people, skills and prosperity: the bc labour market in a...

People, Skills

and Prosperity:

The BC Labour Market in a

Post-Recession Context

Ken Peacock Vice President

and Chief Economist

and

Jock Finlayson Executive Vice President and Chief Policy Officer

October 2011

TABLE OF CONTENTS

Summary and Highlights ............................................................................................... i-iv

I. Introduction .......................................................................................................... 1 II. 2009 BC Labour Force Projection ...................................................................... 4

Comparing Projections with Actual 2009-2010 Data ............................................ 5

Migration and Immigration .................................................................................... 8 III. Updated BC Labour Market Projection .......................................................... 10

Migration .............................................................................................................. 12

Updated Labour Force Projection Results ........................................................... 13

Summary of Aggregate Labour Force Projections ............................................... 15 IV. Provincial Labour Demand ............................................................................... 18 V. Occupational Dimensions .................................................................................. 21 VI. Regional Dimensions .......................................................................................... 26

Expanding Industries ............................................................................................ 27

Regional Labour Supply and Demand Projections .............................................. 29

Lower Mainland/Southwest ................................................................................. 30

Vancouver Island/Coast ....................................................................................... 31

Thompson-Okanagan ........................................................................................... 32

Kootenay .............................................................................................................. 33

Cariboo ................................................................................................................. 34

Northcoast/Nechako ............................................................................................. 35

Northeast .............................................................................................................. 35

Summary of the Regional Labour Market Outlook ............................................. 36

VII. Skills Mismatch .................................................................................................. 38

VIII. Addressing Skill Shortages ................................................................................ 41

Policies and Strategies .......................................................................................... 44

Immigration .......................................................................................................... 45

Increasing Labour Force Participation .................................................................. 47

Enhanced Labour Market Information .................................................................. 48

Regional Labour Supply ....................................................................................... 49

Focus on Education and Training ......................................................................... 50

Employer Initiatives and Adaptation ................................................................... 53

IX. Summary and Conclusion ................................................................................. 55 Bibliography .................................................................................................................... 57

Summary and Highlights

The updated labour force projections examined in this Business Council report point to

tighter labour market conditions in BC in the years ahead. Labour force growth will almost

keep pace with gains recorded over the past decade until 2015, but after that the age profile

the provincial population leads to notably slower expansion in the workforce. Our revised

projections include a modest increase in immigration levels and slightly higher

participation rates for most age cohorts in response to tighter job market conditions,

suggesting the overall slowdown in labour force growth is inevitable barring unrealistically

large changes in these variables. The analysis indicates the impact of older workers exiting

the workforce will be greatest after 2020.

While the aggregate projections suggest there will be sufficient growth in the labour force

to avoid widespread and pervasive skill and “people” shortages in this decade, the

provincial level figures say little about individual industries and regions. Skill

intensification, increasingly specialized job requirements, and the advent of new

occupations mean some sectors or industries will invariably face hiring challenges and

labour shortfalls. A large number of major projects and the anticipated expansion of the

province’s resource industries are signs that regional labour shortages are almost certain to

emerge. Skill shortages are not expected to be a sustained concern in the Lower Mainland

region.

• The provincial labour force will continue to grow in absolute terms over the next

two decades. Growth in the labour force is projected to slow to an average annual

pace of 1.3% through 2019, falling to just 1% in the following decade.

• Projections of future labour market demand indicate that three-quarters of all job

openings in this decade will require some form of post-secondary training; a

completed university credential will be necessary for 34% of all new jobs.

People, Skills and Prosperity: The BC Labour Market in a Post-Recession Context Page ii

• Managers are likely to be in short supply in many different industry sectors, and

shortages in a number of health care occupations are expected to emerge within a

few years. Shortages are also anticipated in many of the skilled trades.

• Regionally, the potential for skill shortages is greatest outside of the Lower

Mainland. For some areas of BC outmigration over the past decade has already

curtailed the labour supply. Most regions have seen their core working age

populations (25-49) decline over the past decade.

• Against the anticipated backdrop of healthy commodity markets and many new

major projects, skill shortages are expected to be most acute in the Cariboo and

Northcoast/Nechako regions.

• There are also concerns over “skills mismatches.” In a world of rapid technological

change and the skill-intensification of many jobs, the gap between worker skills

and what employers are looking for to fill job openings may be widening. In the

BC context, geographical or regional labour mismatches will also be an issue going

forward. Job opportunities may be found in regions with an inadequate supply of

local qualified workers, while some under-employed or unemployed workers in

urban settings are unwilling or unable to move to where the jobs exist.

• Managing and addressing potential skill shortages will require multifaceted policy

approaches and involve both government and industry.

• Immigration is a critical part of labour force growth in BC and will be key to

securing a sufficient supply of workers in the future. It is important to direct

additional resources towards ensuring immigrants are successful in the labour

market. The Provincial Nominee Program can be expanded to help address skill

shortages, including in the regions. There is also value in the Temporary Foreign

Worker Program as a means to manage time-limited labour shortages.

• There may be scope to increase participation rates in the province’s Aboriginal

population as well as among older workers. High quality and accessible labour

market information will be more important in the years ahead. More real time

People, Skills and Prosperity: The BC Labour Market in a Post-Recession Context Page iii

information for education and training facilities would help these institutions tailor

programming to better align their activities with labour market requirements.

• An efficient training and education system will clearly be essential in meeting

labour demand. Research suggests that training should be viewed as a complement

to education not as a substitute. Higher skill workers often cover the cost of their

own training and prefer to make their own training choices.

• Apprenticeships are a form of employer-based training with a classroom

component. Most public funding for employer-supported training in Canada goes

to apprenticeship programs. A recent national review asked whether a broader re-

examination of the apprenticeship system should be considered and whether the

community college system could be used to develop more comprehensive

training/work term programs.

• The province could also explore the potential to create hybrid education programs

that combine a couple years of university/college education with two years of

vocational training, with the objective to speed up training for people who are

looking to supplement academic credits with career-oriented training, and vice-

versa.

• In the face of skill shortages, employers will need to take on more training and

development, including for older employees.

• Partnerships between business and post-secondary institutions have the potential to

help meet labour market requirements.

• Business will have to adjust expectations in an environment of skill shortages.

Companies may need to hire less than qualified people and train them for positions;

some will find it necessary to boost compensation to attract workers with the right

skills. These kinds of market-driven adjustments are inevitable in a world of

growing talent shortages.

People, Skills and Prosperity: The BC Labour Market in a Post-Recession Context Page iv

• It is clear that the impending retirement of the large baby-boom cohort will give

rise to human resource issues for employers in many sectors of the economy. In

aggregate the challenges are manageable, but some regions and industries will

experience significant (but not necessarily long-term) shortages. The baby-boom

retirement wave that is about to begin can be expected to create a more difficult

labour market for employers, and may also slow progress in improving the human

capital base at an economy-wide level.

*****

I. Introduction

With the onset of the global recession in 2008, labour force dynamics in British Columbia

underwent a marked change. Job growth slumped from 3% per year between 2002 and

2008 to an annualized employment decline of close to 3% over much of 2009. The rapid

shift in global economic conditions and steep fall-off in residential home building in the

province also coincided with the completion of many Olympic-related construction

projects, further swelling the number of idled workers. As layoffs mounted and people

continued to flow into the workforce, the unemployment rate surged from a near-record

low of slightly above 4% to more than 8% in the short span of eight months. British

Columbia suddenly moved from an environment of constrained labour markets and

worsening skill shortages to one of excess labour supply.

The recession is now over, and BC’s economy has been growing since approximately mid-

2009. By early 2011 the recovery seemed to be gaining traction, but job growth has

disappointed in recent months, and the unemployment rate remains high. Yet, despite a

substantial amount of labour market slack, concerns about skill shortages are remerging in

some industries and regions. So far most reports of shortages (or looming shortages) are

coming from outside of the province’s large urban centres. Strong growth in the mining

sector, buoyant pulp markets, a partial revival in the lumber industry, and a rapidly

growing transportation and logistics industry are all fuelling the demand for skilled

workers. With a number of large construction and infrastructure projects on the books,

many business leaders and economic analysts expect skill shortages to intensify.

As BC looks to capitalize on the vast potential flowing from the rise of China and other

emerging markets in the global economy, an important question is whether shortages of

qualified workers will hinder economic growth or delay major projects. In a market

economy where labour is mobile, shortages tend to resolve themselves over time. If a

particular skill is in demand and positions cannot be filled, wages for that occupation rise.

People train to work in jobs paying higher wages, resulting in an inflow of workers into the

People, Skills and Prosperity: The BC Labour Market in a Post-Recession Context Page 2

occupation until supply is sufficient to stop pushing the relative wage higher. The

challenge, however, is that this market-based framework says nothing about the nature of

the adjustment process: how long it may take, whether there are institutional or other

barriers that inhibit changes in labour supply, the extent of any regional differences, or the

effect of inter-jurisdictional competition for workers. Another complicating factor is that

the market-based adjustment process summarized above may be hampered in an

environment of more widespread labour shortages.

Up to this point, skill shortages in BC have largely reflected the dynamics of a market

economy, with hiring challenges arising in expanding sectors. Although increasing

numbers of retirements have played a small role, for the most part population aging has not

(yet) had much impact on the province’s labour market. But a steadily aging workforce

means the number of people retiring will climb steeply in the coming years, and employers

will have to fill many more vacant positions. In some industries and regions, sectoral

growth coupled with an aging demographic profile raises the prospect of significant – and

possibly protracted – skill shortages.

