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The Labour Market is Changing Why, How, and What Does it Mean For You?

Currently, the Canadian labour market is living through unprecedented times. The job market is the tightest its ever been due to employment shortages. Even with the enormous employee shortage, wages have yet to increase.
At the start of 2022, there were 1.2 unemployed people for every job opening. However, according to a report by Statistics Canada job vacancies hit an all-time high of one million in the second quarter of 2022. This has caused Canada’s jobless rate to hit 4.9%, the lowest level since 1970.

In almost every industry across the country, there is a historic shortage. In June, businesses posted nearly 70% more job openings in Canada than in pre-pandemic. Companies competed for 13% fewer unemployed workers than were available in February 2020. These numbers indicate that more than half of Canadian businesses cannot increase production. With the output slowed, everyone will be affected, not just employers seeking employees.

The shortage is especially pronounced in the care industries. Teaching, elder care, child care, and the health care sectors are all heavily impacted. These sectors had an astounding 81,500 open positions at the start of 2022.

With a significant drop in employees, employers are now hiring workers without direct experience. Experience and education have become less important due to the shortages. Four out of five employers say they hire applicants without relevant degrees or certifications. Instead, they offer on-the-job training to new workers.

It is clear that these shortages are impacting all industries and consumers. It’s an unprecedented time with the possibility of many different outcomes. While we don’t know what income will come to fruition, what is certain is that this is a defining point in job market history.

Why is Canada’s labour market experiencing shortages?

Many speculate that the reason behind the shortages lies in shifting demographics. The working class is growing older. The newer generation also has different expectations, causing the target demographic to alter.

One main factor is the pandemic, which caused immigration numbers to drop. This has led to a much smaller pool of job candidates in those industries that typically employ immigrants, such as the hospitality sector. Bars, restaurants, and hotels are finding it difficult to retain employees as they move on quickly to their preferred industries. Health is also a serious concern in these sectors. With mask mandates dropping, many don’t want to risk working in these fields. These health concerns and low wages have deterred many from working in these jobs.

Another major factor is the number of people leaving the job market rather than entering it. Canada currently has the highest number of people ever nearing and entering retirement age.  It is expected that Canada’s senior population–65 and older–will grow by 68% in the next 20 years This on top of the decades-long falling birth rates means the working population has declined drastically.

Put simply, for various and significant reasons there are fewer able people to fill jobs, leading to an increase in job vacancies.

How have wages been affected?

The pressure from the labour market led to wage increases in some industries. Most notably, the tech and information sectors.
While some sectors are seeing an increase, others are falling behind. The manufacturing, food services and retail sectors are all still behind. These lagging pay rates are partially due to inflation. Companies are attempting to keep costs as low as possible to keep a good profit margin. Inflation has also caused the cost of goods and services to rise. With companies striving to keep wages low and the cost of goods and services going up because of inflation, employee wages in these industries are being squeezed from both sides. This has made it a struggle to retain employees in these sectors.

Which industries are people leaving and joining?

Statistics Canada data shows a migration among workers between sectors. Many Canadians have moved from the service and food industries into more lucrative positions. The more prominent fields Canadians have moved into are tech, finance, and real estate. These career changes have also played a role in the tightening labour market.

What is the solution?

For Canada’s economy to improve, many experts say it needs an infusion of immigration. Decades of decreasing birth rates to record lows along with almost a decade of a reduction in a Canadian-born working-age population have made businesses more reliant than ever on immigration for new hires.

An immigration policy in Canada actively recruits highly-skilled immigrants. Immigrants have a postsecondary participation rate of more than 75% by the age of 20, while the overall population of Canada’s rate is around 59%. These levels of education should help boost productivity in their respective industries. However, Canada is not utilizing this policy.

Immigrants are nearly three times more likely to work jobs that don’t require their education compared to Canadians. Better integration of immigrants’ talents is needed. With this, workforce productivity will improve. This is especially true with the shift to higher-skilled industries during the pandemic.

What does this mean for the average person?

Though this situation may seem dire, it has provided an opportunity for the country. With all the job vacancies, Canada can provide a good job outlook to those who have never had access to them.

Currently, there is a staggering amount of unemployed citizens. Even without the proper skills, they can find a job and help employers that are scrambling to fill roles. We are living in an employee market for the first time in decades, so it is something many can take advantage of. Rather than take any role or stay in the one they currently have, employees have the option to change.

If anyone is thinking of changing careers, it is an ideal time to do so. Even if someone is happy in their field but not with their pay and benefits, the option to find a better option is open. There is no need to settle when the number of job vacancies is so high.

Conclusion

With the labour market tightening and changing, it can be a stressful time. Those with businesses are struggling to find employees while employees are faced with poor wages. The upside to the market’s condition is that job seekers have the advantage. What was once a market dominated by ruthless employment practices may begin to loosen up. Post-secondary school education is no longer necessary in many fields. This can provide opportunities and save money for eager job seekers.

Though the country may struggle, the immigration policy may prove invaluable. With the number of citizens of working age dwindling, there is a need for outside help from immigrants. Overall, this would provide a symbiotic relationship that would benefit all involved.

If you are struggling with debt due to the labour market conditions, Consolidated Credit can help. Our team of Credit Counsellors can help you understand all the options available to start on the path to a debt-free life.

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