Jim McNiven hopes the economic downturn doesn’t distract policy-makers from tackling Nova Scotia’s impending labour shortage.

This downturn is cyclical, but a shortfall of workers could have a devastating long-term effect on the province’s economy, the retired Dalhousie University business professor says in a study released Wednesday by the Atlantic Institute of Market Studies.

“The way we have set things up is because we’ve always had a labour surplus in Nova Scotia,” Mr. McNiven said Wednesday in an interview.

“Suddenly, we’ve got a shortage and nobody really knows how to deal with this yet, so we better start thinking it through.”

The institute is an independent social and economic policy think-tank based in Halifax.

The shift in the balance between supply and demand is already occurring, as both white- and blue-collar job vacancies keep cropping up in Nova Scotia and the rest of Canada.

This year, the number of people retiring from Nova Scotia’s workforce will probably exceed the number of young people entering the workforce, says the study.

By about 2016, the number of people able and willing to work here and in the rest of the country is expected to be smaller than the pool of available jobs.

It will be the first time this pattern has occurred in a century, said Mr. McNiven, who wrote the study with Michael Foster, president of Canmac Economics Ltd., a Lower Sackville consulting firm. Mr. McNiven also works with Canmac

As the trend continues, by about 2026 about one job in every eight will be vacant in Nova Scotia and the rest of the country.

“It is going to continue to be that (way) as far ahead as we can see right now,” said Mr. McNiven, a former deputy minister of development for Nova Scotia and a former president of the Atlantic Provinces Economic Council.

A recession temporarily eases labour shortages, but the problem will resurge once the economy recovers, he said.

“Normally, if you have economic growth you are going to have job growth along with it. What happens if you don’t have any have any people to grow? You can’t have the economic growth.”

There are three solutions to the problem: Find more people by encouraging a higher birth rate or increasing migration to the province; boost labour productivity; or encourage people to stay in the workforce longer, Mr. McNiven said, suggesting that a mix of the three might the best answer. The institute first started sending out warnings about a labour shortage about 15 years ago, said Charles Cirtwell, the institute’s executive vice-president.

About 18 months ago, the issue began making headlines and spurred national debate, he said.

“People started to talk about the labour shortage as if it was an important significant issue that needed to be addressed,” Mr. Cirtwell said.

“Unfortunately, we then we went into a period of economic downturn and now we are getting the same rhetoric that we have had for the last 30 years.

“If we use old solutions for what looks like an old problem; i.e., an economic downturn, all we are going to do is make the bigger problem worse. We will end up subsidizing industries that need to be downsized anyway. There are not going to be 100,000 or 120,000 people to work on the auto shop floor, for example, in Ontario.”