With close to 2.3 million jobs spread across a diverse mix of industries, British Columbia’s

labour market is large and quite complex. Any attempt to quantify and plan for shortages in

different occupations and industries is a daunting task. As a preliminary step, it is useful to

examine trends in the aggregate supply of labour. Sections 2 and 3 of this paper look at how

demographic change is likely to affect BC’s labour force. What impact will an aging population

have on the composition and growth of the workforce? Is immigration likely to be sufficient to

keep the labour supply growing? The provincial-level projections indicate that demographic

factors will dampen the future expansion of the workforce and raise the average age of those

with jobs, but increases in labour supply should be sufficient to enable adjustments to take place

and support a moderate, but still reasonable, pace of overall economic growth.

The paper then turns to the more complicated issues of occupational and regional labour

markets and the “skills mismatch” problem (sections 4, 5 and 6). Although the labour force

will continue to grow at a modest rate, the picture varies across the province, which is


foreshadowed by the fact that some resource-dependent communities are already reporting

hiring challenges. The review and analysis of occupational and regional labour supply and

demand is based on modelling done by the provincial government, the results of which are

presented in the British Columbia Labour Market Outlook: 2009-2019. That document

contains detailed projections for 140 occupations and seven labour market regions, as well as

provincial totals. Built around an assumed foundation of healthy economic growth through

the end of the decade, the model projects that skill shortages will emerge in resource-based

communities, with larger urban centres less likely to experience significant shortfalls. One

of the factors contributing to shortages is a mismatch between the skills employers are

looking for, on the one hand, and the availability and qualifications of prospective

employees, on the other. This “skills mismatch” issue is briefly discussed in section 6.

The final part of the paper (section 7) explores some dimensions for managing and

planning for a world of tighter overall labour markets. Because labour force growth is set

to slow and some regional and occupational skill shortages are anticipated, employers,

educators, and policymakers need to proactively plan to address labour shortfalls and the

related problems of skills mismatch and obsolescence. Although markets eventually adjust,

smart public policy, flexible educational and training institutions, and collaboration among

employers can expedite the adjustment process through the efficient dissemination of

information, well-designed education and training programs, efforts to encourage higher

participation rates, and steps to support the development of regional labour markets.

Finally, at the outset it is important to recognize that most of the analysis and discussion in

this paper is high level and fairly general in nature. Our purpose is to explore broad trends in

provincial and regional labour markets to help inform and shape a forward-looking policy

agenda for governments, employers and educators. It is not possible to review specific

occupations or sectors in detail. Many industries are undertaking or have already completed

their own analysis of their particular demographic setting. A comprehensive level of analysis

is necessary to adequately understand looming sectoral shortfalls, and to develop well-

grounded, industry-specific strategies to manage and meet future occupational requirements.


II. 2009 BC Labour Force Projection

In an earlier paper produced as part of the Business Council’s Outlook 2020 project, the

authors developed projections to put some parameters around the future growth of British

Columbia’s labour force.1 The purpose of that document (published in 2009) was to assess

the impact of an aging population and relatively low fertility rates on the trajectory of the

labour force. The results indicated that BC’s labour force will continue to grow, but the

pace of expansion will dwindle from an annual average of about 2% in the years leading up

to the recent recession to between 0.8% and 1.5% by 2020. In the original paper, a number

of scenarios incorporating different assumptions about immigration and changes in labour

force participation rates were examined. A key result of this scenario analysis is that

relatively modest increases in immigration levels and labour force participation can have a

meaningful impact on the future growth of the workforce. The paper also concluded that

the more “optimistic” scenario, based on higher immigration levels and delayed retirement,

was realistic: there is scope to boost immigration, and historically the labour supply has

been responsive to economic and job market conditions. On balance, the simulations in our

2009 paper were encouraging, especially if one believes that market forces spur sensible

behavioural adjustments by public institutions, individuals and employers alike.

The labour force projections for the earlier paper were prepared in the summer of 2009.

They were medium-to long-term forecasts. As BC’s underlying demographic picture has

not changed since 2009, there is no reason to believe that projections for the labour force

developed in 2011 will be materially different. Still, it is useful to update the projections

for a “post-recession economy” and to incorporate new information, particularly regarding

assumptions about labour force participation rates.

1 Jock Finlayson and Ken Peacock, “Where Will the Workers Come From? British Columbia Labour Force Projections to 2030,” Business Council of BC (September 2009).


Comparing Projections with Actual 2009-2010 Data

Comparing the Business Council’s initial forecasts and what actually occurred over the

past two years informs our newly updated projections. Our original most “optimistic”

scenario had the labour force growing by 0.5% in 2009 and by 1.1% in 2010. It turned out

that the labour force actually expanded by 1.1% in 2009 and by 1.4% in 2010, stronger

than we had assumed for both years. One reason is that participation rates for many age

cohorts turned out to be higher than we envisaged in 2009. At the time, our thinking was

that during the recession a weak job market and rising unemployment would cause

participation rates to remain flat or fall slightly. Instead, higher numbers of young people

exited the workforce, while the opposite was true for most other cohorts, particularly older

aged cohorts. Given their greater numbers, the general rise in participation rates among

groups aged 25 plus boosted the size of the overall labour force.

The original 2009 forecast

had the participation rate for

males aged 15-19 falling

slightly in the wake of the

recession. The rate had

already slipped for 20-24 year

olds in 2008, so for

forecasting purposes the

participation rate for this

group was held steady. What

actually happened was that

participation rates for both of these cohorts dropped significantly in 2009, followed by

further dip in 2010. The net result was that by 2010, the labour force participation rate for

males aged 15-19 had tumbled a full eight percentage points (making our earlier projection

too high). Similarly, the participation rate for 20-24 year old males slipped 4.7 percentage

points over the two-year period. For females in the younger age groups, our initial assumptions

were closer to the actual changes. The most noteworthy difference was in the youngest

Figure 1

BC Participation Rates: Younger Age Cohorts per cent

Source: Statistics Canada.


cohort (aged 15-19), with the

participation rate dropping

from 58% to 53%. Our

assumption for this group

foresaw a drop of only 1.5

percentage points.

In contrast to the younger

population, the rise in both

male and female participation

rates for older age groups was

much higher than we initially

expected. The share of males aged 65-69 in the workforce increased from 27.7% in 2008 to

33% in 2010 – a sharp rise over a short period of time. For the earlier projections we

posited that the participation rate for this cohort would level off during the recession and

then slowly inch higher again. The participation rate for the age group just before the

“traditional” retirement age (60-64) also rose between 2008 and 2010, from 56% to 59%,

making our largely status quo assumption for this cohort too low. The proportion of

females in the workforce for these age groups also increased, even in the face of prevailing

soft labour market conditions. The share of 60-64 year old females in the workforce

jumped five percentage points, while the participation rate for 65-69 year old females

edged up by two percentage points from 2008

to 2010. The increase in the participation rate

for females aged 55-59 was also greater than

we predicted in 2009.

Participation rates for cohorts between the

younger and older age groups were more stable. Some of the groups posted slight increases;

others saw very modest decreases. On balance, changes in participation rates for the “middle

age” cohorts had little effect on total labour force growth.

Figure 2

BC Participation Rates: Older Age Cohorts per cent

Source: Statistics Canada.

As the job market strengthened during the

boom years (2003-2007), participation rates

for males and females below the age of 25

generally increased by five percentage points.


From this brief review of recent developments in participation rates, two points relevant to

forecasting the workforce emerge. The first is that participation rates for younger cohorts

are quite responsive to changing circumstances in the job market. The behaviour of

younger workers is clearly influenced by economic and labour market conditions. As the

job market strengthened during the boom years (2003-2007), participation rates for males

and females under age 25 generally increased by five percentage points. During the

economic downturn these increases were reversed. The fact that participation rates for

younger age cohorts fluctuate is perhaps unsurprising, as it has long been the case that

during economic downturns a greater proportion of young people stay in or return to

school to upgrade their skills, or temporarily opt out of the workforce. The magnitude and

speed of the changes, however, is something to consider. As labour markets tighten, higher

participation rates among younger workers can help to meet escalating employer demands

for entry-level and mid-skill positions. These shifts, however, also reduce the number of

young adults pursuing post-secondary education and training, which may bear on the

future supply of qualified workers in our increasingly knowledge-based economy.

The second point concerns the sizable increase in participation rates for persons aged 55

and higher. When labour markets were tight during the pre-Olympic boom years, this

response could be expected, as labour shortages and the resulting upward wage pressure

would attract (and retain) more older workers into employment. However, the upward drift

in participation rates for older individuals continued, and in some instances accelerated,

right through the 2008-09 recession. This suggests that for older workers, factors other

than labour market conditions influence the decision to exit or remain in the workforce.

Some older workers may have decided to keep working owing to a loss in wealth, although

for most British Columbians the dip in real estate and equity prices was temporary and

relatively short-lived. More likely, changing retirement preferences, insufficient financial

resources more generally, greater longevity, and new technologies are all shaping decisions

to continue working. Looking ahead, it is reasonable to anticipate that the recent gains in

participation rates for older cohorts will remain intact. Perhaps conservatively, our

projections reported below assume the upward trend mostly levels off, with only small

additional increases in participation rates among the older age cohorts.


