Labour Shortages in Skilled Trades – The Best Guestimate?

Transcription

Issue
in Focus
Labour Shortages in Skilled Trades
– The Best Guestimate?
By Rock Lefebvre, Elena Simonova, Liang Wang
About CGA-Canada
Founded in 1908, the Certified General Accountants Association of Canada (CGA-Canada) is a self-regulating,
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2
Issue in Focus
Labour Shortages in Skilled Trades
– The Best Guestimate?
July 2012
Executive Summary....................................................................................................................4
Introduction.................................................................................................................................6
Skilled Trades – An Overarching Portrait..................................................................................7
Labour Shortages – Past Experience and Future Estimates........................................................11
The Role of Age Structure, Educational and Labour Mobility Barriers.....................................23
Closing Comments......................................................................................................................30
References...................................................................................................................................32
3
Executive Summary
Recognizing that the level of unemployment and the pace of wage increase have not yet fully
recovered from the most recent recession, the issue of labour shortages in skilled trades has
nevertheless resurfaced as an important concern. Two phenomena contribute significantly to the
increased anticipation of future labour shortages: first, the aging of the population is expected to
create a demographic shift as large cohorts of baby boomers anticipate retirement; and second, the
shift in modern educational preferences often leaves skilled trades as an overlooked career option.
When speaking of labour shortages, the certainty of their existence is particularly important as
an incorrect assessment may lead to a sub-optimal distribution of human capital across skills
levels and geographical regions, decreased employment prospects for job seekers and misguided
deployment of public funds. Given this scenario, it is timely to critically examine the presence
and perceptions of labour shortages experienced in skilled trades in the recent past and assess
our ability to reliably estimate possible shortage situations that may occur in the future. Toward
that end, the analysis of the five prevailing skilled trades in five Canadian provinces – Alberta,
Saskatchewan, Ontario, Québec, and Newfoundland and Labrador – was undertaken. As the
following pages reveal, it can be reasonably contended that:
Labour shortages are difficult to observe and measure directly. Employers’ surveys used
to assess shortages and potential deficiencies are subjective and tend to overestimate the
tightness of the labour market, whereas otherwise reliable economic indicators may suffer
from biased and imprecise interpretation, subjectivity, and reliance on reasonable, yet
indeterminate assumptions.
Pan-Canadian assessment of labour shortages is not informative as it may conceal
instances of imbalance at a more detailed regional level with excess demand for the skilled
trades in some provinces and industries contradicted by excess supply of workers in those
trades in other regions and industries.
he regional analysis of labour shortages is seriously limited by the availability of
T
information on unemployment at the occupational level. Statistics Canada’s Labour
Force Survey suppresses estimates of the unemployment rate for all of the examined trades
in Alberta and Saskatchewan as those estimates are considered to be below the reliability
threshold. The lack of information on unemployment leaves little room for assessing the
presence of labour shortages. This is particularly regretful as these two provinces are often
cited as experiencing acute labour shortages.
4
Issue in Focus
here sufficient data exists, an assessment shows that labour shortages occurred rather
W
sporadically and did not persist for more than one year at a time over the past ten years.
The Motor Vehicle Mechanics trade experienced labour shortages most often compared to
other selected trades: this occupation was in shortage in 2006 and 2011 in Ontario, and in
2003, 2005, and 2010 in Québec. The Machinery and Transportation Equipment Mechanics
trade likewise experienced labour shortages more than once; however, the shortage situations
were likewise occasional and spread geographically.
Deriving provincial estimates of the future labour shortages at the occupational level
of detail is a daunting undertaking. The assumption regarding the industry growth rate is
highly influential in the assessment of labour imbalances. Stronger than average pan-Canadian
economic growth does not always lead to an increased likelihood of labour shortages in a
particular trade concentrated in a particular industry.
The age structure of skilled trades and labour mobility barriers are not likely to seriously
influence labour shortages in trades. A large proportion of skilled trades enjoy a noticeably
younger age structure than all other occupations. Trades where the number of workers in the
early stages of their careers exceeds the number of those close to retirement account for 64%
of all skilled trades. The Red Seal Program and recent amendments to the Labour Mobility
Chapter of the Agreement on Internal Trade are naturally intended to facilitate increased
labour and skills mobility.
Some form of educational barrier may exist in skilled trades. The number of registered
apprentices nearly doubled in both nominal and relative terms over the past two decades
accounting for nearly a quarter (24.2%) of all workers in skilled trades in 2010. However, the
growth in completions of apprenticeships has been less remarkable. The labour market signals
are not always well read by prospective apprentices, particularly in Québec and Newfoundland
and Labrador. Elevated rates of unemployment in those provinces were accompanied by an
accelerated rate of growth in apprenticeship registration over the past decade.
Taken together, these assertions lead us to suggest that closing the statistical information gap and
improving the relevance and reliability of labour market statistics at the regional and occupational
levels are important and necessary steps towards understanding the true scope of labour shortages
in Canada. Furthermore, focusing on measures that are activated in the presence of labour
shortages may be a more effective approach than introducing programs that by default encourage
greater participation in skilled trades. Expanding the existing Canadian Occupational Projection
System to also include labour supply and demand projections at the provincial and sub-provincial
levels may achieve greater consistency and coordination in labour market decisions of employers,
job seekers, governments and educational institutions.
5
Introduction
In the mid-2000s, the issue of labour shortages attracted significant attention from industry,
organized labour, governments and educators as the Canadian economy intensified. In the
aftermath of the most recent recession, the high unemployment and subdued economic growth
that dis-balanced the labour market set aside stories of labour shortages yielding room to the more
daunting issues of global and domestic financial and economic stability. Today, the issue of labour
shortages has reappeared in the headlines despite the fact that the level of unemployment and the
pace of wage increase have not yet fully recovered since the advent of the most recent recession.
Although a characterized labour shortage represents an imbalance in the labour market and affects
both workers and employers, shortages in some occupations may be easier to mitigate than in others.
Businesses have a wider choice of organizational and labour strategies when duties of a particular
occupation can be performed from any location (as, for instance, services provided by phone or
automated medium). Occupations where physical presence of workers in a particular location is
required however (for instance, operation of heavy equipment), labour shortages can become a
significant impediment to business development. Skilled trades often belong to the latter category.
Two phenomena that have become fairly prominent in recent years contribute significantly to
the increased anticipation of future labour shortages in skilled trades. The first is the aging
of the population that is expected to create a demographic shift by inducing large cohorts of
baby boomers to exit the labour market. The second phenomenon is the shift in educational
preferences where higher levels of worker education are often promoted as an important attribute
of the prevailing knowledge economy. It is naturally not uncommon that most secondary school
graduates attempt to immediately pursue their studies in the colleges and universities leaving
skilled trades to be an often overlooked career option.
Several other factors may add to the potential and likelihood of labour shortages in skilled trades.
Labour productivity gains due to technological improvements and automation are less prominent
in skilled trades than in some other occupations as skilled trades continue to heavily depend on
the labour and skill contribution of workers. Businesses’ ability to shift the composition of the
workforce towards lesser-skilled workers may also be limited in trades occupations as hiring
standards may be stricter and more regulated whereas skills may be less transferable between
occupations and skills levels.
When speaking of labour shortages, the examination of at least four questions is particularly
important: 1. Did the shortage indeed occur (or can reasonably be contented to occur in the
future)? 2. What prompted the shortage? 3. What direct and indirect effects were generated by the
shortage? and 4. What factors mitigated the anticipated level of shortage? Indeed, if assessment of
6
Issue in Focus
the first question in this sequence is incorrect, the answers to other questions become irrelevant.
