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Analysis of vacancy, wage and unemployment rates finds no proof of an imminent skills crisis.

Ian Jackson/The Globe and Mail

For all the cry over skills and labour shortages in Canada, little evidence points to their widespread existence, a new report says.

Some pockets of Canada may be seeing shortages – such as in the Prairies, but a study to be released Tuesday argues forcefully against the notion of looming economy-wide labour shortages. Analysis of vacancy, wage and unemployment rates in the country finds no proof of an imminent skills crisis.

"Perceptions can take on a life of their own without hard underlying facts supporting them," said Derek Burleton, deputy chief economist at Toronto Dominion Bank, who wrote the paper with other bank economists.

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"From an economy-wide perspective, it is hard to make the case that widespread labour shortages currently exist," he said.

Business groups ranging from the Canadian Federation of Independent Business to trade associations have raised concern about skills and labour shortages, often citing them as a top business challenge.

The Canadian Chamber of Commerce refers to a growing skills "crisis," while the federal government has cited shortages as a key challenge and a reason for expanding its temporary foreign worker program in recent years.

The bank tested for labour shortages and mismatches by collecting data about jobless, wage and vacancy rates for about 140 occupations. It found that vacancy rates in some areas thought to have shortages, such as in health care, have not changed much.

Vacancy rates have risen in the Prairies, particularly Alberta and Saskatchewan, but rates in general "have not accelerated over the past few years," the report said.

Moreover, wage data has not signalled massive labour shortages, TD said. Wage gains were running at 5 per cent, year-over-year, before the recession, but have been muted in recent years. Even in the West, gains "have not increased to the extent that one might have thought, given the signs of tightness," the report said, adding that competitive pressures are likely keeping a lid on pay hikes.

Some groups, such as the Conference Board of Canada, have said the country is facing a shortage of one million workers by 2020 – but TD said such long-term forecasts should be looked at "with considerable skepticism."

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The TD economists are not the only ones to refute the perception of a labour shortage. A paper last May by the University of Calgary's Kevin McQuillan concluded Canada that is not facing a wide-scale labour shortage "and is unlikely to confront one in the foreseeable future."

The TD report also throws cold water on the notion of a "lost generation" of youth in the labour market. It acknowledges that young people are facing intensified challenges in the jobs market since the recession. But the career prospects of recent graduates – including those with liberal arts degrees – are "likely better" than many Canadians believe, it said.

The TD report does flag several areas of concern in the labour market. One is professional development training, which has been in steady decline. Training costs tumbled 38 per cent to $688 per worker in 2010 from 1993 levels, according to the Conference Board.

Another issue is the growth of temporary employment, particularly contract work, which now comprise one in seven positions. And a dearth of data – especially about job vacancies, skills mismatches, and the job prospects of graduates – makes analysis challenging.

The labour market would benefit by more employer investment in workers, such as language training for immigrants and on-the-job training for people from non-traditional labour pools, the report said. Workers, too, should take greater responsibility in researching labour market conditions.

Editor's note: The Conference Board's prediction on labour shortages was made in a 2000 report.

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