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Widespread labour shortages a myth, TD economists say Oct 23,2013 0 Comments

A new report by TD Bank says that widespread labour and skills shortages are a myth. (CBC )
The Canadian Press: A new report suggests Canada’s labour shortage isn’t as bad as previously believed, calling the idea of a widespread skills crisis a myth and suggesting Canada’s future is rosier than it has been made out to be.

The new report from Toronto Dominion Bank appears to be a stark contrast to the gloomier stories of job vacancies and labour catastrophes that we generally take for granted at this point. Which is a welcome addition to the canon of financial forecasts, but it is perhaps not as glowing as it seems.

“Perceptions can take on a life of their own without hard underlying facts supporting them,” said Derek Burleton, deputy chief economist at Toronto Dominion Bank, according to the Globe and Mail.

“From an economy-wide perspective, it is hard to make the case that widespread labour shortages currently exist.”

[ Related: Stories of labour and skills shortages a myth, TD economists say ]

TD Bank’s report looked for labour shortages by studying data on job vacancies, wages and unemployment numbers in 140 occupations, and found that they have remained relatively unchanged.

Which seems pretty exciting, from a “Canada’s economy isn’t actually crumbling” perspective. With the unemployment rate at 7.2 per cent, and the current narrative trending toward the doom-and-gloom approach, it’s nice to add a more cheerful headline to the narrative.

But there have been plenty of recent headlines, and they are all worth considering.

1. The Canadian government has been pounding the pavement on the labour shortage, using it as a reason to introduce the Canada Job Grant and expand its temporary foreign worker program.

2. A Bank of Canada business outlook survey suggested there has been staffing troubles in industries with specific skills. But the Bank of Montreal pointed out that only 25 per cent of companies polled by the Bank of Canada reported a lack of qualified workers, 10 percentage points below the 15-year average.

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3. In 2012, the Canadian Chamber of Commerce released a report that stated a “demographic shift resulting in retirements, a deepening shortfall of skilled workers and the growing mismatch between the skills needed and those available has evolved into a skills crisis. The Canadian economy faces a deep structural problem.” The report urged an aggressive immigration program.

4. A paper by the University of Calgary’s Kevin McQuillan concluded in May that while certain sectors face a worker shortage, Canada did not face a wide-scale problem and is “unlikely to confront one in the foreseeable future.” The paper proposed a focus on skills training rather than immigration.

5. The Conference Board of Canada has forecast that the country would face a shortage of more than one million skilled workers by 2020. Experts in areas such as engineering and computer programming express similar concern.

6. An analysis by CIBC World Markets found that “employment quality” is down significantly, with low-to-mid wage industries at the heart of Canadian job growth.

“Simply put, all other things being equal, lower employment quality means that the labour market has to run faster to stay in the same place since we need relatively more workers to generate the same increase in income,” said CIBC deputy chief economist Benjamin Tal.

For now, let’s all celebrate the possibility that the economy isn’t as doomed as it appears to be. Next week, there may a report that has us looking the other way again.

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