The level of aggregation in assessing the shortage is likewise important. In Canada as a whole,
a sufficient number of job seekers may exist to satisfy employers’ demand; however, personal
preferences, obligations and commitments of workers, as well as unappealing wage differentials
and labour mobility challenges along with other frictions may lead to co-existence of labour
shortages in some regions and labour surpluses in others.
The consequences of incorrectly assessing the presence of labour shortages may be fairly
detrimental as they may lead to a sub-optimal distribution of human capital across skills levels
and geographical regions, decreased employment prospects of job seekers and inefficient use of
public funds allocated to attracting attention to occupational groups not necessarily in need of
complementary promotion. Recognizing the importance of the issue of labour shortages in skilled
trades for the Canadian economy, CGA-Canada sees it timely to critically examine the magnitude
of labour shortages experienced in skilled trades in the recent past, and to analyze the prospects
of achieving reliable estimates of the shortage situations that may occur in the near future. To that
end, this paper begins with a brief overview of main characteristics of the workforce engaged in
skilled trades. This is followed by the analysis of labour shortages experienced by five prevailing
skilled trades in five Canadian provinces in the past decade and an illustration of the sensitivity
of estimates of future labour shortages to some basic or encoded assumptions. Furthermore, we
critically assess the age structure of the trades labour force, and educational and labour mobility
barriers as possible factors contributing to labour shortages. The paper concludes with highlights
of the more salient aspects of our contentions.
Skilled Trades – An Overarching Portrait
A trade is defined as “an occupation for which a provincial or territorial apprenticeship program
is available.” A skilled trade, in turn, is “a type of occupation that typically includes complex
activities and requires skills and account knowledge of the subject.”1 To be designated as a trade,
an occupation is formally recognized through provincial or territorial legislation as appropriate for
apprenticeship training and certification.
Skilled trades can be classified as compulsory and voluntary. Individuals entering or working
in a compulsory trade must possess a Certificate of Qualification or be registered as apprentices
with a provincial or territorial authority in order to practice in that trade. In compulsory trades,
apprenticeship is also compulsory.2 In voluntary trades, apprenticeship training and certification is
1 Canadian Council of Directors of Apprenticeship (2007). Glossary of Terms for Apprenticeship Training & Certification.
2 Individuals working in the trade prior to the compulsory requirement may be exempted from compulsory apprenticeship.
7
available, but not necessarily demanded and is often obtained to indicate the level of competency
of the worker.
Requirements for compulsory and voluntary trades vary noticeably across the country as
Canada’s apprenticeship system is comprised of 10 provincial and 3 territorial systems with
each jurisdiction being responsible for legislating, regulating and monitoring its training and
employment requirements. As such, the list of compulsory trades diverges markedly across
jurisdictions. Overall, there are some 400 skilled trades in Canada; however, only approximately
50 trades3 have compulsory certification in at least one jurisdiction.
Some 1.8 million Canadians either worked or were looking for work in skilled trades in 2011. The
preference towards trades occupations has somewhat changed over time as a smaller proportion
of Canadians are interested in working in trades today than some 25 years ago. In 2011, 9.7% of
the Canadian labour force was concentrated in trades occupations compared to 11.6% observed
in 1987.4 The shift in occupational preferences
Methodology Note 1
was rather gradual but took place primarily
– Classification of Skilled Trades
over the late 1980s and the 1990s whereas
the proportion of the Canadian labour force
The National Occupational Classification for Statistics
involved in trades occupations was fairly stable
(NOC-S) was used as the basis for identifying
occupations that constitute skilled trades category.
over the 2000s.
Skilled trades comprise a great diversity of
occupations and are found in both goodsproducing and services-producing sectors of the
economy. Statistics Canada identifies 70 groups
of trades in its occupational classification while
a search of the Ellis Chart – a tool that provides
detailed information on apprenticeship training
available across Canada – returns 418 different
trades.5 Despite such diversity, the five largest
trade groups account for more than one third of
the total labour force engaged in skilled trades.
These groups are formed by Carpenters that
represent 10.1% of all those working or willing
to work in skilled trades, Automotive Service
Employment requirements for occupations within “H”
occupational group (titled “H – Trades, Transport and
Equipment Operators and Related Occupations”)
were analyzed to identify occupations for which
apprenticeship training constitutes part of
employment requirements. Employment requirements
were identified based on the National Occupational
Classification (NOC) developed by Human Resource
and Skills Development Canada (HRSDC). Where
necessary, concordance table for NOC-S 2006 and
NOC 2011 was used to match NOC employment
requirements with NOC-S occupations. The Ellis Chart
was likewise consulted to clarify the availability of
apprenticeship training for some of the occupations.
Based on the described methodology, the report
defines skilled trades as occupations falling under
H0, H1, H2, H3, H4, H5 (excluding H52) and H6
groups of NOC-S.
3Human Resource and Skills Development Canada website, Labour Mobility section. Available at http://www.hrsdc.gc.ca/eng/
workplaceskills/labour_mobility/index.shtml, accessed on May 28, 2012.
4 CANSIM Table 282-0010, Statistics Canada’s LFS custom tabulations, CGA-Canada calculations.
5 Ellis Chart, available at www.ellischart.ca, accessed May 28, 2012; search criteria: Trade Name field is left blank.
8
Issue in Focus
Technicians, Truck and Bus Mechanics and Mechanical Repairers that account for 9.6% of the
total labour force engaged in trades, Welders and Related Machine Operators (6.6%), Construction
Millwrights and Industrial Mechanics (4.9%), and Electricians (4.7%).6
The distribution of skilled trade workers across provinces follows, to a great extent, the
distribution of the overall population – larger provinces enjoy a larger pool of individuals working
or willing to work in skilled trades. However, peculiarities of industry structure lead to a greater
or lesser reliance of some of the provinces on certain trades compared to other occupations. For
instance, approximately 12% of the total Canadian labour force is located in Alberta; however,
this province for obvious reasons absorbs some 20% of all Canada’s plumbers, pipefitters, gas
fitters, heavy equipment operators, and metal forming, shaping and erecting trades. A similar
‘over-utilization’ is observed in Saskatchewan and New Brunswick: Saskatchewan utilizes a nearly
twice higher proportion of heavy equipment operators compared to the proportion of Canada’s
labour force in that province; New Brunswick, in turn, relies heavily on stationary engineers and
power station operators.7
Cases of ‘under-utilization’ of certain trades are also common. For instance, Ontario contributes
38.4% of the labour force to the Canadian total, but relies on only 28.7% of all carpenters and
cabinetmakers available in Canada. Saskatchewan and Newfoundland and Labrador, in turn, rely
on a noticeably smaller proportion of machinists compared to the proportion of the Canadian
labour force in those provinces.8 It should be noted, though, that over- and under-utilization of
certain trades by provinces does not necessarily signal labour market imbalance; instead, it is
primarily a reflection of differences in the industrial composition among provinces.
Certain industries heavily rely on skilled trades in their production processes. For instance,
nearly 70% of the workforce of specialty trade contractors, an industry that is primarily engaged
in masonry, painting, and electrical work of buildings and structures, is formed by skilled
tradespeople. In repair and maintenance, and construction of buildings, roughly one half of all
workers belong to skilled trades occupations. Overall, ten Canadian industries have more than
one quarter of their workforce in skilled trades (Table 1). In more aggregated terms, construction,
manufacturing, mining and oil and gas extraction, utilities and other services are the industries
where skilled trades constitute a crucial component of the labour force.
6Statistics Canada 2006 Census data, CGA-Canada calculations. The listed trades correspond respectively to H121, H421, H326,
H411, H211 codes of NOC-S.
