Introduction
Canada is a developed country whose economy resembles that of the United States of America. Canada is a high-technology industrial economy, generating trillions of dollars in annual revenues. The country’s living standards and economic systems are very similar to the US, having economic sectors that complement its manufacturing, mining and service industries .
Canada, along with the United States and Mexico, signed the North American Free Trade Agreement (NAFTA) in 1994 which opened trade and economic integration among the three participating countries . Ever since the NAFTA happened, Canada experienced a very dramatic increase in trade with the United States. This increased the economic activity of Canada’s industries such as power and mining, both of which are exported to the United States and both requiring highly skilled labor force on top of its capital-intensive demand for modern plant equipment and machineries. The country is also experiencing a high resurgence of its petroleum sector. The country right now ranks third in the world in terms of oil reserve, next to Saudi Arabia and Venezuela .
As of 2013 Canada’s economy expanded by a rate of approximately 2.9% in just one quarter . Compared to the United States, whose economy contracted by a 2.4% rate in the same period, Canada’s economic gains transcended its broad industrial sectors including mining, oil and gas, manufacturing and even the public sector . The Canadian economy grew by an average of 2% for the whole of 2013.
Figure 1 Canada's Economic Growth (2013 - 2012)
At the same time, Canada’s population is aging. Like many developed countries, Canada’s life expectancy has increased and its “baby boomer” generation or those that were born between the years 1946 to 1965 are now reaching retirement age. Because of the economic activity in Canada, population growth in the following periods was not as large. The graph below shows a decreasing population growth rate for Canada and an overall decreasing population growth rate for the world. Canada’s working-age people, categorized as having an age from 15 to 64 is decreasing. Canada’s census estimates that working-age people in Canada have decreased from 4.9 (for every senior aged 65 and older) in 2011. This is estimated to decrease to 2.7 in 2013 and 2.3 in 2061 . Because of the aging population, there is a slower growth in Canada’s labor force. A smaller supply of labor force participants in the face of increasing demand for labor due to an expansion of the economy creates pressure in that demand for skilled labor makes the industry less competitive if suitable skilled labor is not found.
Labor shortages happen in cases wherein there are new openings that are not filled up by Canadian job seekers, even despite having the appropriate tools and education. This means that the number of jobs exceeds the number of qualified job seekers. According to the Human Resources and Skills Development (2005), may employers in Canada experience shortages of certain types of skilled labor workers. These shortages were found to be focused on jobs that require specialized skills which are acquired either through apprenticeship or through higher education. There was a marked shortage in service industries as well as in the agriculture sector of Canada too. These jobs require highly skilled labor but the shortage in less-skilled labor is evident in some sectors as well .
Economic stability rests on a country’s ability to train and retain adequate labor force participants such that economic activities are sustained over the long-term. With the success in terms of economic growth faced by Canada in the next decade or so, it is imperative that skilled labor be secured and employed to continue the growth in Canada’s mining, oil and gas, power and infrastructure sectors. Without adequate talent to fill jobs required in all sectors of the Canadian economy, the core competitiveness of the country will be compromised. Filling job vacancies with personnel having inadequate skills or experience will stall economic growth, which will be detrimental to the country in the short-term and long-term.
Figure 2 Canada’s Population Growth Rate
Statistical Skill Shortage
The Human Resources and Skills Development Canada (HRSDC) estimated the nation-wide skills shortage in the country using the Canadian Occupational Projection System or COPS. COPS calculate projections for 140 different types of occupations over a period of 10 years. These projections are then updated every two years. According to COPS using data from Statistics Canada (2012), there were about 263 thousand job vacancies in Canada in 2012, 63,000 more than the previous year’s record. The Canadian business community has reported skilled labor shortages as well. According to the Bank of Canada’s Business Outlook Survey, in 2012, about 29% of surveyed firms stated that they have skilled labor shortages which these business organizations feel was even higher than their 2009 and 2010 requirements .
