DON MILLS: Labor market goes from weak to saturated

It wasn’t that long ago that for too many younger Atlantic Canadians the only future was going down the road to pursue a career.

Fortunately, that is no longer the case. The job market in Atlantic Canada has never been better. Indeed, over the past few years Atlantic Canada has gone from an oversupply of labor to an undersupply.

Atlantic Canada has for decades led the country with the highest rates of unemployment. They have been falling rapidly and are at the lowest levels in decades.

There are two major reasons for this change in economic fortunes. One is related to demographics and the other to population growth after years of stagnation.

Up until very recently, much of the region had a rapidly aging population that included a baby boom generation in the early stage of leaving the workforce. The sheer size of that generation meant there were insufficient replacements among those entering the job market.

Today Atlantic Canada has the oldest population in the country, although there are early signs the median age may be falling in fast-growing markets like Charlottetown, Moncton and Halifax.

Thankfully, the recent census has confirmed that most of the region, with the exception of Newfoundland and Labrador, has enjoyed substantial population growth over the past five years. Prince Edward Island has led both population growth and economic growth across the country at that time.

New Brunswick and Nova Scotia are approaching the national rate for population growth. That has provided a stimulus to the economy, creating more employment opportunities.

Workforce

Over the last five years, the number of full-time jobs in Canada has increased by 6.6 per cent (May 2021) while the workforce has increased only by five per cent. This helps explain the tightening job market across the country and the lowest national unemployment rate since 1976 (5.1 per cent in June).

The story is similar for much of Atlantic Canada. PEI has led the region in full-time job growth (11.7 per cent) over the last five years, as well as in terms of increasing the size of its workforce (10.5 per cent). This has mostly occurred as a result of the province’s population growth, leading to the lowest unemployment rate on the Island ever (6.8 per cent).

Job growth is next highest in Nova Scotia (7.3 per cent). Again, growth in the labor market has trailed job growth (6.2 per cent)

Nova Scotia has had the second fastest-growing population in the region over the last five years. Unemployment in the province is currently 6.3 per cent.

New Brunswick’s full-time job growth has not kept pace, at only 2.5 per cent. Even so, labor force growth was lower (2.0 per cent). The unemployment rate in the province is 6.8 per cent.

The situation in Newfoundland and Labrador continues to be more challenging. The only province in the country to see its population decline in the last census, the number of full-time jobs in the province grew by 2.6 per cent but its labor force declined by 2.3 per cent. That combination still lowered the province’s unemployment rate to 10.3 per cent.

Job market impacts

There are consequences of a tightening job market; perhaps the most important to the region is labor costs.

Supply and demand principles are at play. In the past, Atlantic Canada had an oversupply of labor and undersupply of jobs. This led to lower wage pressure in the region. Now the reverse is the case, with high job demand and a declining labor supply.

The wage advantage employers in the region previously enjoyed is rapidly disappearing as wages and salaries approach national levels for most job categories. This will also lead to national prices for the region for most goods and services.

The other important consequence is related not just to recruitment of workers but to retention. The work environment and working conditions are rapidly evolving. The demand for more work from home is one example. Treatment of employees is more important than ever.

Human resource management strategies are increasingly critical to the retention of workers, who have never had more choice in terms of job opportunities, and it has never been so easy to leave one job for another.

Strategies

For Atlantic Canada, by far the largest opportunity to increase labor supply is to increase participation in the workforce.

In Canada, about two-thirds of those 15 years or older are available to work. With the exception of PEI (participation rate of nearly 69 per cent), the rest of the region has lower rates of participation. While part of the challenge relates to having the oldest populations in the country, it does not fully explain a participation rate of only 60 per cent in Newfoundland, which also continues to have the highest unemployment rate in the country.

Population growth is another important opportunity to increase labor supply (and job growth). PEI has proven this premise.

An important aspect of population growth is immigration. At the same time, Canada has for the most part focused its efforts on skilled labour. I would argue the case for more unskilled immigrant labor, particularly to address labor shortages in the agricultural and service sectors.

In addition, increasing participation rates among minority groups and the Indigenous is a near-term opportunity. I would add that retaining older workers who are considering leaving the workplace, perhaps with more innovative relationships such as part-time full-time work, should be considered by employers.

There is little doubt that rising demand for workers is everywhere, in every sector. The competition for talent is increasing. What is your organization’s strategy to recruit and retain workers?

Don Mills is the former CEO and owner of Corporate Research Associates Inc. (now Narrative Research), an active entrepreneur, advocate for change and co-host of the Insights Podcast.

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