Canada facing significant labour mismatch: CIBC

Some jobs seeing labour surplus, others – including HR – experiencing skills shortage
By Amanda Silliker
|Canadian HR Reporter|Last Updated: 01/28/2013

Canada’s job market is experiencing a growing divide between skilled labour shortages in some occupations and labour surpluses in others, according to a report by CIBC.

“There is a significant skills mismatch in the country, with a significant number of people who cannot find a job. And then we have a huge number of employers looking for people and cannot find them,” said Benjamin Tal, deputy chief economist at CIBC World Markets in Toronto.

The report looked at the unemployment rate and wages of several occupations. Very low unemployment combined with rising wages indicated a skills shortage, while the reverse indicated a labour surplus.

Skills shortage

The report identified 25 job groups that have shown signs of consistent skill shortages. These jobs account for 21 per cent of total employment in Canada, found The Have and Have Nots of Canada’s Labour Market.

The largest skill shortage is found in health-related occupations — including doctors, nurses, dentists, optometrists and pharmacists. The mining industry, advanced manufacturing and business services — including HR professionals — are also facing shortages.

A skills shortage is especially problematic for employers because it shifts the power from the employer to the individual, said Gordon Bretsen, regional director of the Pacific region at Manpower in Vancouver.

“The jobseeker now has all the power so they have employers on a list and are saying, ‘Which one would I like to work for? Who is going to give me the virtual office and good pay?’” he said. “You’ve got companies competing over individuals because there are so few skilled individuals.”

The average unemployment rate of occupations experiencing a skills shortage is just above one per cent and their wages are rising by an average annual rate of 3.9 per cent — more than double the rate seen in the economy as a whole, found the report.

Labour surplus

The report found 20 occupations that are in a surplus, which account for 16 per cent of total unemployment in Canada. The surplus is found in more traditional occupations such as office managers and clerks, cashiers, secondary and elementary school teachers, butchers and bakers, tailors and fishermen.

“You have all those occupations that are actually not in demand and they are relatively low-skill occupations — those people would not find a job just because the economy is improving because most of those jobs are experiencing a surplus,” said Tal. “The unemployment rate is now about 7.4 per cent but it would be six per cent if we didn’t have the labour surplus.”

Canada is experiencing such a significant labour market mismatch because changes in the economy shifted the types of jobs in demand, as well as provincial and federal immigration systems not admitting the right types of workers, he said.

“We were admitting a lot of people that believe they have the qualifications, but they don’t. There is a gap between what the government is telling new immigrants when they arrive and what the private sector needs. This gap must be closed — we have PhDs driving taxis.”

The mismatch has also been caused by the education sector’s lack of focus on the needs of the private sector, he said. Because many students have been encouraged to go to university, not enough have gone into skilled trades, said Bretsen.

“We’ve got this from not being forward-looking enough and graduating people with the right skills sets that were going to be in demand,” he said. “As a result, we’ve got areas right across Canada where we don’t have the proper skills.”

One solution is for employers to partner with educational institutions to better match the training to the skills needed in the workforce, said Nancy Whipp, CEO of the Greater Moncton Chamber Of Commerce in New Brunswick.

“When you’re looking at things offered at university, some of the courses, they’ll graduate 50 of them but there’s probably only a need for 10 of them in New Brunswick,” she said. “(We need to) adapt college and university programs to fit the needs.”

Employers should be partnering with colleges and universities to offer co-ops and internships to students, said Whipp. More often than not, these students end up staying at the company once their co-ops have been completed.

“Businesses need to change the standard way of how they have been doing things — we need to start thinking outside the box,” she said. “You need to train people — take people when they’re coming out of school and train them. Not everyone comes with five years of experience. It’s a whole mentality that needs to change.”

Another way employers can help close the gap between skills shortages and a labour surplus is by retraining employees, said the report.

This can be done through cross-training and parallel careers that meet the learning and development goals of employees but also meet the needs of the company, said Bretsen.

“For example, if you need someone in (HR)… and that person is in a marketing position that is in a surplus, it’s providing an opportunity for that learning and development to happen where that person would job shadow or be immersed in that role for awhile so they can move over to it.”

Employers can also partner with educational institutions to retrain employees. Manpower is looking into creating an accredited post-secondary program that would include courses specific to the business, such as Recruiting 101, said Bretsen.

“It’s a credential-based world now and when you’re engaging employees through education, it helps with retention. And that education is going to come back tenfold for the employer in productivity, innovation and creativity.”

Focusing more on employee retention is important to tackling a skills shortage, said Bretsen, adding employers need to make sure they offer competitive starting salaries, enhanced benefit packages, clear career development opportunities and virtual work opportunities.

Employers should do their part in reducing the labour market mismatch because it negatively impacts productivity, growth and competitiveness, said Whipp.

“In a world of globalization, if we don’t stay abreast and don’t do things differently, we’re going to get surpassed in no time.”

The mismatch is becoming big enough not only to limit the growth potential of the labour market but also the economy as a whole, said the report.

“It’s turning from a micro story to a macro story,” said Tal. “If you have a significant amount of labour mismatch with a number of people that cannot find a job and a number of companies that cannot find people it means, by definition, the economy is not operating in an efficient way.”


Surpluses and shortages

What’s hot, what’s not

Jobs facing skills shortage:

• auditors, accountants

• engineers

• psychologists, social workers, counsellors

• miners, oil and gas drillers

• HR professionals

• managers in construction, transportation

• nurse supervisors, registered nurses

• physicians, dentists, veterinarians

• life science professionals

• therapy and assessment professionals.

Jobs facing labour surplus:

• clerical occupations

• secondary, elementary teachers

• office equipment operators

• mail distribution occupations

• cashiers

• tour and recreational guides

• butchers, bakers

• upholsterers, tailors, shoe repairers, jewellers

• fishermen

• machine operators in pulp and paper production.

Source: The Have and Have Nots of Canada’s Labour Market, CIBC World Markets.

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