Monday Market Musings>>> Labour Shortages has Canada in a Death grip
Picture Credit: The Toronto Star website
The labour shortages are affecting countries worldwide, and with a stronger than anticipated inflation, several industries are barely avoiding, what it feels like their inevitable demise. Among the heavily affected countries is Canada. The country’s economy is suffering greatly due to the labour shortages; reports show that the country lost close to $13 billion over the past year in the manufacturing sector.
One of the major challenges that businesses cited was the difficulty in recruiting individuals with the necessary technical skills. The shortages are particularly severe for filling skilled manufacturing positions like welders, machinists, and industrial mechanics. The last few months have been a pleasant experience either, with a very strong job market and not nearly enough people to fill job openings. In this year’s second quarter, there were nearly one million open positions, according to Statistics Canada's most recent quarterly data on job openings, the largest quarterly total ever. Which means, job vacancies have been hitting record highs in said time period. Reports show that there had been a perturbing 82,500 unfilled job vacancies within July 2022 alone.
According to the Canadian Manufacturers and Exporters’ (CME), more than 80% of manufacturers experienced staff shortages in the last two years, aside from management and supervisory positions, general labor or production positions are also proving difficult to fill for businesses. Reports suggest that, due to a scarcity of labor, 62% of manufacturers have had contracts rejected or canceled, and output has been delayed. The companies polled reported cumulative losses of $1.1 billion over the past year, or $2.8 million per company.
Picture Credit: Narcity website
Experts state that labour concerns which were present prior to the pandemic have only amplified; to get a better idea of just how much it had increased, labour shortages which was 60% in 2020, is currently an 80%. Attracting new talent has also seemingly gotten more and more difficult over the past few years. More than 70% of the companies that took part in the CME study claimed that they had increased employee compensation and benefits to entice new hires, however, they are now looking to the government for help in promoting the trades and Canadian immigration to hopefully close the growing labour shortage.
To add to the labour shortage situation, according to reports, there was an increase of people retiring during the pandemic. More than 300,000 Canadians have retired so far for this year, which is a significantly larger number than the 233,000 retirements from last year (average age of retirement is 64). The work-force in Canada currently consists of a large number of workers in the range of 55 and 64 of age, it is a disquieting fact, since on top of the labour shortage, many more workers are supposed to retire in the near future, worsening the situation. What is in store for Canada in the future? Will the country be able to recover from these labour shortages?
October 31st 2022 | 9:30 PM