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Jean-Denis Frechette, Parliamentary Budget Officer pose for a photograph September 20, 2013 in Ottawa. In a report released on Oct. 28, 2013, the PBO says it expects to balance the federal budget books by 2015, despite slow growth.Dave Chan/The Globe and Mail

A new report by the Parliamentary Budget Officer takes Finance Canada to task over its warnings of job and skills shortages, concluding there is little evidence in support of a national labour shortage or skills mismatch in Canada.

Further, the PBO report on Canada's labour market found median real wages have stagnated since the end of the recession, while average real wages have increased, meaning it is only higher-income earners who are seeing wage increases.

The report also takes aim at the potential impact created by the controversial Temporary Foreign Worker program.

"It is also worth noting that a higher portion of temporary foreign workers in the private sector could also be putting downward pressure on the private-sector job vacancy rate," the report states.

While the PBO report does not rule out the possibility of specific labour shortages or skills mismatches in particular regions or sectors, provincial data suggests this is only a concern in Saskatchewan.

The findings of Parliamentary Budget Officer Jean-Denis Fréchette are generally in line with recent conclusions from Statistics Canada and the Bank of Canada.

The report comes as labour issues in Canada are taking on heightened importance. Tackling labour market concerns is a priority for the Conservative government, which is in the midst of reforming the Temporary Foreign Worker program and recently struck deals with the provinces to launch a major new training subsidy called the Canada Job Grant.

The NDP and labour groups have been staunch critics of the expanded use of the Temporary Foreign Worker Program under the Conservatives, arguing that it has the effect of suppressing wages in Canada.

Liberal Leader Justin Trudeau has made income inequality and middle-class economic themes a central focus of his political rhetoric, but has said specific policy proposals won't come until closer to the next federal election.

The PBO report is at odds with the tone of a 53-page Finance Canada "Jobs Report" on "The State of the Canadian Labour Market" that was released alongside the Feb. 11 budget.

That Finance Canada report warned that "labour shortages are expected to continue to increase in coming years."

The PBO report critiques Finance Canada's approach on several fronts, noting that it fails to place recent statistics in a historical context to determine how the data compares to previous economic recoveries.

"For example, the text on page 30 of the Jobs Report states that 'Canadian firms are experiencing more difficulty in hiring than the unemployment situation would normally warrant.' This is a conclusion that cannot be supported by cycle-over-cycle analysis as a result of the limited job vacancy data available over history," the PBO report states.

The PBO report could be viewed as undercutting the federal government's rationale for a major overhaul of federal training programs. However Alexandra Fortier, a spokesperson for federal Employment Minister Jason Kenney, stressed the minister is focused on addressing the regional problems that have been identified by many employer groups.

"This report is consistent with what we have been saying, that while there is no national labour shortage, there are regional- and sector-specific skills shortages, which employers have been saying for some time," she wrote in an e-mail. Ms. Fortier pointed to a section of the PBO report which states that "the lack of evidence of a national labour shortage or skills mismatch in Canada does not rule out regional- and sector-specific – labour shortages or skills mismatches."

Finance Canada's report stated that the job vacancy rate in Canada was on the rise, however independent economists later told The Globe that Finance Canada's numbers could not be easily verified or checked.

Statistics Canada – which uses different methodology than Finance Canada – reported last week that there there were just under 200,000 job vacancies in December, a drop of 21,000 from 12 months earlier. The number of vacancies was the lowest ever recorded since Statistics Canada began tracking the figure in March 2011.

The Bank of Canada's business outlook survey, released in January, showed the percentage of firms reporting that labour shortages are hurting their ability to meet demand has eased. "As in the previous survey, instances of labour shortages were not widespread and were cited largely in relation to hiring for specific positions, skill sets or regions," the bank report stated.

With a report from Tavia Grant

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