Five years ago, then prime minister Stephen Harper’s Conservative government was convinced that Canada’s labour market was sinking into a deepening skills-mismatch problem: There were plenty of skilled jobs available, but not enough qualified applicants to fill them.
In the February, 2014, budget, the Tories attempted to drive home the point by including a Finance Department study that said the job-vacancy rate (open jobs as a percentage of all jobs) was north of 4 per cent, its highest level since 2008, despite still-high unemployment of 7 per cent. But that study contradicted Statistics Canada’s data on job openings, which put the vacancy rate at barely above 1 per cent.
It turned out that some of the government’s stats were gleaned from internet job postings on sites such as Kijiji, and those counts were badly tainted – double-counting some jobs and including some positions that had already been filled.
The so-called Kijiji Jobs Report, as it became known, was a major embarrassment for the Harper government. Critics accused the Conservatives of using half-baked statistical evidence to justify their economic policies. But it was unclear whether Statscan’s numbers were right either. Job vacancy estimates from the Conference Board of Canada and the Canadian Federation of Independent Business yielded still different results.
The episode was a wake-up call: If Canada faced deepening shortages in key skills, it lacked the statistical detail to see them properly, let alone do anything about the problem. In the five years since, there has been a renewed focus on bringing Canada’s labour-skills data into the 21st century – with increased funding to match. But progress has been slow and the stakes are rising. A growing economy and aging population have eaten into the available labour pool, slicing the unemployment rate to a four-decade low. An increasing number of companies complain that they can’t find enough skilled workers.
To help fill the labour gaps, successive federal governments have increased what’s known as “economic” immigration, targeting highly skilled foreign workers. The provinces have also been given increased powers to recruit immigrants to fill their skills needs. All this comes against a backdrop of rising automation and artificial intelligence, which will dramatically reshape the labour market.
Finance Minister Bill Morneau has said that skills development will be a focus of his March 19 budget. But if Canada is going to embark on a skills overhaul, it will need to fill the gaps in its data first. “Being able to gather that information, in terms of the [skills] supply and demand, I think is going to be really important, given the scale and speed with which this [change] is happening,” says Dominic Barton, head of Mr. Morneau’s Advisory Council on Economic Growth, probably the most influential voice shaping the government’s long-term economic priorities. “There is an urgency to this.”
This challenge didn’t exactly sneak up on policy-makers. It’s been a decade since the Harper government’s Advisory Panel on Labour Market Information (LMI), chaired by prominent Queen’s University economist Don Drummond, issued a 228-page report containing wide-ranging recommendations to modernize Canada’s labour data.
“Reducing unemployment or raising wages by a better matching of workers and jobs by as little as a tenth of a [percentage] point would raise GDP by some $800-million,” Mr. Drummond wrote. “That is why we need to spend more money on LMI and spend it smarter.”
Identifying problems with Canada’s labour skills data differs depending on who you ask. Academics, economists, policy-makers, employers, teachers and workers all use the information. But there are two common complaints.
First, information isn’t sufficiently “granular” – it doesn’t drill down deep enough to identify specific skills in supply or demand in the marketplace, or precisely where these skills are available or needed.
Second, data are too scattered among a variety of agencies and levels of government, which don’t do a great job of sharing their information with each other or making it user-friendly.
Statscan is the primary producer of labour data in this country. But the Harper government slashed Statscan’s labour market information budget by more than 20 per cent between the 2011-12 and 2013-14 fiscal years.
In the wake of the Kijiji Jobs Report, however, the Conservatives re-opened the taps, and the flow has accelerated under Prime Minister Justin Trudeau’s Liberals.
Statscan’s current budget for labour data is more than $30-million, up nearly 40 per cent from 2013-14 levels. Still, it’s a small slice of the agency’s total annual budget of more than $600-million.
