How the labour shortage got so bad

Rather than turning to temporary foreign workers, Canada needs a national strategy to improve conditions for the workers it already has
Armine Yalnizyan
Armine Yalnizyan is an economist and Atkinson Fellow on the future of workers

Never in Canada’s history have we seen labour numbers like this. This is the tightest the job market has ever been. At the start of this year, there were just 1.2 unemployed people for every job opening, and we hit an all-time high of one million vacancies in March. Those numbers are starting to decline, but they’re still at hugely elevated rates—and shifting demographics are the driving forces.

At the moment, more people are leaving the job market than entering it. One in seven Canadians are between the ages of 55 and 64 years old, which is the highest number of people ever nearing retirement age. When compounded with decades of falling birth rates, these vacancies simply cannot be filled. This crisis is especially pronounced in the care economy—jobs in teaching, elder care, child care, and across the health care sector—and construction, which counted 81,500 open positions in the first quarter of 2022. (That’s another all-time high.) 

The pandemic is also a culprit: in the last couple of years, fewer people have been coming into the country via immigration, and fewer people want to work in the hospitality sector—in bars, restaurants and hotels. Wages are low and mask mandates continue to be dropped across the country, which could potentially jeopardize the health and safety of workers. 

You’d think there would be more wage growth given these kinds of shortages, but there isn’t. In April, the federal government caved in to demands from employers and opened the taps on temporary foreign workers at all skill levels. In hospitality, employers looking to fill low-wage jobs can now hire up to 30 per cent of their workforce from that pool. But turning to temporary foreign workers is not the same strategy as turning to immigrants; it’s a completely different formula for addressing economic pressures. For one thing, it keeps wages artificially low and takes advantage of people from outside of Canada who are willing to work for less money than Canadians are. 

This strategy also doesn’t provide these workers with any job security, benefits or even a path to citizenship. Do Canadians want to be this reliant on migrant workers, when we know this approach doesn’t create any long-term employment opportunity for the hires? It’s bad for the country, and it’s bad for us as human beings. Yet, right now, the government has no plan to solve the labour shortage aside from temporary fixes. 

Everyone is freaking out about inflation, but the most obvious way to achieve affordability is for everyone to have a good job. Canada needs a plan that maximizes the working potential of Canadians, whether they’re newcomers or born here, offering them the opportunity to train to advance their careers as a first course of action. This might include lowering tuition, or providing grants to people who work in rural and remote regions.

Every province is experiencing a shortage of care workers, which means we need a nationwide strategy to deal with it. The care sector makes up a fifth of the Canadian workforce. Every single job should be meeting three criteria: a living wage; health benefits for the employee and their family; and paid leave for things like illness, caregiving and training. This isn’t the case right now. Workers should also be formally classified as employees, not “independent contractors.” They need to be guaranteed full employment protections under the law. This is one way to build the middle class of the 21st century in the care sector—just as manufacturing was the backbone of Canada’s middle class between the 1950s and 1970s.

Canada’s national child care agreement can be a guiding model. Within one year, every province and territory signed an agreement with the federal government to cut fees paid by parents and increase the number of regulated spaces. The agreement also raised the quality of care by training more early childhood educators and improving their wages and working conditions. Each jurisdiction agreed to report on its progress every year to ensure further federal funding. 

A national framework to improve care-economy jobs could function similarly: boosting wages, improving working conditions for the worst-paid staff and ensuring care jobs remain in the publicly funded and non-profit sectors, curbing the troubling drift toward for-profit agencies and clinics. Specifically, the federal government could put funding toward wages in hospitals and long-term care facilities. This plan should prioritize increased opportunities for Indigenous populations and other workers who have been systemically marginalized. Ideally, it would also require any Canadian employer that brings on temporary foreign workers to secure a path to citizenship for its new hires. 

In this moment, Canada has the chance to transform the lives of individuals who, so far, haven’t had access to good jobs. There are plenty of unemployed workers at the moment, but their skill sets are not necessarily a match for the kinds of roles employers are scrambling to fill. Given Canada’s rapidly aging population, the country can’t wait for the market to simply fill in the existing holes in child care, elder care and health care. These are solutions that need to be delivered by the government. This kind of thinking is a reversal from the ways we have typically turned to the market for all solutions. The way to make an economy—and a labour force—resilient is from the bottom up. It’s time to end the trickle-down approach. ν

This is part of the Maclean’s Guide to the Economy, which appeared in the September 2022 issue. Read the rest of the package, order your copy of the issue, and subscribe to the magazine