The June jobs report, boasting a record-low 4.9-per-cent unemployment rate, on the surface shows an economy that is rebounding from the pandemic well. But behind the rosy headlines lies a more troubling and endemic economic reality: Canadian businesses are facing a severe and worsening labour shortage.
Already squeezed by higher costs and debt payments, businesses are suffering because hundreds of thousands of job postings are being left unfilled. The ratio of unemployed people to job vacancies has reached an all-time low, sitting at 1.2 as of June, 2022.
This is not a short-term issue that will resolve itself. The consequences of a historically tight labour market will be exacerbated by our rapidly aging population. One significant portent is our dependency ratio, which measures the proportion of dependants (individuals younger than 15 or older than 64) to the working-age population. Canada’s was 44 per cent in 2010 and rose to 52 per cent in 2021. It is projected to grow as high as 59 per cent by 2028, with at least five million Canadians to retire by the end of this decade.
Demographics are nothing if not predictable, and while the pandemic accelerated some trends, this problem has been evident for years. Without a robust work force, there will not be sufficient tax revenue to support the programs and benefits, including health care and education, that Canadians rely upon.
We need a comprehensive solution to Canada’s work-force shortages that strengthens our immigration program, makes strategic investments in human capital and eliminates barriers to labour market participation.
The recruitment of high-skilled workers is a globally competitive race, accelerated by the pent-up demand from the past two years. The U.K., the U.S. and several EU countries are increasingly focusing on attracting immigrants, and Brazil and India are undertaking initiatives to attract highly skilled workers in key sectors. In 2005, only 22 per cent of countries had policies aimed at quickly resettling highly skilled immigrants. By 2015, this had doubled to 44 per cent.
Canada needs and will continue to need workers, both skilled and unskilled. Today we have more than two million potential immigrants awaiting approval to come to Canada, a frustrating backlog caused by systemic inefficiency and our reliance on digital infrastructure that is more than a half-century old. To help clear it, we must engage private-sector organizations that specialize in data analytics and digital transformation.
We also should automatically grant permanent residency to international students who graduate from a qualified Canadian postsecondary school, thus prioritizing young workers. Moreover, we should pave a clear path to permanent residency and eventual citizenship for undocumented workers. While there are obvious hurdles to understanding the size of this population, government resources point to estimates as high as 500,000. These individuals are already in Canada and working diligently. Let’s get them permanently into the tax-paying economy as soon as possible.
Immigration already accounts for approximately 100 per cent of labour force growth in Canada. Modelling done by the Conference Board of Canada shows that furthering COVID-era immigration targets would result in an extra $67-billion in GDP and $15.5-billion in annual public revenues by 2040.
But to achieve that, Canada must show that it’s capable of supplying the social and physical infrastructure required for immigrants to pursue free and prosperous lives. Physical capital investments in areas such as public transit and ports increase economic productivity, whereas investments in things such as sewer and water lines, schools and hospitals improve our standard of living and ultimately our long-term economic growth.
Next, we need to get serious about removing barriers to work-force participation within our own population. Notably, our Indigenous population is expected to jump almost 40 per cent over the next two decades, with a younger median age than our general population. Recent commitments on Indigenous inclusion from companies such as TMX Group, Sun Life Financial and BCE Inc. reflect a growing consensus that expanding opportunity and committing to economic reconciliation is not only a moral imperative but an economic one.
Moreover, there is a mountain of evidence pointing to the link between affordable, accessible child care and expanded work-force participation, with the Centre for Future Work estimating that a national child-care program will increase labour force participation and employment by as many as 725,000 women. After decades of promises about a national strategy, the federal government’s agreements with all 10 provinces to fund $10-a-day child care has been a welcome breakthrough.
Finally, we need strategic investments that make it easier for citizens to increase their knowledge, skills and productivity. Governments, businesses and organized labour all have a role to play in advancing this common goal.
For instance, community benefit agreements have rightfully gained traction in recent years as a means of ensuring large-scale infrastructure projects are accompanied by the right apprenticeship and training opportunities. These agreements, if measured correctly to meet employment, training and procurement targets, can ensure that priority projects support the kind of growth that responds to pressing human capital needs.
Creating incentives for businesses and labour to work together on skills development can be instrumental to correcting our sluggish productivity rates, which are presently growing at less than 1 per cent, a far cry from the 2.7 per cent of the 1960s and 1970s. Our ability to pay for the social services of our aging population is dependent on reversing this trend.
A national human capital strategy that prioritizes immigration, skills improvement and the elimination of barriers to work-force participation should be pursued with urgency and in a way that aligns closely with Canadian multicultural and inclusionary values. In a time of structural economic strife, bold strategies for growth can create both economic opportunity for individuals and a better society.
Mark Wiseman is a Canadian investment manager and business executive serving as a senior adviser to Lazard Ltd., Boston Consulting Group and Hillhouse Capital and is the chair of Alberta Investment Management Corp. He was formerly the chief executive officer of the Canada Pension Plan Investment Board and a senior managing director at BlackRock and chairman of its global investment committee. Follow him on Twitter.
Senator Hassan Yussuff is one of Canada’s most experienced labour leaders. He was appointed to the Senate to represent Ontario in June, 2021, and sits as a member of the Independent Senators Group. An immigrant from Guyana, he has had a long and accomplished career as a union activist, serving two terms as the president of the Canadian Labour Congress from 2014-2021. Follow him on Twitter.
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