Statscan’s best-known product is its monthly Labour Force Survey (LFS), which contains the widely reported statistics on employment, unemployment and labour force participation rates. A lesser-known companion is its monthly Survey of Employment, Payrolls and Hours, which draws on payroll deduction information filed with Canada Revenue Agency to generate data on hiring, earnings and hours worked.
The national census also contains a substantial section on labour markets, allowing researchers to draw links to a wealth of data on education, mobility, geography and immigration. But Statscan only conducts the census every five years, most recently in 2016, so some of the most detailed labour data is untimely.
Other sources generate information, too. The federal and provincial governments, the federal Job Bank, postsecondary institutions and private-sector agencies all produce a disjointed array of labour-skills information. A key problem, experts say, is that these sources don’t co-ordinate and share their information.
“Certainly, Statistics Canada doesn’t have the financial wherewithal to do what they probably even think that they should do," Mr. Drummond said in an interview. Provincial data varies from one province to the next. “What exists isn’t adequate,” he said.
Calgary technology executive Bryan de Lottinville agrees.
“The granularity, the recency, the precision of the information that is available is not particularly useful,” says the chief executive of Benevity Inc., a rapidly growing developer of software to help businesses manage their company and employee charitable programs.
Benevity has doubled its staff to more than 500 in the past two years and currently lists more than 60 job openings on its website.
The company’s most pressing needs are for software developers and database architects. Not only has it become increasingly hard to find qualified people, Mr. de Lottinville says, it’s not even clear where to look.
Even though his company is headquartered in one of the highest-skilled labour markets in the country, Mr. de Lottinville says there’s precious little available information on how much of those skills are transferable to his company’s needs. Calgary’s most recent macro data are from a 2016 study, which estimated that 70,000 people were employed in the city’s tech sector.
"Three-year-old data is a pretty blunt instrument, and we don’t know very much about those 70,000 people, because ‘tech sector’ is a pretty broad category,” he says.
For example, job candidates who have tech experience might be proficient in managing energy-industry systems, but utterly unqualified for the software development work Benevity needs. Yet, their qualifications show up as similar in the available skills databases.
Mr. de Lottinville says a lot of Canadian tech companies hire head hunters to identify truly qualified candidates. “It’s clunky, it’s slow and it’s extremely costly. And most companies, especially early-stage ones, can’t really afford that type of solution,” he says.
“[Canada] definitely could stand to democratize the data management around matching skills, interests and needs.”
The Kijiji debacle did spawn funding one major leap forward in labour market data. In 2015, Statistics Canada introduced a new quarterly Job Vacancy and Wage Survey.
This massive regular poll of 100,000 businesses – the largest business survey that Statscan conducts – drills deeply into the nature of unfilled jobs and wage offers, on a city-by-city and region-by-region basis.
“That was a big gap that we had. We had lots on the [labour] supply, but not much on the demand side,” says Jane Badets, Statscan’s assistant chief statistician in charge of labour statistics. “We’re getting down to very detailed occupations and industries.”
The survey asks employers such for specifics on what types of jobs are vacant, the education and experience required, and methods they are using to recruit.
That’s an improvement, Mr. Drummond says, but it’s still not enough.
“What we’re missing is the details on the characteristics on the jobs that are vacant,” he says. “We’re very much behind virtually every other developed country in attaching the characteristics that go along with different jobs – the skill sets, both hard and soft.”
Two years ago, Mr. Barton’s Advisory Council on Economic Growth called for the creation of a “skills lab” that would, among other things, raise Canada’s game on labour market research.
Ottawa embraced the recommendation in its budget that year and put some serious money behind the initiative: $225-million over four years beginning in the 2018-19 budget year, and $75-million a year thereafter.
But the Future Skills Centre, the arms-length research agency that emerged, has been slow getting off the ground. It took nearly two years from that funding commitment before the government announced, in February, that a partnership led by Toronto’s Ryerson University had been awarded the job of operating the centre. It has yet to launch any research projects.