7 Based on 2006 Census. CGA-Canada calculations.
8 Based on 2006 Census. CGA-Canada calculations.
9
Table 1 – Industries Where Skilled Trades Constitute
More Than 25% of the Total Labour Force – Canada
Industry
Proportion of workers
in skilled trades
Specialty trade contractors
69.4%
Repair and maintenance
62.2%
Construction of buildings
45.7%
Heavy and civil engineering construction
42.9%
Fabricated metal product manufacturing
36.5%
Machinery manufacturing
33.5%
Mining (except oil and gas)
29.5%
Utilities
27.8%
Primary metal manufacturing
27.6%
Rail transportation
26.3%
Note: Industries are shown at 3-digit aggregation of NAICS 2002; the proportion of workers is shown
relative to the total labour force.
Source: Statistics Canada 2006 Census, CGA-Canada computations.
Some regional variations may be observed in terms of industry reliance on skilled trades. Unlike
other provinces, skilled workers in British Columbia, Saskatchewan, Manitoba, and Newfoundland
and Labrador account for more than one quarter of all workers in pipeline transportation
which is part of the transportation and warehousing sector. Retail trade, and particularly motor
vehicle and parts dealers, show a heavy reliance on skilled trades in Saskatchewan, Québec and
Newfoundland and Labrador.
Two other characteristics typically important of an occupational profile are gender and age. The
gender mix in skilled trades continues to be highly unbalanced. In fact, men accounted for as
much as 93.4% of all trades workers in 2011 with this proportion not having changed materially
over the past two decades.9 Skilled trades represent the most male dominated occupational
group when compared to all other occupations practiced in Canada. The age structure warrants
particular attention given the overall aging of the Canadian population and will be discussed at
greater length later in this paper.
9 CANSIM Table 282-0010, CGA-Canada calculations.
10
Issue in Focus
Labour Shortages – Past Experience
and Future Estimates
The terms “labour shortages” and “skills shortages” are often used interchangeably; however,
there is a noticeable difference between them. The concept of a labour shortage speaks to the
insufficient number of people available in a given occupation to satisfy employers’ labour demand.
Labour shortages are usually characterized by a low unemployment rate, increasing wages and
net inflow of migrants into the region with labour shortages (provided that there are no barriers
to labour mobility). Skills shortages, in turn, are present when skills and work experience of job
seekers in a specific occupation do not match employers’ understanding of attributes needed
to successfully carry out work responsibilities in that occupation. Skills shortages are often
characterized by an elevated unemployment rate accompanied by a higher than historical average
number of job vacancies, increased level of on-the-job training, and hiring campaigns targeting
workers from other regions.
Both labour shortages and skills shortages have negative consequences for the economy as they
hamper businesses’ ability to pursue new opportunities and to function to their full potential.
However, the factors that cause and instigate these two types of shortages are fairly different:
labour shortages are typically caused by changes in the age structure of the workforce, barriers
to labour mobility, strong positive demand shocks, and changes in occupational preferences of
individuals. Skills shortages, on the other hand, are primarily rooted in the insufficient quality or
orientation of labour which, in turn, may be caused by changes in production process, limitations
of the educational regime and some other factors. To ensure the desirable depth of the analysis,
this paper will focus only on the issue of labour shortages pertaining to skilled trades.
Labour Shortages Experienced in the Past
Although the concept of labour shortage is fairly straightforward, observing shortages is difficult
given that the complexities inherent to the labour market are intricate to measure directly. Surveys
of market conditions conducted directly with businesses – one of the methods used to assess
labour shortages – are fairly subjective and tend to report labour market tightness as a shortage
even though the problem is not seen being serious enough to increase wages and overtime hours.
The other method – estimating labour shortages based on economic indicators – often suffers
from a biased or imprecise interpretation as assumptions made for the estimates are subjective.10
Moreover, the labour market usually has at least some ability to mitigate labour shortages and
surpluses making them less observable. For instance, an increase in demand for labour in one of
the regions may lead to a short-run increase in wages which, in turn, is expected to generate a
10Sharpe A., et al, (2008). Apprenticeship Issues And Challenges Facing Canadian Manufacturing Industries, Centre for the Study of
Living Standards, Research Report No. 2008-2, pp. 29-30.
11
labour supply response from the unemployed, workers in other industry/occupations, and migrants
from other regions. Likewise, businesses may change their strategy and hiring intentions by
either re-evaluating certain opportunities or moving/outsourcing parts of their labour needs to
other locations in a response to the initial tightness of the labour market. As such, labour market
imbalance and friction will primarily exist while such adjustment processes take place and their
magnitude may not be fully captured. In some situations, though, more prolonged shortages or
surpluses may appear when the mitigation process is impeded by slow adjustment in wages,11
educational barrier (i.e. time required for training to practice in the occupation) and labour
mobility barrier. Such shortages are typically easier to observe; however, their magnitude is
derived through different indicators and thus may differ from those actually identified.
The examination of labour shortages presented in the paragraphs that follow recognizes the
limitations of available assessment tools and is done with the caveat that establishing purely
objective estimates of labour market imbalances is imperfect.
If judged by the results of the Business Outlook Survey conducted by the Bank of Canada, firms
experienced serious challenges in recruiting and retaining workers at the end of the 1990s when
some 68% of companies reported that labour shortages restricted their ability to meet demand.
Comparatively, the situation during the first quarter of 2012 did not suggest a tightness on the
labour market as only 27% of firms experienced some form of labour shortages (top graph of
Figure 1).
To better assess the particularity of the state of skilled trades, the unemployment rate may be used.
An occupation may be said to experience a tightness of the labour market if the unemployment
rate in that occupation is below of the unemployment rate for all other occupations. As seen
from the bottom graph of Figure 1, the unemployment rate of those working in skilled trades
was consistently below of that for all other occupations between 1995 and 2008 suggesting that
demand for skilled trades was higher than that for all other workers.
11Multi-year labour contracts between workers and employers, imperfect information, wage controls and social welfare provisions
may influence the wage structure increasing wage stickiness.
12
Issue in Focus
Figure 1 – Unemployment Rate Differentials and
Labour Shortages Reported by Firms – Canada
Proportion of firms that face labour shortages
80%
68%
Recession period
60%
40%
27%
26%
20%
7%
Q3 1998
Q1 1999
Q3 1999
Q1 2000
Q3 2000
Q1 2001
Q3 2001
Q1 2002
Q3 2002
Q1 2003
Q3 2003
Q1 2004
Q3 2004
Q1 2005
Q3 2005
Q1 2006
Q3 2006
Q1 2007
Q3 2007
Q1 2008
Q3 2008
Q1 2009
Q3 2009
Q1 2010
Q3 2010
Q1 2011
Q3 2011
Q1 2012
0%
Unemployment rate
14%
12.4
12%
10%
10.3%
7.4%
8%
6%
6.1%
4%
Recession years
All occupations
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
0%
1991
2%
Skilled trades
Source: Top graph: Business Outlook Survey, Bank of Canada; Bottom graph: CANSIM Table 282-0010 and
Statistics Canada’s LFS custom tabulations, CGA-Canada calculations.
13
The differentials in unemployment rates were not homogeneous across provinces. In Ontario
and British Columbia, the difference between the unemployment rate in all occupations and
in skilled trades was particularly noticeable with skilled trades experiencing a much tighter
labour market; this was predominantly the case in the early 2000s when the differential in
unemployment rates reached as high as 2.4 percentage points in some of the years. In contrast, in
Alberta and Saskatchewan, the gap between the unemployment rate of all occupations and that
of skilled trades was almost inexistent over the past 15 years; however, unemployment rates in
both groups were at a record low reaching as low as 3.3% in Alberta in 2006. Québec followed
very closely the national trend while in Atlantic provinces, skilled trades were in lower demand
when compared to other occupations. After some instability in the trend during the most recent
recession, skilled trades in all but Atlantic provinces experienced a tightening in the labour
market conditions by the end of 2011. To illustrate the regional differences in demand for skilled
trades, Figure 2 presents two highly diverged cases.
