OTTAWA — Canada runs the risk of social unrest, a declining standard of living, and a lifeless economy burdened by high inflation if it fails to deal with labour shortages that threaten to plague the country in decades ahead, says a prominent Maritime think-tank. “Sometime toward the middle of the next decade, and for the first time in at least a century, the number of people willing and available to work in Canada will be smaller than the number of jobs potentially available for them,” says the report, written by Dalhousie University professor Jim McNiven and published Wednesday by the Atlantic Institute for Market Studies. After that point in time, a general labour shortage — not just in specific geographic areas or for particular skilled trades, but throughout the economy and in all provinces — will become a normal fact of Canadian economic life that will continue for as far ahead as demographers are able to forecast. Urban and rural areas will be in conflict as the latter are left with dwindling populations, property values and economic bases as workers move to higher-paying city jobs. The same struggles will play out between prosperous and impoverished regions and provinces, and between struggling companies and an empowered workforce. Take Alberta’s oilsands boom and imagine the whole country competing in the same way for workers and it gives you a sense of the stresses likely to develop, McNiven said. Canada’s problem is that is has a declining birthrate, but a platform of government policies crafted in the 1970s and 1980s that were designed for just the opposite — the surging baby-boom generation. Programs were implemented to accommodate these new workers, such as encouraging older workers to retire early and lengthening the duration of college and university programs to keep the newcomers temporarily out of the workforce, McNiven said. But for decades now, Canada has produced only two children for every three needed in our society. The number of new entrants into the labour force is now declining across the country, and older workers are retiring early. “Labour shortages are one of the highest-raking concerns our members have,” said Ted Mallett, chief economist at the Canadian Federation of Independent Business. It can mean companies have to turn down work or refuse contracts, and losing employees to another company or region can be particularly difficult for smaller companies, Mallett said, whose group nevertheless supports labour mobility and a free market to allow such stresses to correct themselves. McNiven argues that Canadians’ standard of living may well drop as fewer workers are available to pay taxes that support the health and pension benefits of a bulging cohort of retirees. This will mire the economy in a state of little or no growth and drive up inflation as employers compete with higher wages to attract a dwindling pool of workers, McNiven said. Unrest could follow in a variety of ways. “There are some ways of looking at this thing that suggest there are going to be people and businesses that are going to be very unhappy,” said McNiven. “Management will have to deal with labour in a totally different way.” Solutions may be easier to find if it were only Canada’s problem to solve, but it will be a global issue, with most of the developed world competing for a limited pool of workers. McNiven said, however, there is no silver bullet to solve the problem, with the best solution being some combination of policies that evolve out of the three main options available: finding more people through a higher birthrate or accelerated immigration program; increasing labour productivity, by encouraging higher-paying industries at the expense of low-productivity industries; or increasing the labour force participation rate by such efforts as discouraging early retirement.
