Three interesting items popped up on my computer screen this past week.
Three interesting items popped up on my computer screen this past week.One was a commentary by CanaData consulting economist John Clinkard, in which he warned that a shortage of skilled workers was likely to blunt the effectiveness of infrastructure spending as one of the ways of offsetting the effects of the present economic slowdown.
The second was a letter to Daily Commercial News from Jeff Morrison, who heads the Association of Canadian Engineering Companies. In it, he noted that, while Clinkard was addressing the problem of shortages of skilled trades, the engineering sector has a lot of available capacity should projects materialize.
Both, of course, were writing within the context of the economic mess the world finds itself in just now.
But the third interesting thing I ran across was a study paper from the Atlantic Institute for Market Studies.
In it, Jim McNiven predicts that labour shortages threaten to plague the country well into the future, and if the threat is not addressed, we run the risk of a declining standard of living, and a flat economy burdened by high inflation.
The Atlantic Institute (AIMS) is an independent, non-partisan social and economic policy think tank based in Halifax. While its focus is on the Atlantic region, its research often examines broader implications for the whole country.
McNiven is a professor emeritus at Dalhousie University. Before he retired in 2006, he was a professor of public administration, and, before that, was dean of the university’s faculty of management. He is also a former deputy minister of development in Nova Scotia, and a former president of the Atlantic Provinces Economic Council.
His paper notes that “sometime toward the middle of the next decade, and for the first time in at least a century, the number of people willing and available to work in Canada will be smaller than the number of jobs potentially available for them.”
From then on, he writes, a general labour shortage in all regions and all trades will become a fact of Canadian economic life “for as far ahead as demographers are able to forecast.”
And since most of the developed world faces similar challenges, he writes, there will be a global competition among developed countries for labour of all kinds. And as the workforces in such emerging economic giants as China and India grow older, the problem will become worse.
What to do? In a nutshell, we could try to find more people, which given present birthrates means we will need to boost immigration far beyond traditional levels. Or we could increase labour productivity — once again at a faster rate than the historical average — by encouraging growth of higher-paying industries at the expense of low-productivity industries, by improving business practices and processes, and increasing skill and education levels of the workforce.
Finally, we could increase the labour-force participation rate. This would mean encouraging retirees to come back to work, or coaxing people who have never worked to join up.
Twenty years ago or thereabouts, an insurance company ran an ad campaign with “Freedom 55” as the catchline, and many people took that as some kind of promise. But if we are to get people to come back to work, we might be looking at “Freedom 75” as something closer to reality.
A mix of all these things might be the best approach to take, McNiven says, but clearly we “cannot afford to do nothing.”
“If nothing changes, in 2026, one job in every eight will go begging.” Then, he adds ominously: “In that case, the market, as it is presently conditioned by business and government, will definitely ‘solve’ the problem for us, but not, perhaps, in a way we might like.”