It should be noted that high demand for labour in a certain occupation does not necessarily
mean that the occupation experiences a labour shortage. A labour shortage occurs when the
unemployment rate falls below its natural rate which can be thought of as reflecting the minimum
level of unemployment that would exist in an economy operating at full capacity. The natural
level of unemployment is always present in the economy and includes, for instance, individuals
in a voluntary transition between jobs, those who might have chosen not to work at the prevailing
wage rate, and those facing challenges in finding work due to lack of skills. Although the natural
unemployment rate is well defined in theory, in practice it is not observable.
14
Issue in Focus
Figure 2 – Unemployment Rate in Skilled Trades
and All Occupations – Selected Provinces
Saskatchewan
30%
Unemployment rate
25%
20%
15%
10.6%
10%
5%
5.0%
7.4%
4.1%
Unemployment rate
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
Newfoundland and Labrador
30%
25%
1996
1995
1994
1993
1992
1991
0%
22.1%
20%
15%
18.0%
16.7%
12.7%
10%
5%
Recession years
All occupations
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
0%
Skilled trades
Source: CANSIM Table 282-0010 and Statistics Canada’s LFS custom tabulations, CGA-Canada calculations.
15
An alternative approach to identifying labour shortages involves looking at the combination of
growth rates in employment, unemployment and wages. This methodology is used by Human
Resources and Skills Development Canada (HRSDC) in its national occupational analysis. An
occupation is considered to be in an excess-demand situation when employment and wages
in that occupation are increasing substantially faster than in other occupations and when its
unemployment rate is markedly lower than in previous years or relative to other occupations.12
The analysis undertaken by HRSDC at the national level suggests that none of the skilled trades
occupations for which the analysis of imbalances is conducted was in shortage between 2008 and
2010. The situation was quite different in 2005 to 2007 when according to HRSDC the following
four skilled trades showed signs of shortages: Industrial Electricians, Heavy-duty Equipment
Mechanics, Facility Operation and Maintenance Managers, and Contractors and Supervisors
in Electrical Trades and in Mechanic Trades.13 Two years prior (i.e. in 2003-2005), a somewhat
different set of skilled trades was gauged to be in shortage; including Residential Home Builders
and Renovators, Facility Operation and Maintenance Managers, and Contractors and Supervisors
in Pipefitting and Carpentry Trades.14 This inconsistency in labour market imbalances in skilled
trades contrasted markedly with some other occupations where labour shortages persisted
throughout an extended period of time. For instance, according to HRSDC, Physicians, Dentists
and Veterinarians, Medical Radiation Technologists, Therapy and Assessment Professionals, and
Optometrists and Chiropractors were in shortage all years between 2003 and 2010.
The assessment at the national level may conceal many instances of imbalances at a more
detailed regional level with excess demand for the skilled trades in some provinces and industries
coexisting with excess supply of workers in those trades in other regions and industries. To
address this intricacy, the above analysis of labour shortages experienced in the past is extended
from the national to the regional level focusing on five provinces – Alberta, Saskatchewan,
Ontario, Québec, and Newfoundland and Labrador.15 In each province, the examination of labour
shortages is further narrowed to five prevailing skilled trades16 – Carpenters and Cabinetmakers;
12Human Resources and Skills Development Canada (2008). Looking-Ahead: A 10-Year Outlook for the Canadian Labour Market
(2008-2017), Cat. No.: HS28-23/2009E –PDF, p. 98.
(2008-2017), Cat. No.: HS28-23/2009E –PDF, p. 99.
(2006-2015), Cat. No.: HS28-23/2006E –PDF, p. 30.
15The choice of provinces was guided by the intention to account for the two largest Canadian provinces (Ontario and Québec),
the two fastest growing provinces (Alberta and Saskatchewan) and one of the provinces that is usually seen as experiencing a net
outflow of workers (Newfoundland and Labrador). Newfoundland and Labrador is also the province that has experienced the most
sporadic pattern of economic growth over the past 10 years with annual growth in real GDP reaching as high as 15.6% in 2003 and
as low as -9.2% in 2009.
16Based on 2006 Census data. The listed trades represent five prevailing skilled trades in Ontario, Quebec and Alberta. In
Saskatchewan and Newfoundland and Labrador, Heavy Equipment Operators rank 6th yielding only slightly to another trade.
However, to allow for consistency of the analysis and given that the differences in raking are minor, the five identified trades are
treated as the prevailing trades for all five provinces.
16
Issue in Focus
Electrical Trades and Telecommunications Occupations; Metal Forming, Shaping and Erecting
trades; Machinery and Transportation Equipment Mechanics; and Automotive Service
Technicians.17 Together these selected trades represent more than 52% of all workers in skilled
trades in each of the selected provinces.
As seen from Figure 3, assessing the presence
of labour shortages is under the best of
circumstances challenging. One of the main
barriers (which also becomes an impasse) is
the lack of information on the unemployment
rate for some of the selected trades in some
of the provinces. For instance, Statistics
Canada’s Labour Force Survey suppresses
estimates of the unemployment rate for all the
selected trades in Alberta and Saskatchewan
as those estimates are considered to be below
the reliability threshold. This is particularly
problematic as these two provinces are often
cited as experiencing acute labour shortages.
A similar situation is observed for two of
the selected trades in Newfoundland and
Labrador. Naturally, the lack of information on
unemployment leaves little room to assess the
potential of labour shortages.
Methodology Note 2
– Estimating Past Labour Shortages
The methodology for the analysis of the past labour
shortages is adopted from the Canadian Occupational
Projection System developed by HRSDC (see
Footnote 12 for the reference publication).
A trade is said to have signs of labour shortages
if the following three conditions are met: (i) the
employment growth rate of the trade is at least
50% higher than the average growth rate for all
occupations, (ii) the average wage in the trade grows
at the rate at least 30% higher than the growth rate of
wage in all occupations, and (iii) the unemployment
rate in the trade is at least 30% below the average
unemployment rate for all occupations. To account
for the fact that similar unemployment rates do not
necessarily indicate a similar tightening of the labour
market in each of the trades, a supplementary
approach for identifying labour shortages is also
utilized. According to this approach, a trade is said to
have signs of labour shortages if the first two of the
three aforementioned conditions are met and the
unemployment rate in the trade is close to its lowest
historical level.
The examination of labour market imbalances
in the provinces/trades for which data are
The test for labour shortages is performed for
available shows that the shortage situation
each year between 2003 and 2011 for each of the
selected trades and provinces.
occurs rather sporadically (or occasionally)
throughout the period under consideration
and does not persist for more than one year at
a time (Figure 3). Over the past ten years, Motor Vehicle Mechanics trade experienced excessdemand pressures most often compared to other selected trades: this occupation was in shortage in
2006 and 2011 in Ontario, and in 2003, 2005, 2010 in Québec. The unemployment rate of Motor
Vehicle Mechanics in those years reflected well the presence of the pressure remaining at the level
of 3%‑4% while all other occupations experienced a twice higher unemployment rate. Machinery
and Transportation Equipment Mechanics was another trade that experienced some labour
17These trades correspond respectively to H12, H21, H32, H41 and H42 codes of NOC-S.
17
shortages; however, the shortage situations were likewise occasional and spread geographically.
In Ontario, a brief episode of labour shortages was also observed for Electrical Trades and
Telecommunication Occupations in the aftermath of the most recent recession.