Government Initiatives
The first step in providing resolution regarding the labor deficit problem of Canada is to raise the awareness of the population especially the young. There have been misconceptions about the different educational and skills orientation programs in Canada. For example, Komarnicki (2012) noted that the youth are not encouraged to go into trades. The youth are led to believe that skills-based training is the path when one is not eligible for post-secondary studies . This misconception has led to high school students being apprehensive about taking up skills-based education. This myth is one of the reasons why skills-based knowledge has dwindled in Canada thus contributing the skills shortages. Government must lead in the development of programs that will promote skill-based trade education. This may be through more internship and cooperative programs which could be offered through government-led programs involving industries and business organizations. This will bring the youth closer to the industry and could be aided with the support of parents, guidance counsellors and other personnel from the academic institution.
The private sector participation in raising awareness offers more than just a closer interaction with the prospective industry participants. Industries that participate in the awareness program initiate innovativeness in students, making them primed for a career involving post-secondary school education or careers in industries requiring highly skilled personnel.
For this mitigating action, the Federal Government of Canada allocates about $330 million for achieving awareness goals . The government has supplemented this budget to include other programs including a linkage of skills training as well as a career-focus program for graduating students that require additional help in developing skills for finding and retaining a job. This budget is used for launching innovative and interactive career campaigns that are designed to change the youth and job seeker’s attitudes towards skill-based careers. Created in 1994, the organization “Skills Canada” was launched to support and promote skilled trades to the youth. Skills Canada holds an annual competition that encourages students to compete and test their skills and talent in motivating and more importantly, rewarding contests . The Federal Government of Canada also supports Try-a-Trade and Technology Demonstrations . With these programs, students are exposed to different trades. The objectives of these programs are to improve the student’s awareness of particular skilled trades and assist them in making informed decisions about skill-based careers which they previously may not have considered for themselves. In addition, these programs have been used for young Canadians that are considered “at risk”. This youth employment approach utilizes the federal budget for the youth that was identified for awareness building.
The decreasing population has led to Canada making a firm stand on immigration policies. According to the Canadian Encyclopaedia (2014), the country’s policy regarding immigration is the most “explicit part” of Canada’s overall policy on population . Canada regulates immigration rates so that the government’s objectives are achieved. Immigration is principally regulated through the effective selection and control of the entrants. The government agency that is responsible for managing immigration into Canada is the Canada Employment and Immigration Commission which was established in 1977. This agency has instituted three specific immigrant categories. These are family class (immigration of closely related person), independent class (admission of skill, capital, or labor-market based individuals) and refugees .
Because of the use of immigration as a way of addressing labor shortages, the Canadian Federal Government has received a lot of criticisms from various sectors of the society. The government however, insists that this policy helps provide solutions for labor shortages, which runs in parallel with government programs that aid Canadians to become employable through skills training and job matching.
The attractiveness of using immigration to solve labor shortages is that the business community can bring talent to Canada in a rapid and efficient manner that further improves the economy’s competitiveness. Most skilled immigrants to Canada are considered highly skilled and capable (business savvy) and are ready for immediate employment. To ensure that Canadians are not crowded-out, business organizations that wish to employ immigrants must show substantial proof that efforts were made to fill vacancies using local labor force.
Most business organizations in Canada utilize the immigration program for vacancies that require considerable skills, education and job experience . However, studies show that entry-level and semi-skilled job vacancies are greatly demanded by small and medium enterprises (SMEs) as well . This makes the immigration policy ineffective since it purposely targets highly skilled individuals. To augment this weakness, the Federal Government created the Federal Skilled Worker Program (FSWP). The FSWP selects individuals based on a point-selection that utilizes their potential for economic establishment in Canada. This program encourages lesser-skilled individuals to apply for Canadian citizenship, which are suitable for entry-level or lesser-skilled job vacancies.
The FSWP program was amended in July of 2012 to expand the details of the program and include a Skilled Trades Program under the FSWP banner. The amendment of the FSWP enabled the immigration agencies to better select applicants. Some of the changes included requirements for language, education and foreign work experience .
