630,000 Jobs Vacant in Canada. Demand for workers grows, will not change

Industries like Construction, Manufacturing and Hospitality can’t find workers; forecasts say it will get worse.

An Employer in Construction is quoted by a recent Financial Post article, saying “I’m constantly turning down projects… there’s not a day that I don’t say no to a job. We’re trying to find skilled painters, skilled carpenters, even an administrative bookkeeper. I can’t. It’s very difficult to find anybody.”  According to the article, he could double his staff to take on more projects, but he can’t find the right candidates.

The article reports that Construction, Hospitality and Manufacturing are just a few of many industries in Canada that are having troubles today to find workers (see graphic further down).

Even as most of Canada’s Provinces are easing COVID-19 restrictions, and Canada prepares to reopen its borders to fully vaccinated travelers by early September, labour shortages could jeopardize the full recovery of Canada’s economy. There are even some concerns that wage increases may be needed to attract Canadians and Permanent Residents back to work, which creates inflationary risks.

Statistics Canada reported that in March (the last month fully reported), 4.1% of jobs in Canada (about 630,000 positions) were vacant, still well above pre-COVID levels.  

These are all strong indications that job opportunities for Temporary Foreign Workers will only grow in the months to come, and that Canada -once again- will need immigration as a key driver of its economy.

Opportunities for Temporary Foreign Workers

Although preliminary numbers indicate some jobs might have been recovered in June (numbers coming soon), there are longer-term issues, such as a lack of interest in certain types of work among Canadians, and not enough immigration of Temporary Foreign Workers to Canada since COVID started. 

In round numbers, the Hospitality sector had the highest vacancy rate in March at 7.4% (68,000 job vacancies), according to Statistics Canada. In the same month, Construction had about 58,000 vacant positions, or 5.8% of the jobs in that industry. Health Care and Social Assistance had a 4.8% rate (104,000 jobs), Retail a 4% vacancy rate (75,000 jobs), and Transportation and Warehousing had a 3.9% vacancy rate (31,000 jobs).

Source: Statistics Canada

Many economists predict that job shortages will increase as the economy speeds up its recovery. Early in June, Jennifer Lee, Senior Economist at BMO Capital Markets Economics, said that “All surveys have shown that finding qualified workers, or any workers, is one of the biggest problems businesses face.”

Having many job vacancies (or labour shortages) at the same time that unemployment is still high is not usual. 

Normally, high unemployment and low job vacancy rates should coincide. However, the relation between unemployment and vacancy rates has been temporarily broken because of COVID-19, according to Indeed Canada Senior Economist, Brendon Bernard, who the Financial Post article quotes saying that “in times of destruction, in times of recession, often these relationships break down… We have a pretty elevated number of job vacancies… even at the same time that the unemployment rate was high.”

While COVID caused increases in demand for certain products and services in sectors that already had difficulties finding qualified workers, the Federal Government launched a plan that gives Canadians enhanced unemployment benefits, at a time when Canadians and Permanent Residents are already reluctant to work in certain jobs. Mr. Bernard stated that “those factors together could mean that someone who might have been jumping at a job in a warehouse is now more reticent.”

Lack of immigration is making it even more difficult for employers to find the right workers.  And when many sectors return to “normal” after all COVID restrictions are lifted, they will still face pre-COVID turnover rates of 25% or even higher. Although Canada’s labour shortages were heightened by COVID-19, they did not start with it.

Sources said that the difficulty of retaining skilled workers has even doubled for some sectors since the beginning of the COVID-19 restrictions, as businesses compete with enhanced unemployment benefits paid by the Federal Government of Canada (such as the Canada Emergency Response Benefit, or CERB) to bring workers back to work.

Many Canadians and Permanent Residents who lost their jobs during COVID may or will not return to these jobs as the economy recovers.

The Bank of Canada (BOC) warned in its spring business outlook survey that “pre-pandemic labour constraints are starting to return”, and that “many firms expect these constraints to persist.” The BOC also stated that businesses were finding it difficult to find new Workers at current wages rates, mostly in the same types of jobs that were already hard to fill before COVID, and especially skilled trades and technology-related jobs.