Back in 2015, federal and provincial labour ministers agreed to form another new body to oversee the country’s labour data, called the Labour Market Information Council (LMIC). The Drummond report had recommended putting a single federal-provincial body in charge of co-ordinating the file. But the LMIC only began posting reports on its website last fall.
The organization is still defining the data problem. Executive director Steven Tobin says the LMIC spent the past few months working on a “gap assessment” – conducting nine simultaneous surveys of more than 20,000 individuals and organizations across the labour market to determine what data is missing.
“There is a lot of labour market information, but it’s not necessarily tailored to the diverse user groups we have in mind,” Mr. Tobin says. “We’re asking Canadians what information do they use, how are they currently using it and what’s missing.”
The percentage of companies reporting labour
shortages has risen to 10-year highs –
and the severity of those shortages has surged,
according to the Bank of Canada’s quarterly
* percentage of companies reporting more
intense labour shortages minus the percentage
reporting less intense shortages
CARRIE COCKBURN/THE GLOBE AND MAIL,
SOURCE: BANK OF CANADA,
WINTER 2018 BUSINESS OUTLOOK SURVEY
The percentage of companies reporting labour shortages
has risen to 10-year highs – and the severity of those
shortages has surged, according to the Bank of Canada’s
Intensity of labour shortages*
* percentage of companies reporting more intense
labour shortages minus the percentage reporting
less intense shortages
CARRIE COCKBURN/THE GLOBE AND MAIL, SOURCE: BANK OF CANADA,
WINTER 2018 BUSINESS OUTLOOK SURVEY
The percentage of companies reporting labour shortages has risen to 10-year highs –
and the severity of those shortages has surged, according to the Bank of Canada’s
INTENSITY OF LABOUR SHORTAGES*
* percentage of companies reporting more intense labour shortages minus the percentage
reporting less intense shortages
CARRIE COCKBURN/THE GLOBE AND MAIL, SOURCE: BANK OF CANADA, WINTER 2018 BUSINESS OUTLOOK SURVEY
The shortcomings of labour market data have hit home with employers as economic growth has accelerated hiring – to the tune of nearly 600,000 jobs since the end of 2016. That surge has dramatically reduced the pool of available skilled labour. Businesses are reporting their most severe labour shortages in more than a decade.
“It’s getting hard to fill any position at the moment,” says Linda Hasenfratz, CEO of Guelph, Ont.-based auto parts giant Linamar Corp., which has about 400 job openings in its 11,000-strong Canadian operations. “Certainly, the search for skilled people is particularly difficult.”
She says the need for deeper data is also becoming more pressing, because automation and artificial intelligence have already begun to dramatically change the workplace. “We have fewer and fewer unskilled jobs, and more and more need for more skills, more training, more ability to manage more complex tasks,” Ms. Hasenfratz says.
Linamar’s Canadian work force has grown 45 per cent since 2011. The company’s “direct” Canadian headcount – those who work directly on production in its plants – has grown 36 per cent, but its “indirect” work force – everyone else – has increased by 62 per cent.
“That change will only accelerate in coming years as we see more and more automation on the shop floor,” Ms. Hazenfratz says.
A study from the Brookfield Institute for Innovation + Entrepreneurship, a Toronto-based think tank, estimated that 42 per cent of Canadian jobs are at “high risk” of being affected by automation within the next decade or two.
“There are a lot of questions that, practically, on the workers’ side, have to be answered," says Natalia Mishagina, research director at the Institute for Research on Public Policy, which is developing a research program to examine evolving skills needs. "Identifying skills that will be needed, identifying skills that the person has, identifying the match between someone’s skills and another occupation, identifying missing skills, identifying training options – all of this
is related to what labour market information is available.”
How you can help fill the data gaps
The gaps so far
The Globe and Mail has uncovered myriad data deficits, culled from dozens of interviews, research reports, government documents, international searches and feedback from our own newsroom. Here’s a list of what we found, which we’ll be adding to as the investigation continues.