Figure 3 – Labour Shortages in Selected Skilled Trades
in Five Canadian Provinces
2003 2004 2005 2006 2007 2008 2009 2010 2011
Alberta
Carpenters and Cabinetmakers
Electrical Trades and Telecom. Occupations
Metal Forming, Shaping and Erecting Trades
Machinery and Transp. Equipment Mechanics
Motor Vehicle Mechanics
For all selected trades, estimates of the unemployment rate
are suppressed for most of the years
Saskatchewan
For all selected trades, estimates of the unemployment rate
are suppressed for most of the years
Ontario
Shortage
Shortage
Shortage
Shortage
Shortage
Québec
Shortage
Shortage
Shortage
Shortage
Shortage
Shortage
Shortage
Shortage
For these two trades, estimates of the unemployment rate
are suppressed for all years
Note: Some of the titles of trades are shortened to allow for an easier visual representation.
Source: Statistics Canada’s LFS custom tabulations, CANSIM Tables 282-0010 and 282-0070, CGA-Canada
computation.
18
Issue in Focus
Newfoundland and Labrador presented a particularly interesting case: the 21.3% unemployment
rate among Carpenters and Cabinetmakers, the 15.0% unemployment rate among Electrical
Trades, and the 20.6% rate registered for Metal Forming, Shaping and Erecting Trades (observed
in 2008, 2011 and 2011 respectively) could barely suggest the presence of labour market tightness.
However, these levels of unemployment were at historic lows and accompanied by an accelerated
growth in employment and wages. Taken together, these factors led to labour shortages in those
trades in those particular years.
It should be noted that the identified labour shortage seem to be somewhat concentrated in 2011
(particularly when compared to other years within the observation timeframe). One of the possible
explanations resides in the fact that the labour force tends to decline during and shortly after the
recession as less employment opportunities are available. As economic growth picks up in the
aftermath of the recession, those having left the labour force may re-enter; however that may
happen at a slower pace than the growth in employer demand for labour leading to temporary
tightening of the labour market. Re-evaluation of the shortage situation observed in 2011 may be
important once the data for 2012 becomes available.
Estimates of Future Labour Shortages
At the national level, the Canadian Occupational Projection System (developed and maintained
by HRSDC) represents the most comprehensive publicly available tool that provides projections
of future labour demand and supply and allows for identifying those occupations that may face a
shortage or surplus of workers over the medium term. The latest projections cover the 2011 to 2020
period. At the regional level, labour supply projections that would provide consistent information
at the provincial level are not available; some provinces publish a qualitative assessment of the
employment prospects in different occupations and only Alberta and New Brunswick provide a
forecast of the number of employed in the province through detailed occupational breakdown.
In addition to the lack of consistent occupational projections, any forecasting exercise bears a
question of reliability and fitness of the model. Forecasting models are based on assumptions
regarding the variables and the relationship between those variables. As the assumptions are made
to enable the representation of complex relationships in a simplified form, the assumptions often
do not withstand the test of reality; particularly in a fluid market. When it comes to occupational
projections, further complexity is added by the constant state of flux caused by such factors as
adoption of new production techniques, changes in consumer preferences, and fluctuations in
prices for goods and services.
As seen in the preceding subsection, assessing past labour shortages at the detailed regional and
occupational levels is a challenging task. Deriving an estimate of the future labour shortages
at the same level of detail is an even more daunting undertaking. To illustrate the sensitivity of
19
shortage estimates to one of the most basic assumptions – the growth rate in employers’ demand
for labour – an analysis of possible imbalances was undertaken for selected skilled trades in five
Canadian provinces – Alberta, Saskatchewan, Ontario, Québec, and Newfoundland and Labrador.
Two scenarios were constructed to account for possible differences in the future growth in labour
demand. The “average growth” scenario assumes that the annual rate of employment growth over
the projection period will be equal to the average annual growth rate in employment observed
in 2001-2011; the “optimistic growth” scenario assumes that the employment growth over the
projection period will be equal to that observed in 2003-2007, the period when the Canadian
economy expanded at the fastest pace over the past decade (Table 2).
Methodology Note 3 – Estimating Future Labour Shortages
Labour shortages (surpluses) are estimated for a 5-year period (i.e. for the year 2016). A labour shortage (surplus)
in a skilled trade is assumed to exist when employers’ demand for labour in that trade exceeds (is less than)
available supply of labour. It is also assumed that (a) demand for labour depends on the overall macroeconomic
condition and industry growth, and (b) the level of employment in skilled trades observed in the past has
predicting power and is indicative of the future demand for labour.
Future demand for labour is estimated as shown in equation 1 where the Growth Rate parameter is calculated
based on equation 2 (with t denoting the beginning of the reference period and n – the number of years in the
reference period).
1) Labour Demand2016 = Employment2011 × (1 + Growth Rate)5
n
2) Growth Rate = Employmentt+n
–1
Employmentt
Future supply of labour is estimated based on three elements (equation 3): (i) the current level of the labour force
in skilled trades (denoted as Labour Force), (ii) the number of trades people that are expected to retire during the
projection period (Retirement), and (iii) the number of people that are expected to enter skilled trades during the
projection period (New Entrants).
3) Labour Supply2016 = Labour Force2011– Retirement + New Entrants
n Employment
t+n
Data for the labour force in skilled trades is based on Statistics Canada’s Labour
Force Survey
custom
Employmentt
tabulations. The retirement patterns for trades workers are identified based on the comparison of the labour
force composition in four age groups (45-49, 50-54, 55-59, and 60-64 years of age) in 2006 and 2011. The
identified retirement pattern is then used to estimate the number of retirees in 2016. The number of new entrants
into the trade is estimated based on the past growth rates in the number of trade certificates granted to
apprentices and qualifiers.
The process of selecting industries/trades for which the imbalances are estimated is as follows: First, five largest
skilled trades are identified in each of the provinces (at 2-digit level of aggregation of NOC-S); for each of those
trades, the industry with largest concentration of that trade is selected (for instance, the construction industry is
selected for carpenters and cabinetmakers in Ontario as 74.8% of this trade’s labour force is concentrated in that
industry). The further shortlisting of trades is completed based on the availability of data on the number of trade
certificates granted to apprentices and qualifiers in that trade.
20
Issue in Focus
Table 2 – Labour Imbalances as a Percentage of Labour Supply
– Estimates for 2016
Optimistic
Average
growth (based growth (based
on 2001-2011 on 2003-2007
growth rate)
growth rate)
Industry and skilled trade
Alberta
Construction industry
Carpenters and cabinetmakers
Electrical trades and telecommunications occupations
Repair and maintenance industry
Welders and related machine operators
-4.9%
-4.3%
-26.5%
-29.8%
15.1%
-35.9%
-20.2%
-31.5%
19.0%
-8.5%
-0.2%
3.6%
Ontario
Automotive service technicians
-3.2%
0.5%
-2.4%
-14.5%
9.5%
17.3%
Québec
-0.4%
0.7%
-11.4%
-8.6%
24.9%
4.7%
-13.9%
1.5%
-41.8%
-16.5%
1.3%
-17.5%
Saskatchewan
Motor Vehicle and Parts Dealers
Welders and related machine operators
Telecommunications industry
Note: a negative number indicates an estimated labour shortage; a positive number indicates an estimated
labour surplus. The choice of words “average” and “optimistic” in the title row refers to the overall rate of
Canada’s economic growth in the indicated time periods.
21
It should be accentuated that imbalances presented in Table 2 are estimated in a static manner
and do not take into account that initial signs of labour shortages/surpluses will likely generate
adjustments in wages and unemployment rates which, in turn, may prompt labour movement
across industries and provinces (as well as internationally), and may affect educational and career
preferences of some individuals. If and as those adjustments take place, the same growth rates in
employers’ demand will result in smaller imbalances than those suggested by the estimates.
A couple of points may be of interest to highlight based on the estimates of imbalances. First,
stronger than average pan-Canadian economic growth does not always lead to an increased
likelihood of labour shortages in a particular trade utilized by a particular industry. For instance,
the construction industry in Ontario may experience less acute labour shortages of carpenters and
cabinetmakers under the growth rates seen during the strong economic expansion (i.e. 2003-2007)
than during a more extended period of time which also included an economic slowdown and a
recession (i.e. 2001-2011).