Migration and Immigration

The other main determinant of labour force growth is migration, and it too varies with the

state of the economy. Our original 2009 projections utilized population forecasts from BC

Stats, which included net international migration to BC of about 44,000 in 2009 and

40,000 in 2010. Anticipated net interprovincial migration was 7,800 in 2009 and 9,200 in

2010, so baseline migration from all sources was expected to add roughly 50,000 people to

BC’s population in each of 2009 and 2010. For the more optimistic labour force projection

outlined in our 2009 paper, we assumed total migration would be 10,000 higher than the

figure built into the BC Stats population forecast, putting net migration at 60,000 in 2009

and 2010. This figure turned out to be remarkably close for 2009, but it was too high in

2010. As is evident in Figure 3, the drop in migration was due almost entirely to a fall-off

in the number of non-

permanent residents coming

to the province. In response

to earlier labour shortages,

more temporary foreign

workers were brought into

BC, bolstering the net inflow

of non-permanent residents

from around 4,000 each year

to roughly 17,000 in 2008

and 2009. By 2010 high

unemployment and a surplus

of labour resulted in large numbers of temporary foreign workers leaving BC, with the

overall net inflow of non-permanent residents tumbling to just 1,100. These fluctuations

suggest that as labour shortages emerge in the future, government policy can be adjusted to

accommodate the entry of more temporary foreign workers as they are needed.

Figure 3

BC Migration thousands

Source: BC Stats


Temporary Foreign Workers

The number of temporary foreign workers in the province has risen steadily over the past decade. During the 2006-2008 construction boom the net inflow of foreign workers jumped from around 4,000 annually to a peak of nearly 15,000 each year. By 2009 there were nearly 70,000 foreign workers residing in the province. With the onset of the economic downturn the pattern reversed, with a net outflow of 1,200 temporary foreign workers in 2010.

The diversity of locations where temporary workers have settled suggests they can be an effective resource for meeting regional labour demand. In contrast to permanent immigrants, of whom just 15% settle outside of Metro Vancouver, close to half of all temporary workers are located outside of the Greater Vancouver region.

Temporary foreign workers also represent a cross-section of skill levels. Nearly 8% of temporary workers present in Canada are classified in the managerial occupational skill level, 18% as professionals, and just over 18% in the skilled or technical category. Nearly 23% are level C, or intermediate and clerical, and 9% are in the elemental/labourer category D. The occupational skill level is not stated for the remaining 25% of temporary foreign workers. Occupational skill level data are not readily available by province, but the national figures are likely a reasonably close reflection of BC’s stock of temporary foreign workers.

Temporary Foreign Workers Present in BC thousands

Source: Citizenship and Immigration Canada, Facts and Figures: 2009 Immigration Overview and Preliminary Overview: Permanent and Temporary Residents 2010.


III. Updated BC Labour Market Projection

This section updates our previous forecast for BC’s labour supply. In the original paper

Where Will the Workers Come From? British Columbia Labour Force Projections to 2030,

four different scenarios were presented. The baseline projection was a status quo forecast,

to identify what would happen to labour force growth if key variables prevailing at the

time were extrapolated into the future. It took population projections published by BC

Stats as given, and assumed that participation rates for different demographic groups were

stable throughout the forecast

period. More realistically, the other

scenarios incorporated higher

participation rates and more

immigration. The simulations

revealed that modest increases in

immigration and in participation rates materially alter the labour supply outlook. Under the

baseline scenario, labour force growth fell quickly (below 1% as soon as 2013 and to just

0.6% by 2020), leaving it at roughly half the pace typically seen in previous decades.

Under the more “optimistic” fourth scenario, which posited slightly higher participation

rates and more immigration, the picture changed, with BC’s labour force expanding by

1.5% annually through 2019 and then by around 1% for the rest of the projection period. A

combination of more people and higher participation rates strengthens the outlook for

future labour supply relative to the baseline projection, but workforce growth rates still

slow enough to produce tighter labour markets and weaker economic growth over time.

Rather than preparing four different scenarios as we did for our 2009 paper, here we

present a single provincial level projection. Experience over the past two years supports the

original conjecture that the most “optimistic” scenario sketched in our 2009 paper is in fact

the most likely outcome. The updated forecast summarized here retains the upward shift in

participation rates for older age groups and generally embodies somewhat higher

participation rates over time for other groups, as well as a modest increase in immigration

inflows as the labour market tightens.

A combination of more people and higher participation

rates strengthens the outlook for the labour force relative to

the baseline projection, but workforce growth rates still slow

enough to result in tighter labour markets and weaker

economic growth over time.


As with the original forecasts, this updated projection is built around population forecasts

published by BC Stats, which are available for five-year age cohorts for both males and

females. These five-year age cohorts are linked with participation rates for the respective

age groups, allowing us to forecast the size of the labour force for each cohort. Summing

up the 24 cohorts produces an estimate of the size of the BC’s total workforce going

forward.

In the updated projection, the assumptions about future labour force participation rates are

as follows:

• For male cohorts under the age of 30, participation rates gradually rise by two to three percentage points over the next 10-12 years; after that they remain stable. Note that the participation rates for each of the five-year age cohorts remain below 1990 levels, reflecting the trend for a rising share of young adults to enrol in post-secondary education and training over the past few decades.

• Participation in the labour force is also assumed to edge higher for males in their 30s and 40s. Amid a weak job market, participation rates retreated slightly in 2008 and 2009. For the current projection, this decline is reversed, and rates rise another percentage point or so beyond their pre-recession levels. For these age cohorts, it is assumed that the shift towards more males staying at home with children and females being the primary family earners prevents participation rates from returning to levels recorded in 1990.

• For males aged 60 and up, as previously noted substantial increases in participation rates have already occurred. The projection here assumes these changes remain in place, and that participation rates stay close to their 2010 levels. In the case of males over the age of 70, the (low) current participation rate is expected to inch higher through 2024.

• For females under age 30, the updated scenario has participation rates climbing a couple of percentage points over the next 10-12 years. For the youngest two cohorts, the rates remain well below 1990 levels, but for those aged 25-29 the rate rises to a new high.

• Participation rates for females in their 30s and 40s are assumed to increase steadily over the next 15 years. Rates for women in their 30s rise about four percentage points, while females in their 40s see gains of around two percentage points.

• As with males, female participation rates for the older cohorts experienced sizable increases over the past four years and are assumed to remain at similar levels going forward.


Migration

An advantage of the BC Stats population projection is that the underlying assumptions

about the components of population growth are available. This allows for an evaluation of

the assumptions built into the population projections and an ability to make adjustments

accordingly. The BC Stats population forecast assumes net interprovincial migration rises

from roughly +9,000 to +13,500 over the next five years. After that, interprovincial

migration is assumed to stay at this level through 2031. Over the past five years the annual

net inflow of people from other provinces has fluctuated between +4,600 and +17,000.

Over the past eight years it has averaged +9,100, making the anticipated net inflow of

people from other provinces in the years ahead slightly higher than the recent annual

average. So in absolute terms, the BC Stats population outlook assumes somewhat stronger

net interprovincial migration, which is consistent with the general “westward shift” in

economic clout and population growth within the Canadian federation. For the labour force

projections reported here, we make no adjustments to the interprovincial migration

assumptions incorporated into the latest BC Stats population forecast.

For the international component of population growth, the BC Stats forecast assumes that

immigration expands modestly from 41,000 to 45,000 per year by 2020, and then edges up

to 47,500 by 2030. Over the past few years immigration to BC has ranged between 39,000

and 44,000 per annum. The number of immigrants in the BC Stats projection is consistent

with recent patterns, although it may prove to be on the low side as the labour market

tightens and federal government policy is modified to increase immigration in response.

The BC Stats forecast also presumes a stable net inflow of non-permanent residents

(NPRs) of around 6,000 per year over the entire period. This figure may also be low,

considering that the net inflow of NPRs to the province was in excess of 16,000 in both

2008 and 2009, due mostly to the expansion of the temporary foreign worker program. The

number of NPRs did decline in 2010 to just over 1,000 in the wake of the economic

downturn. On balance, the underlying assumptions around migration built into the BC

Stats population projections seem reasonable, but we judge them to be conservative in the

context of tightening labour markets and an aging population.


For the updated projection the assumption about additional immigration is scaled back

relative to our 2009 paper. In that paper our fourth scenario had total net annual

immigration (temporary workers and permanent immigrants) adjusted up by 10,000 more

than the approximately 40,000 built into the BC Stats population forecast. For the updated

projection in this paper, immigration is boosted only 5,000 above the BC Stats figures

through 2017. After that, an additional net inflow of 7,500 immigrants is assumed for a

few years, rising to 10,000 more each year beginning in 2022. The increase in net

immigration is based on the expectation that as the labour market tightens, immigration

policy will adjust – as happened during the 2005-2008 period. In 2008 and 2009 net

international migration to BC stood at approximately 55,000 and 51,000, respectively. In

2010 the net inflow from international sources dropped to 38,000 due to a large number of

temporary foreign workers returning home.

Updated Labour Force Projection Results

Built around modest increases in workforce participation rates and some additional

international immigration, the updated projections in this paper indicate that the growth of

BC’s labour supply will ease somewhat over the next eight years, and slow further after

2020. As shown in Table 2, average labour force growth is forecast to slip from its recent

1.9% pace to 1.3% in the next few years, before diminishing further to around 1% after 2020.

