Aug 22, 2022
Labour Shortages Pre-Date Pandemic
A recession in 2023 might temporarily ease worker shortages, but they’ll return as Canada’s population ages, says a report from RBC Economics. In nearly every Canadian industry and across every sector, a historic labour shortage is hitting companies hard. The root of the labour crunch predates the pandemic and will outlive the next downturn as well. A greying population will continue to create disruptions that extend beyond the shorter-run economic cycle as the large post-WWII baby boom generation began to hit retirement age more than a decade ago. That alone has pushed the share of the population actively working or looking for work (those aged below 65) sharply lower. And Canada is still only about half-way through that wave of labour force exits. By the end of this decade, labour force participation is expected to fall to levels not seen since the 1970s. The lower the labour force participation rate, the more severe the economic and fiscal strains will be. As of June, businesses posted almost 70 per cent more job openings in Canada than pre-pandemic. But these firms were competing for 13 per cent fewer unemployed workers than were available in February 2020. The impact is severe: more than half of Canadian businesses say labour shortages are limiting their ability to increase production, up from 40 per cent before the pandemic and 30 per cent a decade ago. What is needed, it says, is a strong flow of immigrants, better integration of their skills, and more capital investments. These are key to addressing the long-run problems underlying Canada’s labour crunch.
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