Another program that the government has implemented to ensure that the immigration policy does help address skill shortage in Canada is an accreditation program wherein the credentials of immigrants are recognized thus making it faster for immigrants to qualify for job vacancies. This program was developed due to the observation that immigrants needed about five years to become highly employable. Upon arriving in Canada, immigrants need that many years to acclimatize, form contacts, understand the local culture, laws and policies, and get their credential accredited. The government understands that this process is lengthy and inefficient because job requirements in various industries would not match what the immigrant’s credentials may be due to the differences in language, educational structure and work experience. The foreign credential accreditation system short-cuts this entire process, enabling the immigrant’s skills and expertise to be accredited and matched with existing job requirements.
In addition, the Federal Government of Canada has made investments in improving information tools for immigrants. These tools may include classroom training sessions and other resources that would emancipate foreign workers who are integrating themselves to Canadian work cultures .
Another successful mitigating measure that the Federal Government of Canada focuses on is the improvement of the participation rates of under-represented segments of the population. The first level of improved representation relates to gender-equality in the workplace. For example, in 2011 Canadian men had a participation rate of 71.5% while Canadian women had an employment rate of about 62.3%. Unemployment rate for Canadian men was found to be around 7.8% while the unemployment rate for women was found to be 7.0%. Employment rate for Canadian men was calculated to be 65.9% while employment rate for Canadian women was calculated to be 57.9% in the same period .
Three other under-represented members of the Canadian society are examined by the government as a potential mitigating approach to skills shortage, these being Aboriginal people, persons with disabilities and mature workers. Aboriginal people have a lower participation rate compared to the entire Canadian population and their unemployment rates are much higher. Persons with disability have low participation rates and higher unemployment rates compared to Aboriginals. Mature workers or those that have availed early retirement are still eligible to participate in the employment market. The skill shortages in Canada have resulted in an increase in the participation rate of mature workers, both men and women in the last decade . In 2011, approximately one out of every two people between the ages of 60 to 64 was actively participating in the labor market .
Figure 3 Participation Rates of Mature Workers (Men and Women) in Canada
For persons with disabilities, the Federal Government of Canada has provided about $222 million in funding for 2011-2012 to deliver employment benefits and support for persons with disability that have asked for assistance for participation in the labor market. This budget includes financial assistance, student loans and post-secondary education programs.
These mitigating measures are taken by the Federal Government of Canada because of an apparent skills shortage in the labor market. While the government’s prudent response is laudable, it is helpful to note that this is not the first time that Canada has experienced labor shortage. As early as the end of the 19th century, European immigrants poured into Canada due to a shortage in labor. Fertility triggered issues in the 1970s led to immigration into Canada as well, as labor resources were found to be deficient. Current data on the labor market indicates that there are skills shortages coming from current market demand (manifested as an increase in unfilled job vacancies) and from longer term projections, that are more economically disarming. Economic managers fear that the changing demographics of Canada and the surging economy is mismatched, therefore creating some panic in terms of long-term economic viability. This is what the Federal Government of Canada seeks to address through the mitigating measures identified and discussed in the preceding section of this paper.
Critics believe that the future may not be as bleak as what Canada’s economic managers are projecting. Critics claim that while there is evidence of mismatched skills across different types of occupations and locations throughout the country, the challenge of filling up these vacancies are not as dire as publicly presented. According to Flavelle (2013), the economic systems are not dysfunctional but there are clear vulnerabilities that need to be identified and addressed (with respect to the skills shortages in Canada. It is true that many specific occupations will be experiencing skills shortages but this is a global phenomenon and not an isolated Canadian problem . Flavelle added that the government’s efforts have steadily improved the skills shortage in Canada, well past the “panic” stage due to the many implemented programs that were implemented in the last five years.
Other critics feel that the skills shortage is part of the economic cycle and that any healthy economy will have job vacancies due to demand creation. According to Stanford (2014), the federal government should continue pursuing its efforts but should change its mind set in that it is much better to pursue economic demand as a way of solving skills shortages. When the markets are stimulated, new labor opportunities will open up and these will naturally be a beacon that will be filled up, with Canadian government support or not, by individuals or groups that would be seeking gainful employment .
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