Table 1: Summary of Population Variables Used in Projection annual average over periods shown

Increase in Population 15 + Migration (000s)

Period Growth (%) Number (000s) Immigration Net NPRs* Net

Interprovincial

90-94 2.9 77.9 40.4 -1.6 35.9

95-99 2.1 64.5 42.5 3.0 -1.4

00-04 1.1 37.5 37.3 5.9 -0.4

05-09 1.8 62.8 41.4 7.7 10.5

10-14 1.5 58.6 46.3 6.0 9.9

15-19 1.4 60.3 50.7 7.1 13.4

20-24 1.4 62.5 54.4 7.5 13.5

25-29 1.3 63.6 55.6 7.5 13.5 Sources: BC Stats and Statistics Canada Labour Force Survey for history, BC Stats for forecasts (with some upward adjustment to migration projections. * non-permanent residents


The updated forecast is essentially the same as the more optimistic scenario we produced a

couple years ago. But average growth in the labour force is now slightly lower for the 2010-2014

and 2015-2019 periods, reflecting the scaling back of immigration for the current forecast.

Some notable results from the updated projection are:

• BC’s labour force continues to increase in absolute terms right through 2030 and beyond.

• Over the next five years, the labour force will expand by approximately 34,000 persons annually; by comparison, over the previous five years it increased by 42,500 on average. Having the potential supply of workers shrink by almost 10,000 per year will result in the unemployment rate falling and lead to a steady tightening of labour markets.

• The number of young people in the labour force (age 15-24) will decline through to 2020. Our new forecast incorporates a slight increase in participation rates for younger workers, so this result is driven by the shrinking size of this age cohort.

• The fastest growing labour force cohort consists of persons over the age of 60. Today 9% of the workforce is aged 60 plus; by 2020 this group will represent nearly 11% of the total workforce. Unless participation rates rise again substantially for this age cohort, the biggest increase in the number of older workers may have already passed. Between 2005 and 2009 the size of the workforce for this group grew 10% annually, and in absolute terms it increased by 15,000 each year.

• In contrast to the previous two decades, the size of the female labour force will increase at a pace similar to the male labour force. Up to the mid-point of the previous decade, growth in the number of females in the workforce was roughly twice that of males. In addition to population aging, the stabilizing of female participation rates is another factor contributing to slower overall growth in the province’s labour force going forward.

Table 2: Summary of BC Labour Force Projection annual average over periods shown

Labour Force Growth (%) Increase in Labour Force (000s)

Period Total Males Females Total Males Females

90-94 3.0 2.4 3.7 51.9 23.5 28.4

95-99 1.5 1.0 2.0 29.1 11.0 18.1

00-04 1.2 0.9 1.5 25.2 10.0 15.2

05-09 1.9 1.8 2.0 42.5 21.0 21.5

10-14 1.3 1.5 1.2 33.8 19.4 14.4

15-19 1.3 1.4 1.1 33.9 19.7 14.2

20-24 1.0 1.1 1.0 29.2 16.3 12.9

25-29 0.9 0.9 1.0 27.3 13.9 13.4

Sources: Statistics Canada Labour Force Survey for history, BCBC for projections.


Summary of Aggregate Labour Force Projections

The projections reported in this paper show that based on reasonable assumptions, the BC

labour market will tighten over the coming eight years, with growth in the workforce

further moderating after that. For the near- to medium-term, the anticipated slowdown in

labour force growth does not necessarily point to serious skill shortages at the province-

wide level. Over the past decade, in absolute terms, employment in BC increased by an

average of 37,000 per year. The updated projections suggest that the supply of workers

will expand by 33,000-34,000 annually over the next eight or nine years. If job growth is

similar to the recent past, our updated

projection points to a shortfall of a few

thousand persons each year. Today there are

approximately 185,000 people unemployed

in BC, or 7.5% of the labour force.2 Cutting

the unemployment rate in half requires absorbing some 90,000 individuals back into the

workforce, in addition to the 33,000 to 34,000 that enter the labour force each year. Of

course this simple calculation ignores the fact that some of those now classified as

unemployed may not have the skills employers are looking for or be willing to fill the job

vacancies that happen to be available.

2 BC Stats, Infoline (August 5, 2011).

Table 3: Change in BC Labour Force by Select Age Cohorts annual average over periods shown

Labour Force Growth (%) Increase in Labour Force (000s)

Period 15-24 25-49 50-59 60+ 15-24 25-49 50-59 60+

90-94 -0.1 3.4 4.4 5.6 -0.3 38.4 9.7 4.0

95-99 -0.4 1.1 5.4 1.5 -1.5 14.1 15.4 1.1

00-04 1.6 -0.3 4.9 6.3 5.2 -4.1 18.2 6.0

05-09 2.0 0.4 3.3 10.2 7.2 5.3 15.1 15.0

10-14 -1.1 1.1 2.4 4.8 -4.1 14.7 12.7 10.6

15-19 -0.4 1.7 0.3 3.2 -1.5 25.0 1.7 8.7

20-24 0.5 1.4 -0.4 2.3 1.7 22.5 -2.1 7.1

25-29 1.5 1.0 0.5 0.4 5.7 17.2 3.0 1.5

Sources: Statistics Canada Labour Force Survey for history, BCBC for projections.

… the BC labour market will tighten over the

coming eight year period, with growth in the

workforce further moderating after that.


These numbers suggest that, in aggregate, there should be a sufficient supply of potential

workers to accommodate an “average” rate of employment growth over the next decade.

Another strong multi-year economic expansion, however, would result in a quicker

disappearance of labour market slack accompanied by more widespread skill shortages.

Labour shortages will intensify after 2020. The provincial-level projections say little about

regional labour market patterns, or the potential for shortfalls across higher skill

occupations or occupations with comparatively older workforces. A final point worth

highlighting is that the projection also shows that the proportion of older workers in BC’s

workforce is poised to rise quite substantially in the next decade.


Comparison with Labour Force Projections from the British Columbia Labour Market Outlook

The province of British Columbia produced a comprehensive forecast of BC’s labour market titled British Columbia Labour Market Outlook 2009-2019. The Labour Market Scenario Model project was initiated by the (former) Ministry of Regional Economic and Skills Development in 2009, in partnership with BC Stats and the Ministry of Finance. The report contains detailed projections for the provincial labour force (supply) and the expected number of jobs (demand) for 140 occupational groupings. Projections are done for the seven labour force regions and added together for an overall provincial forecast.

Comparing the Business Council’s provincial labour force growth forecast with the aggregate labour force projections from the Labour Market Outlook shows that both forecasts anticipate a similar growth profile for BC’s labour market over the coming decade. The provincial projection, however, foresees somewhat stronger growth for the labour force. Under the province’s scenario, the labour force grows by slightly more than 1.5% per year during the middle years of the current decade and then slows to just below 1.5% through to 2019. Under our projection labour force growth remains below 1.5% through 2016 and trends down towards 1.0% thereafter.

These two independent forecasts come to a similar conclusion about the trajectory for the provincial labour force over the next five or six years. In the latter years of the decade, however, the Business Council projection anticipates a more pronounced slowdown. One reason for the difference is that our projection just models labour force supply using demographics and participation rates. Some recognition is given to the fact that tighter labour markets will attract more labour from outside of the province and prompt a rise in participation rates. However, unlike the government’s model, we assume little direct labour supply response from stronger labour demand. The provincial projection uses a general equilibrium model that captures the interactions between supply and demand. In this model stronger demand results in a labour supply response.

BC Labour Force Growth: BCBC Projection and Provincial Labour Market Outlook Projections

Source: British Columbia Labour Market Outlook and Business Council of BC.


IV. Provincial Labour Demand

Up to this point only the supply side of the labour market at the provincial level has been

discussed. The reason was to provide a backdrop for understanding the extent to which

demographics will translate into slower labour force growth, and to shed light on whether

the demographic shift alone might derail economic growth. Upward adjustments were

made to participation rates and to presumed levels of in-migration in response to the

tightening of labour markets, but for the most part the projections in the previous section

reflect the impact of

population aging on labour

force growth.

This section broadens the

discussion to include the

demand side of the labour

market, as well as

occupational and regional

dimensions. The analysis is

based on forecasts developed

by the provincial government

using a set of regional macroeconomic models as well as regional occupational models.3

The macroeconomic models are basically general equilibrium models, which allow for

industry growth to influence labour demand. The regional general-equilibrium models

interact with an input-output model that links different sectors of the economy together.

There are seven regional macroeconomic models that produce projections for 14 industries.

In each region, economic and industry growth drive employment demand. Expectations

about economic growth are informed by external economic conditions and major projects

that are anticipated in the respective area. Detailed results are presented in the BC Labour

Market Outlook 2009-2019.

3 British Columbia Labour Market Outlook 2009-2019, p. 10.

Figure 4

BC Labour Supply and Demand Projections thousands

Source: British Columbia Labour Market Outlook


Regional labour supply for different occupations is driven by demographic trends and

patterns of economic activity. The occupational model used by the BC government posits

that “labour supply generally follows labour demand, and in the long run, [the] labour

force for an occupation will be determined by the demand for the occupation.”4 In other

words, the modelling assumes that a worker shortage for an occupation will not persist

indefinitely, and that in the long-run rising demand will be met with new supply. In the

Lower Mainland nearly all occupations move towards a rough balance between supply and

demand, with relatively few outright labour shortages. In other regions most occupations

also move towards equilibrium, but in areas with smaller labour markets skill shortfalls are

more common. The results of the regional models are aggregated to produce the provincial

totals.

It is important to clarify how to interpret what is meant by a “labour shortfall” in the

context of the model. In the projections, the demand for labour represents the number of

persons needed to allow labour markets to function and to meet employers’ requirements.