Second, the assumption regarding the industry growth rate is highly influential in the assessment
of labour imbalances. Employment in the repair and maintenance industry in Alberta expanded
by a mere 0.7% over 2001-2011, but saw a booming rate of growth (10.6%) in 2003-2007.
Consequently, assuming that an average growth scenario will materialize in Alberta’s repair
and maintenance industry over the next five years will leave the industry with a 15% surplus in
welders and related machine operators. A more optimistic growth assumption, on the other hand,
will result in an acute (more than one third) shortage of welders in that industry in Alberta.
Third, it may happen that under the same growth scenario, shortages of skilled workers in one
province coincide with surpluses in the other. Based on the estimates, this is the case for welders
and related machine operators in Alberta and Saskatchewan, and automotive service technicians
in Ontario and Saskatchewan. Availability of information on job openings across provinces may
be crucial to mitigate such imbalances.
22
Issue in Focus
The Role of Age Structure,
Educational and Labour Mobility Barriers
Labour shortages may be caused by both cyclical and structural factors. Cyclical factors
reflect short-term fluctuations in aggregate labour demand and tend to occur at the peak of the
business cycle. Structural factors, in turn, reflect long-term changes in the economy and society.
Demographic changes that affect the size of the workforce available, technological advances that
may lead to a shortage of workers with needed skills, and globalization of the competition that
puts additional pressures on labour costs are often identified as structural factors that lead to
labour shortages.
Short-term cyclical shortages are best dealt with by short-term solutions such as the increased
ability of employers to recognize shortages and adjust wages, the improved access of job seekers
to information on job openings, and higher reliance on temporary foreign workers. To safeguard
against structural labour shortages, it is important to understand demographic shifts and the
ability of the educational/qualifying system to generate new entrants to the occupation. Both of
these elements, unattended, may create strong, long-term barriers to the resolution of imbalances
(for instance, it may take years for an individual willing to work in an occupation to complete
the necessary training program whereas adjustments to the age structure of the labour force may
take decades). Labour mobility is also an important factor that may create barriers to resolving
structural shortages; however, the time required to achieve positive changes in this area may be
fairly short once the proper incentives/measures are in place.
Age Structure of Skilled Trades
The aging of the population is often associated with an elevated likelihood of skills and labour
shortages. As the baby boomers retire from the labour force, it is assumed that the loss of
knowledge and experience taken with the slower growth in the number of new labour market
entrants will have a negative effect on Canada’s ability to build and sustain the competitive
workforce. However, the aging-worker phenomenon varies noticeably across occupations.
One way to look at the age composition of an occupation is through the ratio of new entrants
(workers aged 20 to 29) to the number of workers nearing retirement (those 50 years of age and
over). A ratio of below 1 suggests a potential net outflow of workers from the occupation as the
number of those retiring soon exceeds the number of people in early stages of their careers.18 The
entrants-to-near-retirees ratio of the total Canadian labour force declined steadily and markedly
over the past 20 years accentuating, once again, the presence of the aging trajectory. In fact, the
ratio dropped by the factor of two (from 1.5 to 0.7) between 1991 and 2011. Skilled trades have
18Pyper, W. (2008). Skilled Trades Employment, Statistics Canada, Perspectives on Labour and Income, Vol. 9, No. 10, p. 7.
23
not been exempted from the aging trend; however, most of the decline in the entrants-to-nearretirees ratio in skilled trades took place over the 1990s whereas the 2000s were characterized by
a relatively stable ratio which stood at 0.9 in 2011, well above of that for all occupations (top graph
of Figure 4).
The aging trajectory is not homogeneous among different skilled trades; moreover, each province
ages at a different pace. As such, gauging the age structure of skilled trades would best be done
by examining the situation of a specific trade in a particular province. However, that is currently
infeasible as Statistics Canada’s estimates of the age structure of the labour force in particular
skilled trades are often below reliability threshold at the provincial level of aggregation and are
not publicly available. In this situation, Canada as a whole remains the lowest level of aggregation
for which the analysis of the age structure of particular skilled trades can be performed.
As seen from the bottom chart of Figure 4, the number of younger workers exceeded the number
of those close to retirement in many skilled trades in 2011. Specifically, Plumbers, Pipefitters
and Gas Fitters, Electrical Trades, Carpenters and Cabinetmakers, Other Construction Trades
and Other Installers and Repairers have a relatively young age structure as the entrants-to-nearretirees ratio for those trades stands above 1. Overall, the ‘young’ trades account for 63.8% of all
skilled trades. However, some trades (i.e. Machinists and Related Occupations, Heavy Equipment
Operators, and Machinery and Transportation Equipment Mechanics) show alarming signs of
aging as they have a substantially larger number of workers close to retirement than those who are
in early stages of their careers.
24
Issue in Focus
Figure 4 – Entrants-to-near-retirees Ratio for Selected Trades – Canada
1.8
1.7
Entrants-to-near-retirees ratio
1.6
1.4
1.5
1.2
1.0
0.9
0.9
0.8
0.6
0.7
0.4
0.2
All occupations
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
0.0
Skilled trades
2011
Other Installers and Repairers
1.3
Plumbers, Pipefitters and Gas Fitters
1.3
1.1
Electrical Trades
1.1
Other Construction Trades
1.1
1.0
Masonry and Plastering Trades
1.0
1.0
0.7
Machinery and Transprt. Equipment Mechanics
0.6
Heavy Equipment Operators
0.5
Machinists and Related Occupations
0.9
Skilled Trades
0.7
All Occupations
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Entrants-to-near-retirees ratio
Note: Labour force is used as the basis for calculating the entrants-to-near-retirees ratio. On the bottom
chart, the length of bars with identical values may vary due to rounding. Some of the titles of trades are
shortened to allow for an easier visual representation. Due to a large number of suppressed data estimates
for different age groups, the ratio could not be calculated for the following four groups of skilled trades:
Stationary Engineers and Power Station and System Operators [H22], Other Mechanics [H43], Upholsterers,
Tailors, Shoe Repairers, Jewellers and Related Occupations [H51], Crane Operators, Drillers and Blasters
[H62]. Together, these groups constitute 6.7% of all skilled trades.
Source: Statistics Canada’s LFS custom tabulations, CANSIM Table 282-0002, CGA-Canada calculations
25
Educational Barrier
Routes available for an individual to enter a skilled trade occupation are a function of whether that
trade is compulsory or voluntary. In compulsory trades, apprenticeship training19 (and subsequent
certification) is the most typical way of obtaining the certificate of qualification and the title of
journeyperson. However, individuals may also obtain the certificate of qualification as “trade
qualifiers”, persons who have acquired enough practical work experience to write the examination
to obtain the certificate of qualification. In voluntary trades, apprenticeship training and trade
qualifier options are also available, but on-the-job training and work experience may likewise be
sufficient to practice the skilled trade.
To resolve an anticipated labour shortage in an occupation, an increased number of new entrants
into that occupation are logically required. An educational barrier may be in place when certain
time is required for training prior to the entry to the occupation. The divergence of ways of
becoming a tradesperson and the variety of characteristics of particular trades within the
overarching notion of “skilled trades” pose a challenge for identifying an optimal measurement
of new entrants to the trade. Certificates of qualification issued to either apprentices or trade
qualifiers certainly represent an improvement to the quality of labour force in skilled trades;
however, those granted the certificate usually do not constitute new entrants to the occupation as
they have already been working in the trade as either apprentices or experienced workers for some
time prior to certification. Changes to the number of registered apprentices, in turn, reflects the
growth in new entrants to trades; however, apprentices do not have the same level of commitment
to the trade as do journeypersons because the training is not yet completed and an alternative
career path may be ultimately chosen. Moreover, new entrants in voluntary trades would not be
reflected in either the number of registered apprentices or the number of certificates granted.
