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The king is dead. Long live the king – of statistics that is.

For the past 50 years, the king of economic statistics, the one awaited each month with bated breath by finance ministers, central bank governors, pundits and the general public alike, was the unemployment rate. A rising rate was political poison, a falling one grounds for governmental preening.

But those still focused on the unemployment rate as the prime barometer of the health of the Canadian economy and the prospects of individual workers probably still call recorded music "tapes" and are stubbornly waiting for the slide-rule industry to recover from its slump.

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Today the statistic whose entrails we should be earnestly scrutinizing each month is the job vacancy rate. The success or failure in bringing down this crucial economic barometer will matter more than any other single measure in understanding whether we have the policy mix right.

The reason for this revolution in statistical significance is not hard to spot: Canada had the largest baby-boom generation relative to base population in the Western world, 50 per cent larger than the next closest, that of the United States.

As a result of this tsunami of workers, the Canadian labour force grew more than 200 per cent over the past 50 years. The chief economic challenge was where to put all these workers. We did pretty well, all things considered, in getting them into work, but the numbers were so overwhelming that even in the face of strong employment growth, we still ended up with big unemployment numbers. How quickly people forget that in four years during the 1980s, Canada's unemployment rate topped double digits and ranged between 7.5 per cent and 9.7 per cent the rest of the decade. Even in the trough of the recent recession we avoided such high rates.

But that speaks to how radically the retreat of the boomers is reshaping the economy. Over the next 50 years we can expect the number of workers to rise by a relatively paltry 11 per cent as the boomer bulge moves into retirement.

Consider, for example, that if past recessions are anything to go by, at this stage of the recovery Canada should still be struggling with double-digit unemployment and lagging the U.S. job market recovery.

Instead, Canada was the first major Western industrial economy to recover all the jobs lost in the recession, and remains streets ahead of the U.S. The headline unemployment rates are misleading because Washington measures unemployment better than Canada does. If Canada used the U.S. measure, the unemployment rate would fall to around 6.3 per cent. Bear in mind that the U.S. Federal Reserve has said it will start to raise interest rates when U.S. unemployment falls to 6.5 per cent. Canada has already passed that milestone, with a higher share of its population working than any other Group of Seven country.

Canadian statistics are further distorted because of two narrow groups, young people and immigrants, whose unemployment greatly exceeds the national rate. If they are excluded, the national rate is in the low 5-per-cent range. In other words, the problem is not on the demand side; there is ample demand for labour. Canada no longer needs general stimulus to soak up unemployment; it needs targeted programs to help pull a few outlier groups into the economic mainstream.

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Also, the jobs that have been created are not of the "fries-with-that" drudgery of popular lore. Since the recession, the vast bulk of new employment in Canada has been in full-time above-average-wage work. Because of the boomer ebb tide this is no accident or unrepresentative moment. This is the new normal. Labour markets are tightening across the country, explaining the largely unremarked 3-per-cent rise in real wages in the past year, near the peak experienced during the pre-recession resource boom, and business groups constantly single out labour shortages as a huge headache.

Which brings us to the job vacancy rate. Little noticed in the recent federal budget was Ottawa's estimate that the number of jobs going unfilled is several times higher it was just a few years ago and is rising fast. In other words, the low level of unemployment is increasingly matched by rising job vacancies.

That is a red-hot labour market, with Canada's economic prospects held back because employers cannot find the right workers with the right skills to help the economy create the greatest wealth for Canadians. Memo to policy makers: Unemployment isn't the problem. Squeeze the vacancy rate if you want to make Canadians better off.

Brian Lee Crowley is the managing director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in

Editor's note: An earlier online version of this story and the newspaper version of this story incorrectly said that in the 1980s, Canada went through a decade in  which unemployment was never less than double digits. In fact, according to Statistics Canada, the unemployment rate in Canada was over 10 per cent from 1982 to 1985, but it varied between 7.5 per cent to 9.7 per cent in the other years of the decade. This version has been corrected.

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