This means that demand includes employed persons and job opportunities, as well as

“unemployed” people transitioning between jobs, responding to seasonal fluctuations, just

entering the labour market and looking for work, and so on. So even when an outright

shortage of workers is projected, it does not mean the unemployment rate for the

occupation (or region) is zero. Unemployment will never fall to zero, because there are

always a certain number of people flowing into the workforce and transitioning between

jobs. While it is not stated explicitly in the documentation, the modelling appears to

assume a minimum unemployment rate in the range of 3.5% to 4.0% (it may vary

depending on the number of people employed in an occupation/region). Anytime an

occupation bumps up against this rate of unemployment, the modelling results reflect a

shortage of workers.

4 British Columbia Labour Market Outlook 2009-2019, p. 10.


Before turning to the

occupational forecasts, a word

on overall provincial employ-

ment growth outlook is

warranted. The results of the

model-based simulations call

for modest employment gains

this year. In 2012 job growth

is forecast to climb to 1.8%

and to stay there for a few

years, before peaking at 2.3%

in 2015. After that growth in

labour demand downshifts to around 2% per year and then falls to 1.7% by 2019. Over the

entire forecast period, employment growth is predicted to average 1.8% per year. This

compares favourably with the 1.6% annual average recorded in the previous decade (which

included a multi-year economic boom as well as steep job losses during the recession). The

government’s model assumes a fairly healthy outlook for future employment gains,

especially if one believes the slowdown in future labour force growth rates will have a

knock-on impact on the pace of job creation. In the model, economic and employment

growth are driven largely by external factors (some of which look broadly favourable for

BC), and labour supply responds to changes in the demand for new workers. As noted, this

occurs at the regional level, and the regional results are summed to get a provincial total, so

slower labour force growth has only a limited impact on job growth in the modelling over

the medium- to long term. The implicit assumption is that BC will be able to attract

sufficient numbers of workers – mainly from other provinces and countries – to meet

demand. One can question whether this expectation is well-founded in a world where

many other jurisdictions are also undergoing big demographic changes and will be

stepping up efforts to attract and retain talent.

Figure 5

BC Employment Growth, 5-year Averages per cent

Source: Statistics Canada and British Columbia Labour

Market Outlook for forecast.


V. Occupational Dimensions

The British Columbia Labour Market Outlook provides forecasts for the supply of and

demand for workers in 140 different occupations (at the three-digit level). The occupations

are based on the National Occupation Classification (NOC), which is the nationally

accepted framework of occupations in the Canadian labour market. The NOC is used to

compile, analyze and communicate information about skill development, career

intelligence, occupational forecasting as well as labour supply and demand. The three-

digit level represents minor occupational groups that have the same skill level

requirements and similar job duties and tasks. Because of the large number of occupations,

the outlook for all of the occupations is not discussed here. Instead, commentary is limited

to general trends and to

identifying occupations where

the forecasts suggest shortages

are apt to be most intense.

At the province-wide level, the

outlook is for an overall

tightening in essentially all of

the three-digit occupational

categories, with only a few

occupations listing an outright

shortfall of workers. Most

specific occupations move to a

slight surplus of workers or balanced market conditions by 2018/2019. To a large extent,

this reflects the way the models are structured, with supply assumed to adjust to satisfy

demand over time. There are, however, some occupations where shortages are expected to

emerge and become more pronounced. In most instances these occupations are higher skill

jobs, requiring some form of post-secondary education or training.

Figure 6

Training Required for Job Openings in

BC, 2009-2019 thousands

Source: British Columbia Labour Market Outlook 2009-2019.


Importantly for purposes of planning education and training requirements, the occupational

projections indicate that fully three-quarters of available job openings this decade will

require some form of post-secondary education. A university education will be necessary

for 34% of all jobs, with a college or trade certificate required for another 43%. A high

school diploma will be sufficient for 19% of

jobs; only 4% of projected openings will be

open to people with less than a high school

diploma.

Managers in many fields are expected to be in

short supply, and numerous occupations in the

broad field of healthcare will experience

shortages within a few years. Projections also point to insufficient numbers of workers in

the transportation sector as well as in some skilled trades and technical occupations.

The following list identifies occupations where the most significant shortages are expected.

It is derived primarily from the Labour Market Outlook projections, and reflects situations

where demand for workers is forecast to exceed the available supply. The list is

supplemented with some additional analysis that considers the number of projected

openings for an occupation relative to the number of people currently employed in that

occupation. Because the modelling process assumes that supply responds to demand (with

lags), small projected shortfalls eight years from now may not fully capture looming hiring

challenges. The total number of job openings between 2009 and 2019, relative to current

employment levels in each occupation, is a good supplemental indicator of where future

hiring challenges may develop. In occupations where this ratio is high, employers will

have to fill a large number of openings typically due to both growth and attrition.

Presumably shortages will be correlated with having to hire more workers amid tightening

labour market conditions. While there is a lot of overlap between these two indicators,

examining the number of job openings in each occupation does expand the list of

occupations where hiring challenges are likely to emerge.

Importantly for purposes of planning

education and training requirements, the

occupational projections indicate that fully

three-quarters of all available job openings

this decade will require some form of post-

secondary education.


Table 4: BC Occupations with Projected Labour Shortages

and a High Proportion of Job Openings

Occupation (3-digit) Demand less

Supply in 2011

and 2019

(persons)

Ratio total

openings

2009-19 to

current

employment

Ratio of

replacement

openings to

current

employment

All occupations 87,100 6,040 46.6 28.0

Legislators and senior management (NOC001) 1,000 110 58.9 40.8

Managers in health, education and social services (NOC031)

480 10 55.0 38.3

Managers in public administration (NOC041) 70 -10 47.7 36.4

Managers in food service and accommodation (NOC063)

840 0 50.6 29.9

Managers in protective services (NOC064) 60 -20 38.6 27.3

Managers in construction and transportation (NOC071)

840 70 67.8 36.1

Civil, mechanical, electrical and chemical engineers (NOC213)

600 60 57.8 31.6

Architects, urban planners and land surveyors (NOC215)

220 10 61.0 32.4

Transportation officers and controllers (NOC227)

230 -20 63.4 37.5

Physicians, dentists and veterinarians (NOC311) 610 -40 67.9 38.0

Optometrists and chiropractors and other health diagnosing & treating (NOC312)

50 -10 62.6 31.6

Therapy and assessment professionals (NOC314) 230 -20 61.2 32.3

Nurse supervisors and registered nurses (NOC315)

1,470 -160 67.6 36.9

Medical technologists and technicians (NOC321) 450 -40 60.4 30.4

Technical occupations in dental health care (NOC322)

150 -10 56.7 30.0

Other technical occupations in health care (NOC323)

560 -50 60.0 32.2

Assisting occupations in support of health care (NOC341)

1,370 -140 59.6 30.9

Judges and lawyers (NOC411) 430 20 70.8 41.7

Psychologists, social workers, counsellors and probation officers (NOC415)

700 -10 60.1 39.2

Paralegals and social service workers (NOC421) 2010 -60 52.8 27.1

Contractors and supervisors, trades and related (NOC721)

650 60 62.6 34.5


Table 4: BC Occupations with Projected Labour Shortages

and a High Proportion of Job Openings

Occupation (3-digit) Demand less

Supply in 2011

and 2019

(persons)

Ratio total

openings

2009-19 to

current

employment

Ratio of

replacement

openings to

current

employment

Supervisors, railway and motor transportations (NOC722)

40 0 64.2 40.8

Electrical trades and telecommunication occupation (NOC724)

800 60 58.7 32.3

Plumbers, pipefitters and gas fitters (NOC725) 460 50 59.1 27.7

Carpenters and cabinet makers (NOC727) 1230 -20 59.2 25.7

Masonary and plastering trades (NOC728) 540 10 58.4 24.1

Other construction trades (NOC729) 850 40 58.1 23.8

Train crew operating occupations (NOC736) 60 0 62.1 37.4

Crane operators, drillers and blasters (NOC 737) 70 0 57.7 29.7

Heavy equipment operators (NOC 742) 460 0 62.3 33.2

Other transportation equipment operators (NOC 743)

180 -10 55.8 29.9

Underground miners and oil and gas drillers (NOC 823)

40 0 42.6 27.7

Logging machine operators (NOC 824) 130 -10 (2014) 46.5 37.3

Mine service workers and operators in oil and gas drilling (NOC 841)

40 0 (2014) 27.5 11.8

Logging and forestry workers ((NOC 842) 120 0 (2015) 37.0 28.9

Source: British Columbia Labour Market Outlook and Business Council for ratios and selection of occupations.


Outlook for Construction Labour Markets in British Columbia

The Construction Sector Council produces projections for the BC construction labour market. Its most recent analysis is for 2011 to 2019 covering 32 construction industry occupations. The projections come from a scenario-based forecasting model, involve consultation with industry, labour and government, and take into account major projects that are expected to go ahead in BC.

Shaping the demand side is the expectation that stimulus related construction activity winds down in 2011. At the same time, a number of new mining and utilities projects are initiated, so overall construction employment levels are sustained. In the coming years, strong commodity prices and various mining, pipeline and port expansion projects will contribute to gains in non-residential construction employment. Planned construction on several major hydroelectric facilities is also incorporated into the outlook. The result is double-digit employment growth for a number of construction trades and occupations between 2011 and 2014. Over the same period, road and highway projects are expected to scale back as stimulus winds down and governments trim spending to cut deficits.

Further out, construction employment is projected to ebb after 2015 as many major projects are completed. Overall construction job numbers, however, should be supported by continued modest growth in commercial and institutional building and ongoing maintenance.