Recognizing these conceptual challenges, the further discussion will focus only on those who
enter the trade through the apprenticeship system.
The number of registered apprentices doubled in both nominal and relative terms over the past
two decades accounting for nearly a quarter (24.2%) of all workers in skilled trades in 2010. The
growth in completions of apprenticeship training was somewhat less remarkable. The proportion
of those receiving a certificate of qualification through apprenticeship training (measured relative
to all skilled trade workers) remained at a fairly stable level of around 1.3% between 1991
and 2007. Although the situation noticeably improved by the end of 2010 when the number of
certificates granted to apprentices reached 2.0% of all skilled trade workers, the overall growth
in completions was still lagging that observed among apprenticeship registrations (top graph of
Figure 5).
19Apprenticeship is a structured system of supervised training leading to certification in a designated trade; it combines practical
on-the-job training or work experience, which accounts for approximately 80% to 90% of the time spent in an apprenticeship
program, with the formal in-school technical training accounting for the remaining 10% to 20%. The nominal duration of most
apprenticeship programs varies between two and five years.
26
Issue in Focus
Figure 5 – Apprenticeship Registrations, Completions
and Labour Market Conditions
2.0%
2.0%
1.5%
1.0%
25%
20%
15%
1.3%
12.6%
1.2%
10%
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
0%
1994
0.0%
1993
5%
1992
0.5%
1991
% of skilled trades labour force
24.2%
% of skilled trades labour force
Canada
2.5%
Certificates granted to apprentices (LHS)
Registered apprentices (RHS)
Selected provinces (1995-2010)
25%
20%
15%
10%
5%
0%
BC
AB
SK
ON
QC
NL
Canada
Average annual growth in apprenticeship registrations
Average unemployment rate in skilled trades
Note: The choice of province presented on the bottom chart was determined by the availability of data
on unemployment in skilled trades.
Source: Top graph: CANSIM Table 477-0053 and 477-0055, Statistics Canada’s LFS custom tabulations,
CGA‑Canada calculations. Bottom chart: CANSIM Table 282-0010 and Statistics Canada’s LFS custom
tabulations, CGA-Canada calculations.
27
Apprenticeship registrations are largely determined by the employers’ demand for apprentices
as the prospective apprentice must find an employer willing to provide the on-the-job portion
of the training. As such, apprenticeship registrations are expected to be low when an elevated
unemployment rate is observed as a higher number of job seekers reduces employment
opportunities for apprentices and discourages young people from careers in trades. However,
experience of the past 15 years suggests that labour market signals are not always well read by the
market participants. For instance, the average unemployment rate observed in Québec between
1995 and 2010 was higher than that in Canada as a whole (8.5% vs. 6.9%); however, the growth in
the number of registered apprentices in Québec averaged at 6.7% over the same period of time, a
level identical to that observed in Canada as a whole (bottom chart of Figure 5). In Newfoundland
and Labrador the situation was even more pronounced: the province showed both, one of the
highest rates of growth in the number of apprentices and the unemployment rate that exceeded the
national average three fold.
The number of registered apprentices grew the fastest for Carpenters and Plumbers, Pipefitters
and Steamfitters; however, the completion rates for these trades declined in some provinces.
When measured relative to the number of registered apprentices, the number of those completing
apprenticeship training as Carpenters declined by 55% in Ontario and by 27% in Newfoundland
and Labrador between 1991 and 2010. For Plumbers and Pipefitters, the decline in completions in
Ontario was of the same magnitude; however, it was less pronounced in other provinces.20 Overall,
a great diversity exists in the rates of completion of apprenticeship training across different trades
and regions. However, in aggregate terms, the trend remains clearly negative: the completion rates
observed twenty years ago (e.g. 10.2% in 1991) were higher than those seen in the late 2000s
(e.g. 8.4% in 2010).
Research findings suggest that the design of the apprenticeship program is important in achieving
higher completion rates as such factors as trade group, type of technical training, and the presence
of a journeyperson are all important determinants of program completion.21 As only roughly
12% of all trades occupations are compulsory certified in at least one of the provinces, some of
those attending apprenticeship training may see little or no benefits in completing the training,
particularly if the certification is not associated with enhanced employment prospects.
Labour Mobility Barrier
Interprovincial labour mobility seems to be less of an issue in skilled trades compared to some
other regulated occupations. One of the main tools enhancing labour mobility in skilled trades
is the Red Seal Program that represents industry’s recognition of an interprovincial standard of
20CANSIM Table 477-0053, CGA-Canada calculations.
21Laporte, C. and Mueller, R.E. (2011). The Completion Behaviour of Registered Apprentices: Who Continues, Who Quits, and Who
Completes Programs? Statistics Canada, Catalogue no. 11F0019M — No. 333, p. 33
28
Issue in Focus
excellence for the skilled trades. Apprentices who have completed their training and become
certified journeypersons are able to obtain a Red Seal endorsement on their certificates of
qualification by successfully completing an interprovincial Red Seal examination. The Red Seal
allows qualified tradespeople to practice their trade in any province or territory without having to
write additional examinations. The Red Seal Program currently includes 52 trades which cover the
vast majority of compulsory certified trades.
In 2009, amendments to the Labour Mobility Chapter of the Agreement on Internal Trade (AIT)
further improved labour mobility in all occupations including skilled trades. The amendments
provide that any worker certified for an occupation by a regulatory authority of one province or
territory shall be recognized as qualified to practice that occupation by all other provinces and
territories as long as the scope of practice is equivalent and the worker remains in good standing
in the province of certification. Furthermore, such recognition should be granted without further
material training, examinations, or assessment requirements.22
It is typically assumed that interprovincial mobility takes place as workers recognize opportunity
elsewhere. However, the relationship is oftentimes more complex. For instance, the average
unemployment rate in Ontario and Québec over the 2000s (6.8% and 8.6% respectively) was
noticeably higher than that in Saskatchewan and Manitoba (5.0% and 4.8% respectively). At the
same time, Ontario and Québec experienced a close to zero net flow of migrants (measured as a
proportion of province’s working age population) during that period of time while Saskatchewan
and Manitoba faced a noticeable net outflow of workers. The net outflows were as large as 1.2% of
Saskatchewan’s working age population in 2004 and 0.8% of Manitoba’s working age population
in 2005.
Proximity to the destination of choice as well as economic opportunities are important in labour
migration patterns. For instance, migrants from Atlantic Canada are more likely to move to
Ontario than anywhere else. In turn, migrants from British Columbia, Saskatchewan and Manitoba
are more likely to move to Alberta, while Albertans are more likely to move to British Columbia.23
Moreover, people tend to migrate away from relative hardship and thus are more sensitive in their
migration decision-making to increasing unemployment and declining earnings in their home
province compared to emerging better labour market conditions in other provinces. These are
important considerations to take into account when relying on labour mobility as one of the tools
for mitigating labour shortages.
22It should be mention that some observers (including the Canadian Labour Congress) suggest that the amendments to the Labour
Mobility Chapter of the AIT erode the quality and power of national occupational standards currently enforced through the Red
Seal Program and may further fragment the apprenticeship systems in Canada.
23Bernard, A. et al (2008). Interprovincial Mobility and Earnings, Statistics Canada, Perspectives on Labour and Income, Vol. 9, No. 10,
p. 17 and 20.
