Canada’s labor shortage is exacerbated by the federal pandemic bailout program, analysts say

News analysis

Canada’s labor market faces a large labor shortage, some of which are said to be long-term in nature, but businesses and analysts also have problems with the government’s pandemic support program. Is worsening.

“As before the pandemic, the potential supply of future workers and the potential shortages that impede economic growth and innovation are one of the most central problems facing the Canadian labor market,” he said. I am. Statistics CanadaOctober Labor Force Survey, released on November 5th.

NS Bank of Canada We surveyed companies to understand what they see as the reason for the labor shortage. Companies are addressing structural issues such as aging populations, depopulation of rural areas, and “general employment insurance impediments,” as shown in the October 27 BoC monetary policy report. I mentioned it.

The company also cited the following government pandemic-related measures: Canadian recovery benefits (CRB) and employment insurance, and travel bans affecting immigrants. They also mentioned fierce competition for workers and pandemic-related absenteeism.

Jasmine Genet, vice president of national affairs for the Canadian Federation of Independent Enterprises, said SMEs are struggling to fill their positions and retain workers. He added that the lack of extension of the CRB was good news for them.

“they [government support programs] People should be encouraged to return to work, and the CRB was certainly not a program that encouraged people, especially part-time workers, to return to work, “he said in an interview.

NS Canada Emergency Response Benefit (CERB) and CRB lasted for a total of about 16 months. This has been around for a long time, and it has affected the job market, Gennett said.

CRB and CERB ended in late October Ended in December last yearIan Lee, a business professor at Carleton University, said in an interview on November 5 that he “distorted” the low-income Canadian labor market. BNN Bloomberg.. He added that the unemployment insurance process, that is, those who apply for a job rather than turn down the right job, need to return to normal.

Lee said the government’s program wasn’t enough to explain the shortage of low-wage workers, but the benefits provided a cushion for people to start the moonlight.

“Currently, the country has a very important underground economy,” Lee suggested.

Just before the CRB ends on October 23, the government Presentation A more targeted program to replace programs like CRB.

Survey conducted by Nanos Research It turns out that two-thirds of Canadians say they need to reduce or end their government’s pandemic-related support programs altogether.

Distorted labor market

“Statistics Canada data very clear that there is a great deal of distortion in the labor market,” said Philip Cross, a former Chief Economic Analyst at Statistics Canada and Munk Senior Researcher at the McDonald’s Laurier Institute. Told the era newsletter.

NS Vacancy rate in the accommodation / restaurant industry According to Statistics Canada’s October Job Report, it reached a record high of 12.3% in August, with a total of 156,800 vacancies compared to 76,600 in the third quarter of 2019.

The shortage of low-wage workers is a serious dilemma, but overall participation in the workforce, the proportion of the population looking for workers or jobs, was 65.5% before the pandemic seen in February 2020. Was virtually the same as. ..

Cross says there is no brief explanation here.

He explained that there is usually a trade-off between unemployment and job vacancies. If one is high, the other should be low and vice versa. For example, if the unemployment rate is high, people are anxious for work and need to reduce vacancies. And if the unemployment rate is low, the company is looking for workers and there should be more vacancies.

But now, the 6.7% unemployment rate in October is 1.0 points higher than the pre-pandemic rate in February 2020. And the latest recruitment rate of 4.6% from the previous quarter from April to June 2021 is the highest level since 2015, according to Oxford Economics (OE), when the data became available.

“These people may have enough money in the bank-they saved enough money during the pandemic-they can hold up for a better paid job.” Said Cross.

“The biggest problem”

On the other hand, the employment rate of the core age group of 25 to 54 years old in the working population rose to 83.3% in October, the same level as in February 2020.

It is worth noting that the pre-COVID employment level has regained, according to analysts and economists, but the labor market has not fully recovered. On November 2, the OE estimated that employment would have grown by about 580,000 less, based on pre-pandemic trends.

Leah Knoll, Senior Director of Labor Strategy and Comprehensive Growth at the Canadian Chamber of Commerce, said in a statement on November 5 that Canada “has a well-established structural workforce prior to COVID. We need a serious plan to address the challenges. ” Celebrate the recovery of work lost since the pandemic blow.

“No matter where you are, you are facing a total labor shortage now,” Node told the Epoch Times, adding that labor shortages are the biggest problem for members of the Chamber of Commerce.

She added that additional problems caused by the pandemic included tensions between employers and employees over working from home, long-term care, vaccination, and mental health.

“Work without people, people without work,” said Node.

Canada’s Business Development Bank of Canada (BDC) said the labor shortage would continue and that the problem that began more than 20 years ago was due to the aging population and the associated decline in labor force participation.

According to the BDC’s September 29 survey, “How to Adapt to Labor Shortages: Employment Difficulties Have Not Resolved,” the baby boomer generation has left a large workforce and new entrants are in the gap. Cannot be filled.

BDC conducted two surveys of more than 4,000 respondents to conclude the survey.

“The pandemic has exacerbated the problem by destabilizing the already volatile situation,” said BDC, saying that the surge in jobs offers workers more options and employers pay higher wages. He added that he was under pressure to provide better profits.

The BDC also states that “liquidity between sectors has increased significantly.”

Worker market

So far, wage growth has remained modest, so labor market shortages do not appear to be driving inflation.

“This rising level of unmet labor demand did not significantly increase the average wages of most occupations in the industry,” said Statistics Canada, especially in the accommodation and food service industries.

Labor shortages in some sectors are a risk that the OE could raise its forecast for an average hourly wage growth of 2.1% in 2022 and a 3% increase in 2023.

“So far, there is little evidence of widespread upward pressure on wages, but this risk should not be underestimated, especially in the most scarce sectors,” said the OE.

SMEs are being forced to raise their salaries, even though they are not in a position to raise them due to the ongoing pandemic, Gennett said.

“Workers are in the driver’s seat … enough,” Unifor President Jerry Diaz said in an interview on November 5. BNN Bloomberg..