Over the projection period, residential construction is expected to continue to recover at a moderate pace through 2013. After housing starts catch up to population growth and the rate of household formation around 2013, a slowing in the residential building cycle is projected between 2014 and 2019.

On the supply side the BC construction labour force is projected to increase by just 1,600 between 2011 and 2019. However this masks the fact that stronger expansion takes place in the first half of the projection period. As many as 31,000 workers are expected to leave the construction industry due to retirements and mortality. Replacement of these workers will be partially met by 22,400 new entrants into the various construction occupations. The estimated residual gap of 10,000 means some workers will need to be recruited from outside of local construction labour markets to meet the industry’s labour demand.

In general, labour market conditions in the construction sector are expected to be balanced for most trades over the projection period. However, conditions are likely to be tight for a number of occupations (estimators, managers, contractors and supervisors, crane operators) between 2011 and 2015. Attracting skilled workers from other provinces and industries will be essential to meet labour market requirements in the 2011-2015 period. This will put BC in competition with Alberta, Saskatchewan and Newfoundland for skilled construction labour.

After 2015, relatively flat demand for labour should be met by new labour market entrants. Long-term demographics, however, do point to the need to attract new people into the construction industry to meet labour requirements. Because many of these individuals will come from the younger population or from outside of the industry, training and certification and apprenticeship programs will have to be expanded and adapted to attract and prepare new workers.

Source: The Construction Sector Council, “An Assessment of Construction Labour Markets from 2011 to 2019 for British Columbia” (April 2011).


VI. Regional Dimensions

Provincial-level projections pointing to a gradually tightening labour market, but not to

widespread aggregate labour shortages, mask some important differences across regions. In

some areas, the model results suggest labour shortages will arise and may become quite

serious. The regional setting is further complicated by the fact that certain areas of the

province have seen little population growth or even experienced net out-migration in the

past two decades. A preference for living in large urban centres with more amenities and

diversified job opportunities has curtailed population growth in certain areas of the

province. The fact that immigration in Canada is concentrated in big cities is also a

relevant consideration. Push factors have also been at work, as some people have migrated

out of resource-dependent communities during past downturns or in response to longer-

term restructuring and consolidation in the

forestry sector.

Looking at the province’s seven labour force

regions, the Lower Mainland, Thompson-Okanagan and Vancouver Island regions have all

recorded relatively strong population increases over the past decade. In the Kootenay

region the population has inched higher, while the Cariboo and Northcoast/Nechako

regions have seen population declines. In the Northeast a burgeoning natural gas sector has

led to population growth similar to that in more urbanized areas of the province.

The population age profile of the regions further underscores the workforce challenges that

lie ahead. All regions except the Lower Mainland and the Northeast have seen their “core”

working age populations (25-49) decline. In the Cariboo and Northcoast/Nechako the

number of people in this age cohort has slumped by 20% or more over the past ten years.

In some areas, the model results suggest

labour shortages will be acute.


The absolute size of regional

populations is also relevant in

thinking about regional and

local labour markets. There are

now 2.7 million people living in

the Lower Mainland/Southwest

region. Although this covers a

geographic area that stretches

the limits of commuting

distances, it effectively is one

large labour market that

represents 60% of the provincial

population (up from 55% in 1990). Adding in Vancouver Island and the Thompson

Okanagan, these regions account for 89% of the population. With just 11% of BC’s

population spread across the rest of the province, employers in these areas have a

comparatively small pool of workers to draw from. While past population dynamics will

change with economic circumstances, small

and declining population bases represent a

very challenging backdrop for managing

future skill shortages in a number of regions

of the province.

Expanding Industries

In addition to demographic factors, a sizable improvement in the economic outlook is

anticipated for some regional economies. The rise of China, India and other emerging

economies is lifting global commodity markets. A renaissance for BC mining is already

underway. The recently released Annual Mining Industry Report produced by PWC

concluded that, with three major metal mines in the construction phase and a pipeline of

Figure 7

Population Growth Aged 25-49

BC Labour Market Regions average annual per cent change (2000-2010)

Source: BC Stats.

With just 11% of BC’s population spread

across the rest of the province, employers in

these areas have a comparatively small pool of

workers to draw from.


projects ready to go, 2010 was a turnaround year for the industry in terms of construction.5

According to the same report there are 12 mines in the development phase (permitted or

active permitting) in the province. The federal government’s recent approval of the

Highway 37 power line points to the construction of a $404-million, 344-kilometre

transmission line project from the existing Skeena substation near Terrace to a new

substation near Bob Quinn Lake, creating construction jobs and opening up additional

opportunities to for new mine development.

The once beleaguered forest sector is also in the very early stages of what is likely to be a

prolonged revival. Rapidly increasing demand for lumber in China has prompted the

reopening of numerous mills in the north and a big jump in the volume of lumber shipped

to Asia. A ten-fold increase in the

value of wood exports to China over

the past five years was followed by

a further 173% surge in the first

quarter of this year compared to Q1

2010. In the US new home

construction is still at very

depressed levels (having tumbled from a peak of 2 million units annually to around

500,000 units). But the underlying demographic fundamentals – stronger population

growth as net migration recovers, a return to more normal rates of household formation as

the job market improves, and the creation of more households due to population aging –

will contribute to stronger housing demand in the coming years. “These three combined

influences should lead the annual number of new households to almost quadruple from its

current rock bottom level.”6 The combination of further growth in the Chinese market and

a recovery in the US housing sector could well translate into very robust demand

conditions for BC lumber producers later in the decade, at a time when labour is becoming

scarce in the province’s key lumber producing regions.

5 PWC, “Seize the Day: The Mining Industry in British Columbia in 2010” (May 10, 2011), p. 24. 6 TD Economics, “Setting the Stage for a U.S. Housing Recovery” (April 20, 2011).

The combination of further growth in the Chinese market

and a recovery in the US housing sector could well translate

into very robust demand conditions for BC lumber

producers, at a time when labour is becoming scarce

in…key lumber producing regions.


British Columbia will also continue to benefit from its expanding role as Canada’s

Gateway to Asia and the construction of a number of large Gateway-related projects in the

coming years. The Port of Prince Rupert is looking to capitalize on trade with Asia and has

aggressive plans to increase capacity. Other major projects outside of the Lower Mainland

that will or may proceed include the aforementioned Highway 37 transmission line, Rio

Tinto Alcan’s modernization and expansion project in Kitimat, a proposed LNG terminal

in Kitimat and the associated natural gas pipeline, other potential LNG projects based on

BC’s huge unconventional natural gas resource, transmission line upgrades, several wind

farm projects, and BC Hydro’s Site C dam on the Peace River. There is also the proposed

Enbridge Northern Gateway pipeline that currently is subject to an initial review by the

National Energy Board. The Mount Milligan gold/copper mine is under construction and

slated to be operational by 2013. There are also a number of other mines in the advanced

permitting/pre-construction phase. Taken together, the medium term outlook is for stronger

conditions in resource-based regions stretching across the northern two-thirds of the

province.

Regional Labour Supply and

Demand Projections

As noted, the British Columbia

Labour Market Outlook 2009-

2019 includes forecasts of supply

and demand for each of BC’s

seven labour force regions. In

each case labour force growth is

not expected to fully keep pace

with employment demand,

resulting in tightening labour

markets in all regions. The

Figure 8

BC Labour Market Regions


degree of tightening, and when

and how shortfalls emerge, varies,

with the most significant

shortages evident outside of the

main urban centres.

In each region apart from the

Northcoast/Nechako, the data

indicate that more employment

opportunities will arise from

replacing the existing workforce

than from the creation of net new

jobs. Measured as a share of current employment levels, nearly 30% of all job openings

between 2009 and 2019 will stem from retirements (and deaths) in the smaller labour

market regions. Thompson-Okanagan has the lowest share of openings due to retirements,

reflecting the fact that this region has the youngest workforce in the province.

Lower Mainland/Southwest

There are an estimated 1.4 million people working in the Lower Mainland/Southwest,

which represents 62% of all jobs in the province. With such a large share of the population,

the labour market projections for this area essentially mirror the broader provincial results

– the region’s labour market will tighten, but aggregate labour supply growth is expected

to meet projected demand through to 2019. The projection calls for the region’s labour

force to increase by 1.4% per year over the period, essentially the same as the provincial

rate. One difference, however, is that labour force expansion is expected to be stronger in

the coming years (1.9%) and then to taper off to around 1% by 2018. For context, note that

between 2000 and 2010 the Lower Mainland’s labour force grew on average by 1.9% per

year, so as with the province-wide setting, the expectation is for a significant slowing in

labour force growth in this decade compared to the past one.

Figure 9

Total Job Openings 2009-2019 as a Share of

Current Employment per cent

Source: BC Labour Market Outlook 2009-2019


On the demand side, employment gains will average 1.8% over the 2010 to 2019 period.

In the next few years, job growth is forecast to accelerate and peak at 2.6% in 2015 before

slowing to 1.5% by 2019. Projected average employment growth is the same as over the

past decade. In practical terms this means the outlook is for a broadly similar economic

performance for the region. Considering that the unemployment rate in the Lower

Mainland/Southwest is currently 8.4%, there is some capacity to utilize idle workers. The

employment and labour force projections suggest that by 2019 the unemployment rate will

drop by 3.2 percentage points, taking it down to 5.2%, a rate that still provides for a small

surplus pool of workers and that is higher than the 4.0% rate recorded in 2007.