29
It is also important to note that some forms of labour mobility are not yet well understood and
their effectiveness in easing labour shortages cannot be gauged. Anecdotal evidence suggest
that itinerant workers – those who work in one province and maintain a permanent residence in
another – have been particularly prevalent in Newfoundland and Labrador and other Atlantic
provinces (while working in the West); however, the data on the exact numbers of such workers
and their regional affiliation are not collected on either provincial or federal levels.24
Summing up the discussion, the following points are deemed most important. First, labour
shortages are difficult to observe and measure directly; the assessment tools available are
subjective and may overestimate the shortages. Pan-Canadian assessment of labour shortages is
suboptimal as it may conceal many instances of imbalances occurring at more detailed regional
levels. Second, the regional analysis of labour shortages is seriously limited by the availability of
information on unemployment at the occupational level. Third, where sufficient data does exist,
the assessment shows that labour shortages have occurred rather sporadically and did not persist
for more than one year at a time over the past decade; admittedly in some instances affected in
part by government action. Fourth, the age structure of skilled trades’ participants and labour
mobility barriers are not likely to noticeably contribute to labour shortages in trades. However,
some form of educational barrier may exist as the growth in completions of apprenticeship
training is noticeably lagging the growth in the number of registered apprentices.
Closing Comments
Disappointedly, the limited availability of information on unemployment rates experienced by
individual trades in some of the provinces (particularly in Alberta and Saskatchewan) leave
the conclusions of the analysis presented in this paper incomplete and subject to change as new
information becomes available. As such, an important consideration of government would be
to close the statistical information gaps that currently exist and lend resources to improving the
relevance and reliability of labour market statistics at the regional and occupational levels.
Although the presence of structural labour shortages in skilled trades is far from obvious, the
government policy response has tended to side with the intent to resolve labour shortages rather
than to ensure that effective stabilizing mechanisms are in place. Over recent years, a number
of measures have been introduced that provide job seekers and employers with direct incentives
for engaging into apprenticeship training and career in skilled trades. Those measures included
the Apprenticeship Incentive Grant, the Apprenticeship Job Creation Tax Credit, the Apprentice
24Advisory Panel on Labour Market Information (2009). Working Together to Build a Better Labour Market Information System for
Canada – Final Report, pp. 128-129.
30
Issue in Focus
Vehicle Mechanics Tools Tax Deduction, the Tradesperson’s Tool Deduction, and campaigns
that encourage young people to choose careers in skilled trades. In complementary and integral
fashion, the opportunity before Canadians may be to focus on measures that are activated only
in cases when shortages are indeed quantifiably present. Such measures could, for instance, be
aiming at improving the ability of employers to recognize shortages and adjust wages, enhancing
the access of job seekers to information on job openings, and adjusting the fitness of the
temporary foreign workers program to mitigate anticipated or threatened labour shortages.
Expanding the existing Canadian Occupational Projection System to also include labour supply and
demand projections at the provincial and sub-provincial levels would achieve greater consistency
and coordination in assessing the prevalence and magnitude of labour imbalances. This may be
a valuable tool for such labour market stakeholders as workers, employers and governments that
make decisions about education and training, hiring, and investment in human capital.
Completion rates in apprenticeship training are known to positively react to higher expected
earnings associated with the completion of the program and obtaining the certificate of
qualification. Employers may contribute to improving apprenticeship completion rates by
providing better signaling of the earning benefits expected at completion. Moreover, it seems
that leavers of the apprenticeship training continue to hold a positive attitude toward the trade
pursued. As such, the completion rate may also be improved if a follow up mechanism is in place
to promote the training with leavers that may re-enter the apprenticeship program.
Finally, it is also worth mentioning that labour shortages (particularly of a short-term nature) may
generate certain benefits for both employees and businesses. Tighter labour markets may present
professional development and growth opportunities for employees, and better align their wage
increases with growth in productivity. Businesses, in turn, may be compelled to optimize their
organizational and operational structure, invest in machinery and equipment and improve overall
efficiency. All positive outcomes for Canada.
31
References
1.Achkar, S.E. (2010). A Companion Guide to Analyzing and Projecting Occupational Trends,
Centre for the Study of Living Standards, CSLS Research Report 2010-07.
2Advisory Panel on Labour Market Information (2009). Working Together to Build a Better
Labour Market Information System for Canada – Final Report, pp. 128-129.
3.Bernard, A. et al (2008). Interprovincial Mobility and Earnings, Statistics Canada,
Perspectives on Labour and Income, Vol. 9, No. 10.
4.Brassard, Pauline. (2010). The Devastating Impact of The Labour Shortage: Is Delusion
A Factor?, EFFECTIF.
5.Brienza, Victoria, (2012). 10 Best Jobs of 2012, 10 Worst jobs of 2012, www.careercast.com.
6Canadian Council on Learning, (2006), Apprenticeship Training in Canada, Lessons in
Learning.
7.Canadian Federation of Independent Business (2012). Business Barometer, February 2012.
8.Canadian Council of Directors of Apprenticeship (2007). Glossary of Terms for
Apprenticeship Training & Certification.
9.Desjardins, L. (2011). Apprenticeable Occupations and the Employment Downturn in
Canada, Statistics Canada, Education Matters: Insights on Education, Learning and Training
in Canada, Vol. 7, no. 6.
10.Ericksen, J.A. (2009), Women Pursuing Careers in Trades and Construction, Journal of
Career Development, Vol. 36, No. 1, 68-89.
11.Fang, T. and Anil, V. (2002). Union Wage Premium, Perspectives on Labour and Income,
Vol. 3, No.9, Statistics Canada Catalogue No.75-001-XIE.
12.Human Resource and Skills Development Canada website, Labour Mobility section.
Available at http://www.hrsdc.gc.ca/eng/workplaceskills/labour_mobility/index.shtml,
accessed on May 28, 2012.
13Human Resources and Skills Development Canada (2006). Looking-Ahead: A 10-Year
Outlook for the Canadian Labour Market (2006-2015), Cat. No.: HS28-23/2006E –PDF.
14.Human Resources and Skills Development Canada (2008). Looking-Ahead: A 10-Year
Outlook for the Canadian Labour Market (2008-2017), Cat. No.: HS28-23/2009E –PDF.
15.Kelly, D. et al (2009), Canada’s Training Ground: SME’s $18 Billion Investment in the
National Workforce, Canadian Federation of Independent Business.
16.Laporte, C. and Mueller, R.E. (2011). The Completion Behaviour of Registered Apprentices:
Who Continues, Who Quits, and Who Completes Programs? Statistics Canada, Catalogue
no. 11F0019M — No. 333.
17.Manyika, J. et al (2011). An Economy that Works: Job Creation and America’s Future,
McKinsey Global Institute.
18.Milham, S. (1997). Occupational Mortality in Washington State, 1950-89, National Institute
for Occupation Safety and Health.
32
Issue in Focus
19.Ostrow, N. (2011). Work Day of 11 Hours Boost Risk for Heart Disease, Study Says,
Bloomberg News.
20.Pyper, W. (2008). Skilled Trades Employment, Statistics Canada, Perspective on Labour and
Income, Vol. 9, No. 10.
21.Scullen, J. (2008). Women in Male Dominated Trades, It’s Still a Man’s World, Saskatchewan
Apprenticeship and Trades Certification Commission.
22.Sharpe A. et al (2008). Apprenticeship Issues And Challenges Facing Canadian
Manufacturing Industries, Centre for the Study of Living Standards, Research Report
No. 2008-2.
23.Statistics Canada (2012). Job Vacancies, The Daily, January 24, 2012.
24.Watt-Malcolm, B. and Barabasch, A. (2010). Tensions in the Canadian Apprenticeship Sector:
Rethinking Bourdieu’s Analysis of Habitus, Field, and Capital, Research in Competitiveness
and International Education, Vol. 5, No. 3.
33

Labour Shortages in Skilled Trades – The Best Guestimate?

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