Over at my blog I’ve linked to a recent study by the Canadian Federation of Independent Business, “The Future of Atlantic Canada: Dealing with the Demographic Drought”, by Amelia Demarco and Bradley George.

CFIB members have identified several advantages to operating a business in Atlantic Canada. They include the ability to balance work and family life, the region’s proximity to the U.S. market, and the perceived lower cost of living relative to other parts of Canada. Atlantic Canada also offers a highly skilled and educated workforce, with some of the lowest turnover and absenteeism rates in the country.

Unfortunately, the out-migration of youth, an aging population, and fewer labour force entrants due to low immigration levels and declining birth rates have all contributed to a growing labour shortage in Atlantic Canada. With fewer young people entering the workforce, employers are doing more to attract and retain this group, as well as seek other alternatives. In fact, the region’s average weekly wages have increased faster than the national average, as business owners try to compete for quality employees.

While the economic downturn may have temporarily eased labour shortages across the country, the problem is expected to worsen as soon as the economy recovers. As governments unveil multi-million dollar stimulus plans to create jobs, firms hoping to successfully compete for government contracts must first ensure they have enough skilled employees to carry out the work.

While the entire country faces demographic challenges, the problem is more acute in Atlantic Canada and will reach a critical point in the region sooner than in other parts of the country. In fact, Atlantic Canada’s population is aging faster than any other region in Canada; it has the lowest fertility rates in the country, attracts the smallest share of Canadian immigrants, and has the highest out-migration rates in Canada.

These factors will, as the report notes, cause serious issues, is indeed causing serious issues.

Between 2004 and 2006, approximately one in five small business owners in Atlantic Canada reported a longterm vacancy. In 2007, this number increased to nearly one in three.

In terms of the type of job that employers have the most difficulty filling, approximately four out of 10 small business owners in Atlantic Canada are in greatest need of employees with a community college degree or apprenticeship training, such as carpenters or mechanics. Another 45 percent of employers need employees with secondary school or specialized occupation specific training, such as salespeople or machine operators. More than half of business owners need employees to fill positions requiring no post-secondary education, including many entry-level jobs.

The dramatic increase in long-term vacancies demonstrates that Atlantic Canada’s labour shortage troubles are far from over. While cutbacks and job losses, stemming from the current economic downturn, have shifted focus away from the problem temporarily, they are merely delaying the full effect of the labour shortage.

In fact, a number of research reports have attempted to anticipate the effects of labour shortages in Atlantic Canada. For example, a recent study by the Atlantic Institute for Market Studies (AIMS) predicts that by 2016, the number of available workers will be smaller than the number of available jobs and by 2026, approximately 12.5 percent of jobs will be vacant in Nova Scotia. A similar study by the Policy Research Centre at the University of New Brunswick predicts that the province’s labour force will begin to decline as soon as 2011. And in 2007, the Newfoundland and Labrador Skills Task Force released a report that predicted serious skilled labour shortages for many of the province’s large-scale development projects in the coming years.

The consequences of this will be severe, with the erosion of the workforce combining with Atlantic Canada’s traditionally low productivity growth relative to the Canadian average to make convergence a practical impossibility. Increaisng immigration and diminishing emigration to other provinces are the authors’ main recommendations, but the plausibility of actually implementing this program given the existing economic gap and the tendency of immigrants to cocnentrate in major cities is slim.