With BC’s largest and most diverse labour market, supplemented by a high immigration

numbers, the modelling foresees few outright shortages for individual occupations in the

Greater Vancouver region. Still, many of the occupations that are identified as having

labour supply concerns at the provincial level may also prove to be problematic for the

region. Occupations requiring specialized skills mean that shortages of managers, health

care professionals, and workers in the advanced technology sector will be of concern.

Growth in business activity related to the Asia Pacific Gateway as well as a looming surge

in retirements suggests that shortages will also emerge in occupations associated with the

transportation, warehousing and logistics sector. Finally, the projections summarized here

do not take into account the possible impact of high housing costs on the future

recruitment/retention of workers in the Lower Mainland. If housing costs remain far above

those found in other Canadian urban centres, this may dampen labour force growth and

make it harder for employers in some industries to fill vacant positions.

Vancouver Island/Coast

Current employment in this region sits at 384,000, equal to 17% of all jobs in the province.

According to provincial projections, the region’s labour force will expand at an average

annual rate of 1.5% between 2010 and 2019. This represents a modest increase from the

1.3% growth rate recorded over the past decade. In contrast to the Lower Mainland, growth

in the labour force is expected to rise from 1.1% in 2013 to 2.4% by 2019. Because supply

responds to demand, this rise flows from an anticipated improvement in economic


conditions and thus better employment opportunities. Employment is projected to increase

by an average rate of 2.0% each year, with more robust job market conditions tilted

towards the end of the period. This is higher than the 1.7% average recorded over the

previous decade. Apart from a general commodity upswing and better economic times in

forestry, there are no obvious large projects on the horizon that will drive employment

gains, suggesting that a broadly based improvement underpinned by sustained in-migration

is the foundation for much of the expected increase in employment.

Employment growth is predicted to outpace labour force growth, with the job upturn

strong enough that the region may face a modest shortfall of workers as soon as 2014. By

the end of the projection period there will be a sizable annual shortfall of workers (7,800)

in the Vancouver Island/Coast region, which is likely to translate into more widespread

shortages. Nearly every three-digit occupation is forecast to experience shortages, many

within a couple of years. Shortages of managers are perhaps of greatest concern: excess

demand is seen for management positions in financial and business services,

communication, engineering, health, education, public administration, sales and marketing,

food services and accommodation, construction and transportation. Occupations related to

transportation will also experience shortages.

Thompson-Okanagan

Thompson-Okanagan is the province’s third largest labour region. In 2010 there were

257,000 people employed in the area, representing 11.4% of all jobs in BC. Over the past

decade Thompson-Okanagan has registered the strongest job growth among the seven

labour market regions, with a 2.1% annual increase versus the provincial average of 1.6%.

Looking ahead, the Labour Market Outlook anticipates job growth will ease to 1.6% per

year over the projection period. As with the Vancouver Island/Coast region, weaker

employment gains are expected in the short term, with more robust market conditions

evident by the latter years of the decade.

The labour force should expand at a 1.2% annual pace, one of the slowest growth rates in

BC and also well shy of the 1.9% average over the past decade. Note that even though job

growth is slated to outpace labour force growth, this region is expected to experience


relatively minor labour shortages, most of which do not emerge until 2017. Part of the

reason that shortages show up later than in other areas is because the Thompson-Okanagan

has had high unemployment rates in recent years. Many of these individuals need to be

absorbed into the workforce before shortages are registered in the modelling process. An

issue for many employers, however, is whether the unemployed have the skills and

experience they seek in new hires.

The regional projections do foresee shortages of qualified managers towards the end of the

decade, as well as shortfalls in accountants and investment professionals. It will also

become harder for employers in the region to find workers in most of the trades (electrical,

plumbers, carpenters, masonry and plastering trades).

Kootenay

The Kootenay region is small, employing just 70,000 people or 3.1% of all jobs in the

province. The number of jobs is predicted to rise by an average annual rate of 1.7% and,

as with the other smaller regions, employment growth should pick up notably towards the

end of the projection period. This is a very different picture than the past decade, which

saw absolute employment decline between 2001 and 2010. Reflecting soft employment

conditions in the region, the labour force also did not expand during this time. In the

coming decade, more buoyant economic conditions and accompanying job opportunities

are expected to lift the Kootenay’s labour force growth rate to 1.1% per year.

Labour shortages are projected to emerge as soon as 2014, and will be more significant by

2017 when there will be a shortfall of 2,000 people. As in other regions, filling a variety of

management positions is apt to be especially challenging. While the absolute numbers are

not large, in the context of the region’s small workforce and population substantial

shortfalls will show up for managers in construction, facility operations managers and

primary production managers. Physicians and dentists will also be in short supply, along

with other health care occupations.


Cariboo

In 2010 there were an estimated 80,000 people working in the Cariboo labour market

region, representing 3.6% of the province’s workforce. This region is expected to

experience the most significant labour shortages in BC, with overall demand outstripping

supply as soon as 2012-13. Supply shortfalls are predicated on solid economic growth and

a greater demand for workers in many sectors. Employment is forecast to increase by an

average 1.8% per year over the projection period, which marks a turnaround from the past

decade when it edged ahead by just 0.3% annually. Built into the forecast is an assumed

inflow of people into the region so that the labour force expands by 1.2% each year thanks

to fairly strong economic conditions.

By 2015, the supply-demand analysis points to a shortfall of almost 2,400 workers in the

region. Proportionally, the Cariboo is on track for the most significant skill shortages in the

province. Current labour market indicators suggest the modelling and projections on which

the above forecasts are derived are sound. A (still tentative) recovery in forestry, the

ongoing expansion in mining, and solid growth in transportation and logistics are already

resulting in hiring difficulties and sparking concern that there will not be enough workers

for upcoming construction projects or to meet the near-term needs of the transportation

sector. Unemployment in Prince George is currently at 5.8%, which is the second lowest

rate of any city or urban region in the province that is tracked by Statistics Canada (only

the Northeast has a lower unemployment rate). The unemployment rate in the broader

Cariboo region is 7.1%, which puts it in the unusual position of having unemployment rate

below the Lower Mainland’s.

The Cariboo is not expected to experience management shortages to the same extent as

other regions. What does loom, however, is a projected shortage of school teachers. The

outlook is for 1,160 job openings for teachers, with 980 of them resulting from

replacements (which is nearly half of the current workforce). Shortages in many of the

skilled trades are also anticipated. There will be excess demand for some trades

occupations as soon as 2012. For many occupations, a high proportion of job openings


will be due to retirements. For example, there is expected to be a total of 1,720 openings

for motor vehicle and transit drivers, 1,200 due to replacements.

North Coast/Nechako

There are just 40,000 people working in the Northcoast/Nechako, or 1.8% of the provincial

workforce. Ten years ago 47,000 people were employed in the region. It is the only

labour force area in BC that experienced an outright decrease in employment over the past

decade. The latest forecast, however, points to a different future. Boosted by Rio Tinto

Alcan’s multi-billion dollar upgrade to its aluminum smelter, the LNG plant in Kitimat, the

electrification of Highway 37, new mining opportunities, and further capacity expansion in

the Port of Prince Rupert, this region is expected to record employment gains of 2.9%

annually over the next decade, which is the strongest growth in the province. A confluence

of large projects will result in employment growth peaking at 6.5% as soon as 2013. As

with the Cariboo, significant shortages across various occupations are expected to emerge.

Job opportunities mean people will migrate to the region, and companies will have to bring

people in to complete projects. Mirroring demand, the projections foresee the biggest

percentage increase in labour supply of any region in the province. Annual growth in the

potential supply of workers will rise to around 5% by the middle of the decade and then taper

off to 1% by 2019. Perhaps not surprisingly, there is a projected shortage for managers in

construction and transportation. Shortfalls of health professionals are also anticipated.

Northeast

The Northeast has the smallest workforce (37,000 employed in 2010) of any region and the

lowest unemployment rate in BC. Employment growth has averaged 1.6% over the past

decade. The medium-term outlook is similar, with employment projected to expand on

average by 1.7% per year in the coming decade. Excess labour demand conditions are

forecast to show up by 2013. The employment forecast for this region is largely a status

quo projection, but shortages result from the fact that labour force growth slows from an

average pace of 1.6% annually to 1.3% as the decade progresses. Skill shortages are

forecast for 2013 and persist right through to 2019.


Summary of the Regional Labour Market Outlook

The modelling results for the seven labour market regions indicate that skill shortages will

be most pervasive in resource-oriented regions with smaller labour markets, particularly

the Cariboo and the Northcoast/Nechako. Few outright or persistent shortages are

anticipated in the Lower Mainland.

With the backdrop of healthy global commodity markets, the labour market modeling

embraces an upturn in economic growth for all regions, except the Lower Mainland. Here job

growth, and by extension economic conditions, are expected to be very similar to the recent

past. The regional labour market models are calibrated such that migrants are assumed to

be attracted into regions in response to available employment opportunities. As previously

noted, this kind of modelling does not provide insight into the time it takes for markets to

adjust or how the adjustment process actually unfolds. In reality, some employers, notably

in smaller and more rural/remote areas, will likely have to offer wage premiums or bonuses

to attract workers, including young workers. Employers will also need to play a direct and

significant role in securing workers for large projects, the opening or expansion of new

mines, and replacing retiring employees. During the boom years when production in

Alberta’s oil sands was ramped up and growth in the Fort McMurray area exploded,

employers there faced acute labour shortages. Workers were being offered generous wages

and large bonuses to come to the area. Employers also engaged in poaching labour from

other provinces (and other industries within Alberta). At the height of the skill shortages,

companies operating in the oil sands were flying workers in directly from Atlantic Canada.

