Too many people without jobs. And at the same time, too many jobs without people.
It’s a paradox that ripples through a 54-page analysis of the state of Canada’s labour market released with last week’s federal budget. It’s the first time such a paper has been published with the budget, offering insights into how the Conservative government views the current jobs market and future trends.
Skills shortages are a central concern as Ottawa expands its job training responsibilities and aims to steer more people into apprenticeships and skilled trades.
Few would dispute some skills shortages exist in Canada, though there is debate as to their extent. As evidence of growing shortages, the finance department published a job vacancy rate that shows it climbing since 2009. Its vacancy rate is based on its own calculations, using several data sources that can’t easily be replicated or checked by economists.
That estimate eschews the main measure released by Statistics Canada, which shows a different trend. The agency’s job vacancy rate has fallen from a year earlier amid a drop in the overall number of job openings. Canadian job growth in 2013 was the weakest since the recession, Statscan’s labour force survey shows.
“It is odd to see two arms of the government using two very different measures of job vacancies,” said Don Drummond, a former Toronto-Dominion Bank chief economist who spent 23 years at the federal Finance Department.
The “official” measure, by Statscan, suggests that vacancies aren’t very high and that the key problem is a lack of job demand, Mr. Drummond noted. But the job vacancy figure used by the finance department shows the rate is high.
“There is a lot at stake as to which is ‘right,’ ” he said. “One suggests the problem is lack of job demand and mismatches aren’t that severe. The other suggests there are serious job mismatches.
“Frankly, I find it totally unacceptable that there hasn’t been a rigorous reconciliation of the two measures. If the Statistics Canada measure is ‘wrong’ then the methodology should be revised,” Mr. Drummond said.
He wasn’t the only one scratching his head about the assessment. Even the finance department’s own measure shows the vacancy rate hasn’t budged much over the past year, noted Tyler Meredith, research director at the Montreal-based Institute for Research on Public Policy. (The finance department’s in-house measure shows the average vacancy rate for last year was 4 per cent compared with 3.8 per cent in 2012).
“We know there are specific sectors in specific areas of the country where there are imbalances,” Mr. Meredith said, “but at the national level we’re not seeing a significant acceleration [in shortages].”
Several measures assess shortages in Canada, with all of them suggesting “really there is no significant increase in vacancy rates, though over time they have crept up,” said Sonya Gulati, TD senior economist, adding that it’s “critical” employers and policy makers have more publicly accessible, timely and detailed data about shortages, by occupation and region.
The federal report included dozens of charts about labour mobility, youth unemployment, skills shortages and how Canada’s employment picture compares with other countries in the Organization for Economic Co-operation and Development.
The federal report makes a number of interesting observations: Apprenticeship rates have risen, but only half of the people actually complete apprenticeship programs. And a third of jobless Canadians experienced some form of mismatch last year, meaning they would have had a better shot at finding work if they had either had high-demand skills or moved to provinces with tighter labour markets.
The finance department said the report was prepared by six economists at the department over about two months. The government published the analysis “because it believes it is important that Canadians have access to comprehensive information on the state of the Canadian labour market.”
But it’s also telling for what it doesn’t contain. Several groups, such as recent immigrants, were cited as “not reaching their full potential” in the labour market and seeing above-average joblessness. Statistics about aboriginal unemployment don’t include those living on reserve. And the unemployment rate for people with disabilities dates back to 2011, making it difficult to know whether those with disabilities are falling further behind and who in this group is in need of particular attention.
Canada needs better labour market data, Mr. Drummond said. He was part of an advisory panel that in 2009 recommended a range of improvements to such information, including added detail on current job openings. Some suggestions were implemented, but not many.
“I continue to be surprised by the lack of attention to labour market information. The alleged labour shortages seem to be one of the hottest topics, yet almost everything we are told about this is based on anecdotal evidence,” he said.
More detailed labour market data would clarify the debate and help policy makers make better decisions, said Mr. Meredith, who would like to see more investments in basic data collection, such as expanding sample sizes, enhancing longitudinal studies and developing more targeted surveys for groups such as the disabled.
“Investing in labour market information is not a sexy thing for government … but it has a huge, huge importance in how we development economic policy.”