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Seamus O'Regan in St. John's in this Feb. 14, 2022 file photo.Paul Daly/The Canadian Press

The federal government is paying close attention to Canada’s labour shortage, and is urgently working to figure out how to streamline immigration as an immediate measure to address the worker shortage across a wide swath of sectors, according to the Labour Minister.

“We’re on it,” Seamus O’Regan, the federal Minister of Labour, told The Globe and Mail, in an interview at Unifor’s fourth convention in Toronto. “Certainly, if we are going to look at shorter-term fixes to the labour market, immigration is key.”

Mr. O’Regan said that his department has been closely collaborating with the Ministry of Employment, Workforce Development and Disability Inclusion, as well as the Immigration Ministry to come up with “holistic solutions” to the labour shortage. But he stopped short of detailing what exactly those solutions were, beyond a broad reference to boosting immigration numbers.

The country has been plagued with a shortage of qualified workers over the last one year, a scarcity that is particularly acute in healthcare, construction and food and accommodation sectors. In March, there were one million job vacancies across the country — an all-time high.

A confluence of factors has driven labour supply to all time lows — employees’ changing relationship with their workplaces; an exodus of older workers from the labour force, catalyzed in part by the pandemic; and critically, a severe backlog in number of immigrants entering the country due to a pandemic-related pause in processing applications.

In April, the federal government employed a number of policy levers to increase the number of foreign workers. It expanded the temporary foreign workers program, allowing employers to hire up to 20 per cent of workers from the low-wage TFW program.

And after pausing applications under the Express Entry program from high-skilled immigrants for close to 18 months, the government resumed invitations, but is simultaneously dealing with a mammoth backlog.

Frustrated by the severity of the labour shortage crisis and under pressure from businesses, several provincial immigration ministers have called on the federal government to give them more control over the immigration process. Ministers from Ontario, Alberta, Saskatchewan and Manitoba said this week that they want to be allowed to pick more immigrants “with the skills they need most”, as opposed to being subject to an allocation process.

Critics policy tools say that the system to process immigrant entries into Canada is still too splintered and inefficient. “The Express Entry program was working well until they paused it in 2021. It’s just a complete mess,” said Mikal Skuterud, a professor of economics at the University of Waterloo. He has also been a vocal critic of the TFW program, which he says encourages wage suppression, and provides employers with a quick fix solution to the labour shortage that does not prioritize better wages and working conditions for migrant workers.

“The federal government should be thinking about ways to increase the number of workers in this country without downward wage pressure. So, number one, they should fix the immigration issue. And number two, we can increase labour force participation rates for older Canadians,” he said.

In 2016, the Liberal government reversed a policy to raise the eligibility age for Old Age Security to 67, which would have effectively disincentivized older workers to depart the workforce.

When asked whether his department, alongside other ministries, were contemplating policies to keep Canadians working longer, Mr. O’Regan was unclear. “It is technically not under my jurisdiction. But we do have an aging population, and that’s a challenge,” he said.

Some economists believe that solving the labour shortage is fundamentally about businesses raising wages.

“The fastest relief valve for labour shortages is an increase in wages,” said Robert Kavcic, an economist with the Bank of Montreal. “The trouble with immigration, is that you don’t always have a perfect skills match for people coming into the country and those leaving the labour force,” he added.

Wage growth in Canada is slowly starting to inch upward, according to both Mr. Kavcic and Prof. Skuterud, but it is still a long way off from incentivizing workers to take on jobs that they perhaps do not want.

On the issue of wages, Mr. O’Regan said that getting businesses to pay their workers more is not that easy. “Of course, if you treat your workers well, if you make sure they have benefits, paid sick days, then yes, they’ll stick with you.”

But, he cautioned, many employers incurred quite a bit of debt during the pandemic recovery and are themselves still struggling. “We have to figure out the most seamless way to do this to make sure the prosperity of employers is also taken into account. They are the ones who create the jobs.”

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