OK, apparently this week I’m going to have to talk about skills shortages, because it seems that people in Ottawa have LOST THEIR EVER-LOVING MINDS on the subject.
The basics of the policy discussion are as follows: Canada currently has an unemployment rate of about 7.5%, which is deemed too high. Despite there being roughly 6 unemployed people for every job vacancy, there are some jobs which are going unfilled because of skills shortages. This, everyone can probably agree, is a Bad Thing.
Conventional wisdom would suggest that the problem is a lack of aggregate demand – that is, a lack of jobs. But there is an increasing drumbeat saying that the problem is one of aggregate skills – or, a “skills mismatch”.
So, which is it? A jobs challenge, or a skills challenge? And if it’s the latter, what kinds of skills are missing?
One way to look at the tightness of labour markets is to look at the ratio of unemployed-to-job openings. Statistics Canada has been measuring this over the last couple of years, and here’s what they’ve found:
Ratio of Unemployed-to-Job Openings, by Province
The major determinant of unemployment is, as it always has been, regional economic disparity. Everywhere outside the Prairies, the ratio of unemployed-to-job openings is over 6-to-1; the idea that skills mismatches are in any way driving unemployment in these areas stretches credulity.
That doesn’t rule out the skills mismatch hypothesis in other parts of the country, though. But what kind of skills mismatch is it? Is it true that, as one Conservative source allegedly said, “we have too many BAs and not enough welders”? That’s a common meme, stemming in no small part from the constant rhetorical confusion between “needing more skilled workers”, and “needing more workers in the skilled trades”, which is not the same thing at all.
This can be easily verified. Recently, CIBC put together a nice little report, which listed the 25 occupations showing signs of a skills shortage over the next few years. Here they are, in the table below, listed in no particular order:
25 Occupations Showing Signs of a Skills Shortage (Source: CIBC)
Maybe five of those require apprenticeships; most of the rest require university degrees. True, only one relates to BAs, but that suggests a need to put more money into expensive STEM problems, not shift students out of universities altogether.
But this isn’t the line we’re hearing right now from elected representatives. Why, exactly, is that? More on this tomorrow.
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Let’s see, nearly ALL of these jobs are ones that require a university education. Who’d have thunk it?
There’s one other aspect to the difficulty some employers have in filling positions. Wages. In some cases, employers can’t find people wllling to do the job under the conditions and wages that they offer. I regularly apply for jobs ‘requiring’ Masters’ degrees, more than 7 years experience, and very specific technical skills…..paying under $50,000 p.a.
There’s a very simple private-sector solution to that problem. Raise wages. It’s not government’s business to selectively subsidize some occupations and not others.
I agree. However, I do want to point out to people in the discourse that wages are an issue. Industry needs to remember that wages are an issue. Industry can’t just call on Higher Education to increase the size of the pool from which it draws its labour (potentially exerting negaive pressure on wages) where a skills gap doesn’t exist.
Unless of course you think they’re trying to expand the labour pool *specifically* to bid down the price of labour.
I am more concerned with effect than intent.
Which could be the case if you consider this from the March 15th report on wage changes over the last three decades from Statistics Canada:
“Movements in industry-level wages were quite different during the 1998-to-2011 period. Unlike in the 1981-to-1998 period, during which few industries posted robust wage growth, several industrial sectors experienced close to two-digit wage growth after 1998. Wages in the resource sector (mining and petroleum) grew the fastest, and virtually none of this growth was related to changes in worker or job characteristics. In contrast, the retail trade sector experienced weak wage growth. From 1981 to 2011, pay rates in this sector changed little;” (http://cansim2.statcan.gc.ca/cgi-win/cnsmcgi.pgm?Lang=E&ResultTemplate=RPM/CLF2-NSI2/RPM2&RPM_Mode=2&RPM_Action=MPage&RPM_ID=101&RPM_PID=7)
Just saw the comment and remembered reading this the other day and thinking it strange. Strictly a response to the labour market that costs resource companies big on HR lines with little to show in terms of added benefit.
“Unless of course you think they’re trying to expand the labour pool *specifically* to bid down the price of labour.”
This this this and this. Nobody plays the game better than the Chamber of Commerce set.
Also, in 2013, how does an editor let through a story on the skilled trades that uses a plumber as the main character sketch? Couldn’t find anything more cliched?
We dispute HESA’s argument that all but five of the skill shortages reported by CIBC require a university degree. By our count, colleges, institutes and polytechnics offer professional programs for 22 out of the 25 occupational categories listed. HESA appears unaware of the enormous range of career focused diplomas, post-graduate diplomas and bachelor degrees offered by these institutions in the fields of business, the health professions, construction management, engineering technologies, and physical sciences, to name a few.
Perhaps I didn’t express myself quite as clearly as I should have, but you’re also reading it wrong.
First of all, I said “most of the rest (i.e. other than the five trade areas) require university degrees”. I didn’t say “all”, as you’re making out. If you’re going to come in claiming that I’m ignorant of something, at least get your quote right at the outset.
Now, as you’re right to point out, few areas are entirely composed of jobs from a single level of education. It would have been more accurate of me to say “in most of the other areas, most of the jobs require university degree” – a statement which is both true and still compatible with your point about college programs.
As I hope you can appreciate, the combination of deadline pressures and a 450-word post limit means I sometime lose some of the nuance these pieces would otherwise have. My apologies to you and your colleagues if you felt slighted by this.
Thanks for this. We give you the point that you didn’t say “all”, however the correct statement would have been a “minority of”. College programs align with a majority of the skill areas identified.