In turn, the Canadian Federation of Independent Business (CFIB) reported in a May survey that 38% of surveyed businesses reported trouble finding workers, and that a shortage of skilled workers was the most common barrier to sales or production growth.

Although Workers in the skilled trades can earn a very substantial income, the shortage of workers such as plumbers, carpenters, and electricians, to name just a few, has become a constant in Canada.

Many young Canadians and Permanent Residents are deciding to get a university degree, rather than studying to enter the skilled trades. At the same time, many older workers in these trades are retiring in Canada.

Trying to change this lack of interest in the trades, the Construction sector is now launching recruitment campaigns that target historically underrepresented groups, including women and Indigenous people. However, this is not enough.

Immigration is another way that Canada has historically used to fill these gaps.

However, the number of newcomers and Temporary Foreign Workers declined significantly in the past 16 to 18 months due to travel and public health restrictions related to COVID, which only worsened Canada’s labour shortages in Construction and Manufacturing.

Source: IRCC Canada

The Government of Canada has acknowledged that Immigration is crucial for Canada’s future, in particular for economic growth. When the Government announced its Immigration Plan in 2018, it set ambitious goals, including 341,000 new immigrants in 2020 and 350,000 in 2021. These goals have not been met. As Canada reopens its borders, more Temporary Foreign Workers will start flowing into the country and the number of new immigrants will grow.

75% of Canada’s population growth comes from Immigration. 5 Million Canadians will retire in 2035, but they will not be able to do so without economic and population growth supported by Immigration.

The pause imposed by COVID in many economic activities is temporary. Without Immigration, long-term population trends will slow down the Canadian economy.

As Canada reopens its borders, Immigration will help boost the economy.

Unemployment goes down, labour shortages that existed before COVID will persist, and the Economy recovers. This will create the need (again) for Temporary Foreign Workers.

As indicated by several sources in Canada, unemployment will decrease rapidly as COVID-related restrictions are eased or lifted altogether, borders reopen, and the economy bounces back. This means that the demand for workers will increase sharply, particularly in those sectors and kinds of jobs that many Canadians are not that interested in. After COVID restrictions are lifted, Temporary Foreign Workers will continue to fill growing gaps of Canada’s aging population, as they historically have. This is great news for many Employers that just cannot find workers, and for many Temporary Foreign Workers that have skills highly demanded in Canada.

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Employment in Canada bounced back in June

In its June 2021 Labour Force Survey (week of June 13 to 19) Statistics Canada reported that “compared with the May reference week, public health restrictions had been significantly eased in several jurisdictions by the end of the June reference week. Most indoor and outdoor dining, recreation and cultural activities, retail shopping, and personal care services had resumed or continued in eight provinces, with varying degrees of capacity restrictions”.

This Survey shows that Employment grew in June by 231,000 jobs (+1.2%), almost enough to recover the losses of 275,000 jobs accumulated in April and May. The Unemployment rate decreased 0.4% to 7.8%.

June’s Employment growth was entirely in part-time work and concentrated among youth aged 15 to 24, and the employment rate for returning students aged 20 to 24 was 67.5% (vs 51.0% in May). These are excellent news for International Post-Secondary students that want to work while they study in Canada (you can find here our article with 15 Important Things to Know to Study and Work in Canada).

Here’s some data from this Statistics Canada survey:

Unemployment rate falls while the labour force expands

The June unemployment rate was 7.8%, which means that 61,000 (3.7%) less Canadians are unemployed. At the same time, the total number of people in the labour force (whether employed or unemployed) increased by 170,000 (+0.8%).

The number of people working in Accommodation and Food Services rose by 101,000 (+11.8%), and the employment in Retail trade rose by 75,000 (+3.4%). However, the number of people working in goods-producing industries fell by 48,000, employment in the Construction industry fell by 23,000 (-1.6%), and in natural resources it decreased by 9,800 (-2.9%).

The Graphic below shows the effect of COVID in the Canada’s employment, and that Employment has grown as the Federal Government and Provinces have eased COVID-related restrictions.

