A new report from the TD Bank claims that fears of a looming labor shortage in Canada as the workforce ages are largely unfounded.
The report – authored by TD's deputy chief economist Derek Burleton and three other bank economist – says that widespread labor and skills shortages are a myth, and that whatever skills shortages exist are isolated and likely no greater than a decade ago.
"Evidence of economy-wide shortages is hard to find," the economists wrote. "Yes, across regions and occupations, skills mismatches (exist) because you are never going to get a perfect match. So it's not a complete myth, but it's not as extreme as people believe."
The report, which runs 52 pages, looks at a variety of factors for its conclusions, including job vacancy rates and overqualification and underqualification rates in comparison with other countries; it also looked at wage gains on the theory that if labor is scarce, employers will pay more to obtain it.
But even in Alberta and Saskatchewan, which for years have led the country in low unemployment rates and have real shortages in certain trades, the report suggests the problem is far from crisis proportions. "The story on the wage data remains curious, as wage gains out West have not increased to the extent that one might have thought given the signs of tightness," the economists wrote.
The report also dismisses predictions of massive labor shortages down the road as the aging workforce moves into retirement, noting that older Canadians are working longer and that other market adjustments are likely to occur.
The TD economists do say that skills mismatches could increase in the future and urges governments, business and educators to increase their focus on skills and training "to provide Canada with a world-leading workforce in the 21st century."
In an overview of Canada's labor market over the last decade, the economists judge that Canada has fared far better than the U.S. and other members of the Group of Seven big industrial economies, with the possible exception of Germany.
Despite the dip during the 2008-09 recession, they note, job growth in Canada has averaged 1.3 per cent a year between 2003 and 2013, compared with 0.4 per cent for the U.S. and 0.3 per cent for the G7 as a whole. Canada's pace of job creation has been slightly better than the growth in the labor market during the period, the economists say.
The authors also noted other trends, including a growth in temporary or contract jobs, which may show a deterioration of job quality but could also be attractive to older workers. They say older workers are "punching well beyond their weight," in terms of their takeup of new jobs, while youth unemployment remains elevated.
Still, they say concerns about a "lost generation" is overstated, saying the job outcome of recent university graduates, including those with liberal arts degrees, "are likely better than many Canadians perceive."