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The number of employed Canadians is now higher than it was before the pandemic, and the country’s labour participation rate has recovered in most age brackets.Christinne Muschi/The Globe and Mail

Job vacancies have soared to unprecedented numbers in Canada, the latest sign that employers are struggling to fill positions in an increasingly tight labour market.

At the start of September, there were slightly more than one million unfilled positions, Statistics Canada said Thursday. Vacancies jumped 16.4 per cent – about 143,000 – from August. Employers have never before recruited for so many jobs, according to Statscan figures that go back to 2015.

Nearly a fifth of all vacancies were in hospitality, which includes restaurants and hotels. That industry’s job vacancy rate – open positions as a percentage of all occupied and vacant jobs – was 14.4 per cent in September, easily the highest of any sector. The national vacancy rate was 6 per cent.

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“We have a major issue when it comes to filling these positions,” said Benjamin Tal, deputy chief economist at CIBC Capital Markets. “This is not something that will be resolved tomorrow.”

Labour shortages have been a key feature of the economy since the lifting of pandemic restrictions and shutdowns. The pressure has been acute in low-wage service industries, such as restaurants and retail.

At the same time, Canada’s labour market has rebounded smartly from the calamity of the spring of 2020, when millions were laid off as the pandemic took hold. The number of employed Canadians is now higher than it was before the pandemic, and the country’s labour participation rate – the percentage of people either working or looking for a job – has recovered in most age brackets.

Still, companies want a lot more workers – and many are struggling to recruit them.

As of September, there were 0.83 vacancies for every job seeker, according to an analysis of Statscan data by Mikal Skuterud, a professor of labour economics at the University of Waterloo. That was the highest on record and a sign of increasing tightness in the job market. In B.C. and Quebec, there were actually more vacant positions than job seekers, Prof. Skuterud found.

The situation has led to a great deal of finger-pointing. In some instances, employers have blamed the federal government’s pandemic income supports for skewing return-to-work incentives. But many workers – such as restaurant servers – say they’ve moved into industries with better pay and working conditions.

The bulk of Ottawa’s financial supports for businesses and households expired in late October, which should have reverberations in the labour market. In a recent survey of individuals, the job-search site Indeed Canada found that “urgent” searches for work rose substantially last month.

Statscan said Thursday that increasing vacancies can be a sign of many developments, including a mismatch between the skills employers want and what’s available, along with an unwillingness among individuals to accept the pay, benefits and work environment of a particular job.

Despite the hiring challenges, wage growth has been fairly subdued this year. There are, however, mounting signs that it is starting to accelerate. As well, small businesses are planning to raise wages by an average of 3.1 per cent over the next year, according to survey results published Thursday by the Canadian Federation of Independent Business. That is the highest in surveys that go back to 2009.

The trouble is that wage gains aren’t keeping up with inflation, which is running at an 18-year high and eroding the purchasing power of households.

As recruitment challenges persist, Mr. Tal expects wage inflation to pick up, thereby adding to pressures facing the Bank of Canada.

“That’s the No. 1 reason why interest rates will have to rise – in order to deal with any potential inflationary problems here,” he said.

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