Parisa Mahboubi is a senior policy analyst at the C.D. Howe Institute.
Many Canadian employers are facing a tightening labour market due to labour shortages. Imbalances between labour supply and demand exist across population groups and regions. Addressing these disparities through improvements in labour mobility and employment of underrepresented groups would have a positive impact on the Canadian economy.
According to Statistics Canada, the number of job vacancies (unadjusted for seasonality) rose by 19.3 per cent to more than 462,000 in the first quarter of 2018 compared with a year earlier. This led to an increase in the job-vacancy rate − the share of unfilled jobs out of all available jobs − from 2.6 per cent to 2.9 per cent, pointing to a need for more workers.
On the other hand, Canada’s unemployment rate was at its lowest since October, 2007, in the first quarter of this year, at 5.8 per cent. Low unemployment has made it harder for employers to fill jobs. There were, on average, fewer than three unemployed people for every vacant job in the first quarter of 2018, down from about four unemployed just a year ago.
A closer look at the unemployment rate across age and population groups shows there is room to tackle these labour shortages. The unemployment rate has historically been high for some underrepresented groups, such as less-educated individuals, recent immigrants and Indigenous peoples. Furthermore, the unemployment rate among youth between the ages of 15 to 24 is meaningfully higher than for other age groups. Uneven unemployment across population groups often reflects lack of opportunities for groups of potential workers.
In order to reduce job vacancies, my recent C.D. Howe article highlights how immigration-settlement policies through language training and job-search assistance can improve employment outcomes of refugees and other newcomers. Some immigrants also face challenges in obtaining recognition for their education and experience. While education is the main barrier for Indigenous people, young people struggle with lack of experience to simply find a job. However, a sizable share of Canada’s vacant jobs is from positions that do not require previous work experience (47.4 per cent) or a minimum education level (32.7 per cent). This should create opportunities for many job seekers.
There are also some disparities in job vacancies and unemployment across regions. The job-vacancy rate was the highest in British Columbia (4.2 per cent), followed by Ontario (2.9 per cent) and Quebec and Alberta (2.6 per cent). However, these provinces have experienced the lowest unemployment rate, particularly, in B.C. (4.7 per cent), indicating the serious labour shortages that businesses face in these provinces.
Conversely, employers in Newfoundland and Labrador have experienced the least difficulty in hiring, as suggested by the low job-vacancy rate – 1.5 per cent while more than 14 per cent of the labour force was unemployed during the first quarter of this year. Other Atlantic provinces also exhibit a relatively slack labour market.
Regional variations in job vacancies point to uneven provincial economic growth. When we see unemployment in the midst of significant job vacancies, we detect an imbalance between labour supply and the types of skills in demand that can impede regional economic growth. Disparities in regional unemployment suggest barriers to labour mobility from regions with high unemployment toward regions with higher job opportunities. These barriers could include a number of factors, such as different certification and credential recognition between provinces, or other incentives to remain in a high unemployment region. A wide range of occupations – such as accountants, architects, carpenters, doctors, electricians and welders – are provincially regulated. Removing barriers to labour mobility in regulated occupations would help support a more nimble and beneficial response from job seekers to the needs in other jurisdictions.