Skilled worker shortages continue despite recent job losses

A warning this week that a shortage of skilled workers could hold up government stimulus infrastructure projects was followed by new jobless figures showing big losses in the construction sector.

“I can see how people would scratch their heads and say, ‘How can we have labour shortages when we’re having 44,000 job losses in December in construction? How can you have the two things happen at the same time?'” says Craig Alexander, vice-president and deputy chief economist with TD Bank Financial Group.

Canada shed 34,000 jobs last month, according to Statistics Canada figures released Friday. The loss of 70,700 full-time positions – including 44,300 in construction alone – was offset in part by 36,000 new part-time jobs.

A residential building boom was followed by a busy period of non-residential construction of roads, factories and the like in recent years, Alexander says, so the recent decline in construction jobs has only dented what was already an over-taxed industry.

“One month of decline does not unwind years of job creation in that sector,” he says.

Even with the recent losses, construction jobs still grew by 55,000 overall between December 2007 and December 2008, he says – accounting for a big slice of the 98,000 net gain in jobs across all sectors last year.

The demand for workers will decline as building slows through 2009, Alexander says, but demographics suggest the pool of skilled tradesmen will also shrink as older electricians and plumbers retire without enough young replacements coming in.

“Like everything in economics, it’s supply and demand,” he says. “The education system in Canada produces lots of white-collar workers but hasn’t been generating skilled tradespeople in the same sort of way.”

The construction industry’s situation is unique, Alexander says.

But Jim McNiven believes the current economic slump will only postpone the long-term problem of a worker shortage across the Canadian labour market.

“If you have a slowdown in the economy and people aren’t being employed as much or people are being laid off, then the likelihood of this starting to become a painful situation gets pushed off a little bit,” says the professor emeritus of management at Dalhousie University, who released a paper on that topic through the Atlantic Institute for Market Studies last week.

A labour shortage is a long-term problem that will persist after the economy recovers, he says, and that could stall job growth down the road if businesses have to pass up expansion opportunities because of a lack of people to staff them.

In the short-term, the faltering economy may alleviate some demographic pressure on the labour market if it prevents the mass exodus of baby boomers, says Thomas Lemieux, an economics professor at the University of British Columbia.

“Lots of people were planning to retire later this year or next year who are probably going to try to keep working just because, very regrettably, the savings they thought they had for retirement are no longer there,” he says.

Andrew Jackson, chief economist for the Canadian Labour Congress, worries that older workers delaying their exit from the workforce will further limit entry-level positions for young workers – traditionally the group hardest hit in a downturn.

But Canada’s slow-growing pool of workers could be a benefit in the short-term, he says, because the unemployment rate in a recession is driven more by a lack of job prospects for people coming into the labour force than by layoffs.