outlook for PEI
APEC’s Senior Policy Analyst Fred Bergman talked about the economic outlook for PEI in 2020. “The economy of PEI expanded about three percent in 2019, and the province leads the nation in the growth of manufacturing and export sales, housing starts, and the value of residential building permits. The growth of wages on PEI is outpacing the national growth rate.
“We predict that in 2020, the PEI economy will expand by about 2.8 percent, due to continued growth in public spending, tourism activity, and exports.
“Growth will be tempered by a reduction in housing construction, labour supply, and trade uncertainty. Employment on PEI went up by about 2.2 percent in 2019, and we predict it will rise 2.1 percent in 2020. Higher employment means higher incomes, spending, and investment.”
Benefits of immigration
APEC estimates immigration will add about 0.9 percent to PEI’s GDP in 2020, which shows it is a major contributor to economic growth. From January to August 2019, immigration was up about 20 percent over the same period in 2018. “We expect immigration could expand in 2020 to about 3,450 people,” says Fred. “The one-year retention rate on PEI is about 58 percent. Retention of immigrants is a challenge across the region.”
Housing construction boom
“Housing prices on PEI are up about 12 percent year to date,” says Fred. “Housing starts are leading the nation, up about 50 percent in the first three-quarters of 2019. About 1,400 units are predicted to be built in 2019, and our forecast is for about 1,500 to be built in 2020. With the rise in immigration, those numbers are needed to just maintain the present low apartment vacancy rate.”
Global trade uncertainty
“PEI exports are up 19 percent from January to August 2019 as compared to the same period last year. There is a huge increase in exports of frozen PEI lobster to China. There is also strong growth in exports of aerospace, bioscience products, and electrical control panels. However, trade uncertainty with the US could reduce exports to the US by about $30 million in 2020. And the slowing global economy could affect PEI as well.
“In the near term, we think the fastest growing sectors on PEI will be agriculture, public administration, manufacturing, construction, and bioscience. However, if the trade uncertainty lasts, I believe we will start to see a bit of a slowdown in exports that will affect manufacturing and bioscience. A tax rebate on aerospace and defence is set to be phased out in 2022, but for the near term, the outlook for aerospace is quite positive as well.”
For more about Atlantic Provinces Economic Council, visit www.apec–econ.ca