Source: Statistics Canada June 2021 Labour Force Survey

Gains driven by private sector employees, while self-employment declines

The number of private sector employees rose by 251,000 (+2.1%) in June, still -313,000 (-2.5%) lower than in February 2020. Meanwhile, in the public sector employment grew by 43,000 (+1.1%) in June, 180,000 (+4.6%) higher than pre-COVID levels, mainly pushed by increases in Health Care and Social Assistance, Public Administration, and Educational Services.

Growth in Sales and Service occupations contributes to employment gains for Chinese and Filipino Canadians

In June 2021, Employment increased by 41,000 among Chinese Canadians and by 31,000 among Filipino Canadians, especially in Sales and Service occupations. This occupational category, which accounted for most of the overall employment increase in June, represents a larger share of employment among Chinese and Filipino Canadians than the national average.

Employment rate remains below pre-COVID levels

Comparing these employment changes against those in population, employment would have had to grow by 203,000 between February 2020 and June 2021, because in that period Canada’s population grew +334,000 (+1.1%). However, instead of growing, total employment decreased 340,000 (-1.7%).

Employment rises in several industries providing in-person services

The number of Workers in service industries grew by 279,000, the largest increase since March 2021.

In June, the Employment grew sharply in various service industries, where many jobs require face-to-face interactions with the public. These include Accommodation and Food services; Retail Trade; and “Other” services. Employment also grew in Educational Services; Health Care and Social Assistance; Professional, Scientific and Technical Services; as well as Business, Building and Other Support Services.

The Employment increase in Accommodation and Food services in June came mostly from Quebec, Alberta, and British Columbia. In Ontario, the increase in this industry was smaller due to restrictions on indoor dining still being in place at the time.

Although the June employment increases closed the gap vs pre-COVID levels to -263,000 jobs (-21.6%), the smallest since November 2020, Accommodation and Food Services is still where the majority (77.4%) of the overall difference in Employment is vs February 2020. Meanwhile, Employment in Retail Trade is still -65,000 jobs (-2.9%) below February 2020, and for “Other Services,” an industry which includes subsectors such as Personal and Laundry Services, Employment is still -61,000 jobs (-7.5%) below February 2020.

Employees with Soft Skills needed in Canada!

Another recent article by the Financial Post reports that businesses say they are willing to train people if they have soft skills, such as creativity and willingness to learn, which are now more valuable than ever.

Canadian businesses say they’re struggling to find workers, and it’s not because potential hires lack training in their field. Rather, it’s a lack of “soft skills” holding workers back.

According to a new survey quoted in this article, 59% of Canadian businesses say they can’t find qualified employees to fill vacancies. A third of those businesses say a key reason is that candidates don’t have soft skills such as dependability, flexibility, and a willingness to learn.

Labour shortage can grow even worse in the long run because of this, as those soft skills are proving more valuable than hard skills for employers say in after COVID-19.

The article says that employers are willing to invest heavily to train, develop, coach and mentor new employees. They need to hire workers that demonstrate a willingness to learn and stay at the job, which would give them a return for their investment. Employers are hesitant of hiring candidates if they are not dependable and flexible, and especially if they are not willing and able to learn.

Another recent research report from RBC Economics says that COVID-19 changed the economy and how people do business. Being able to adapt has become highly important, making creativity the new “it” soft skill for the decade (Creativity includes various skills, such as Critical Thinking, Problem Solving and others).

This report showed that creativity will be a critical skill through the 2020s, and that employers in Canada have increasingly been looking for creativity and soft skills in job postings since the beginning of 2020. Job postings looking for soft skills grew as follows:

  • Critical Thinking, 37%;
  • Flexibility, 20%;
  • Teamwork, 18%;
  • Ability to Learn, 15%;
  • Continuous Improvement, 12%;
  • Problem Solving 9%; and
  • Strategic Thinking, 8%.

The sectors that are looking for workers with soft skills are Healthcare, Education, Sales and Service, which are among the most affected by COVID-19. Employers in these sectors need workers with these skills to make the large changes required to adapt to new ways of doing business. Although hard skills and experience are still needed and valued, many Employers want to hire dependable, innovative workers that are self-starters, can learn new things, can adapt to changes, and have the right attitude.

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