As a final general point, if future economic growth turns out to be slower than anticipated

this likely would not alleviate projected shortages. While it is true that the presumed

economic upswing contributes to regional labour shortfalls, it is also the case that rural

labour markets will have higher proportions of job openings due to replacements or

retiring/departing employees. Moreover, recall that faster economic growth and more job

opportunities result in a greater supply of workers, mainly via in-migration. If economic

growth is softer than projected, the supply response will also be scaled back, so some skill

shortages are still likely.


Labour Market Trends in BC’s Technology Sector

The BC Technology Industry Association (BCTIA) recently published an assessment of labour market conditions for the province’s advanced technology sector. The report is based on a survey of BC technology companies and reflects the industry’s recruiting challenges and practices. Most of the questions and related analysis focus on current labour market conditions.

As a general backdrop, technology sector employment reached a peak in 2008 (78,500) but fell 6% (4,700) amid the 2008-09 downturn. Based on company responses, at the time it was prepared the report anticipated that employment in the sector would return to its previous level by the end of 2010 or early 2011. Whether this has materialized or not is difficult to say as special employment tabulations done by BC Stats have not been completed for 2010. At the time of the BCTIA survey jobs in highest demand were Software Engineers, Technicians/Technologists, Project Managers, Executive Management, Senior Sales positions/Sales Managers.

The survey asked respondents about recruitment barriers. In 2010 among 12 listed barriers, lack of available talent was second to high housing costs. In 2008 lack of talent was identified as the most significant barrier. With employment now recovering in the sector, and based on numerous anecdotal reports, talent scarcity has probably returned to the top place.

In a specific question regarding the “single most important job position your company is trying to fill,” sales positions were by far the most important (sales positions were ranked first and senior sales positions second). In trying to identify how technology companies are expanding their capacity to fill positions, the survey asked about research, co-operative education and training. Many companies report employing co-op students (although the response rate was quite low for this question). Co-op students do appear to be an avenue for sourcing new employees, as most companies who take on co-op students also report hiring former co-op students. Eighty per cent of respondents indicate that part of their salary budget is allocated to training. Almost 60%, however, spend less than 2% of their budgets on training.

Some interesting observations and anecdotes emerge from the survey. Respondents generally believe BC enjoys a good pool of talent, although many recognize the need to source additional talent from outside of the province. A fairly common response was that the downturn allowed a company to strengthen their human resources with skilled and experienced workers. More directly on the skill shortages issue, a few respondents noted they are already having difficulty hiring people to grow their business.

A couple of respondents indicated that because of the “leading-edge nature of their business, they will never find people with the exact skills and experience they require.” Similarly, a number of other companies, especially in the software sector, recognize that in working with the newest technology it is “extremely rare” to find senior people with proficient knowledge of programming. Invariably companies in these segments make some trade-off between technical skills and experience.

The survey does cover off anticipated labour demand for the sector. However, it only asked about anticipated hiring one year out, which at the time of the survey was 2010. The results did suggest that companies in the technology sector were expecting to grow in 2010, as overall employment was projected to increase 6% that year.

Source: BC Technology Industry Association, “Labour Trends in the British Columbia Technology Sector” (February 2010).


VII. Skills Mismatch

A growing “mismatch” of skills is another feature of the labour market that will exacerbate

challenges for many employers. Mismatch refers not only to very specific skill shortages,

but also to more general gaps in qualifications, knowledge, training and education. In this

situation, some people are unable to find jobs even as employers report that they can’t fill

vacant positions. While overall supply trends and demographics will shape the labour

market and largely determine future worker availability, it is possible that some regions

and industries could have a surplus of potential labour accompanied by shortages of people

with the qualifications that employers seek.7 In a dynamic economy where some industries

are expanding and others contracting, some degree of skills mismatch is always present.

But in a world of rapid technological innovation, with skill intensification of many jobs

and accelerating skill and knowledge obsolescence, the gaps between skills and job

openings may be widening. Temporary mismatches and “frictions” are inevitable, even in a

well-functioning economy, but long-term mismatches may dampen employment growth

and result in broader economic and social losses.

Some of the recent literature emphasizes the role that new technologies play in the

emergence of skills mismatches. From this perspective, changes in the skill composition

required for a particular job result from technological change. As firms adapt to and deploy

new technologies and alter their business processes, some existing workers become under-

qualified or under-skilled relative what their employers demand. With new technologies

becoming more pervasive, hiring difficulties then multiply.

Some aspects of the skills shortage issue appear to be driven by rapid changes in demand

for new – often technology-related – skills. For many workers, skill obsolescence

diminishes their capacity to perform their jobs and is a driver of skill shortages and

mismatch. In an economy and work environment where human capital depreciates, training

can play a critical role. While firm-sponsored training and up-skilling make sense for

7 For an introductory discussion of this topic in a Canadian setting, see Rick Miner, Jobs Without People, People Without Jobs (2010).


existing employees, training new entrants or workers transitioning from one industry to

another is a more complicated matter and may require a response through government

policy and targeted programming. There is also the problem of people who lack the basic

or foundational skills – literacy, numeracy, good work habits, etc. – that are necessary to

gain employment in most sectors. These individuals face a difficult future in today’s

increasingly knowledge-driven economy.

There are regional dimensions to the skills mismatch issue. Regional labour scarcity can

arise due to an absolute lack of skills – too few qualified people available to work in a

particular occupation in a given community. Mismatches can also occur when suitably

skilled people do exist, but live in different geographical areas, or do not meet employment

criteria for other reasons (such as a lack of Canadian work experience or possibly language

barriers). In BC, the pattern of reported skill and broader labour shortages suggests there is

an element of what we term “geographic labour mismatch”: some job opportunities are

found in regions where the labour supply is inadequate, and some unemployed and under-

employed people living in urban communities may be unwilling or unable to move to

where the jobs exist. This problem is likely to get more serious as the number of large

projects ramps up and the province’s resource sectors expand across less populated

regions.

In recent years there has been very little published research on skill or labour mismatch in

a Canadian context. But in the US, where the unemployment rate jumped from roughly 5%

to 10% during the Great Recession and has since remained stubbornly high, the issue has

garnered a fair amount of attention. A recent study by economists at the IMF examining

data from the 50 states from 1991 to 2008 concluded that state-level unemployment rates

are linked to skill mismatches as well as housing market developments.8 The analysis finds

that the aggregate mismatch between supply and demand for jobs and skills in 2010 was

about 1¾ percentage points higher than before the onset of the US housing market

8 Marcello Estevao and Evridiki Tsounta, “Has the Great Recession Raised U.S. Structural Unemployment?,” IMF Working Paper (May 2011).


meltdown at the end of 2006. Such mismatches have arisen nationally, and are more

apparent in certain states. Another study on US unemployment summarizes the issue

concisely in concluding that “[i]nadequate demand and inadequate education, relative to

available occupations are both hampering economic recovery in in U.S. metropolitan

areas.”9 The research suggests that reversing this trend will be difficult, requiring a mix of

targeted labour market policies as well as measures to expedite the stabilization of poorly

performing housing markets.

Canada has made greater headway than the US in reducing unemployment since the 2008-

09 downturn. The BC unemployment rate is currently 7.5%, down from more than 8%.

Despite this, anecdotal reports of hiring difficulties coupled with a relatively high

unemployment rate suggest that skill mismatches, geographic labour mismatches, and

accelerating skill obsolescence are already affecting the provincial labour market. Looking

ahead, policymakers and industry associations will need to carefully monitor job market

conditions to determine the nature and extent of skill and labour mismatches and how best

to respond.

9 Jonathan Rothwell and Alan Berube, “Education, Demand, and Unemployment in Metropolitan America,” Brookings (September 2011).


VIII. Addressing Skill Shortages

Economists generally agree that in a market-based economy where labour is mobile,

markets adjust to underlying changes in demand and supply, and this adjustment process

tends to reduce/eliminate shortages (and surpluses) over time. For this reason, in most

macro-economic models significant labour shortages do not persist indefinitely. But while

market forces can be expected to stimulate desired changes in individual behaviour,

business practices, public policy, and the use of technology, economists do recognize that

market imperfections, institutional barriers and information limitations may inhibit the

adjustment process. Moreover, even when labour markets have few barriers, adjustments

take time. One study examined the adjustment process for eight construction trades in 20

different Canadian cities, and in particular considered the length of time it takes for labour

markets to adjust.10 Using statistical

techniques, the researchers measured wage

shocks associated with skill shortages, and

concluded that the median “half life” of the

adjustment process is between 2.3 and 3.0

years. They also found there was not much

difference across the occupations studied.

Adjustment in some regional labour markets may also be hindered by small local

population bases and the preference of many people – including most immigrants – to

reside in larger urban communities. For smaller regions where labour shortages and skill

mismatches are likely to be most intense, multi-year adjustment periods are too long.

Regional labour shortages will often be linked to large projects initiated in response to

commodity upswings, which require quick labour supply responses. Companies in this

situation will be under pressure to actively recruit workers from other areas. And in smaller

labour markets, skill shortages that last for any length of time can be very disruptive for

local industries and communities.

10 Patrick Coe and J.C. Herbert Emery, “Accreditation Requirements and the Speed of Labour Market Adjustments for Eight Building Trades in 20 Canadian Cities, 1971-2004,” SRI Working Paper Series (2006).

… it will be incumbent upon government policy

makers, employer organizations and educational

institutions to constantly re-assess whether education

and training systems, immigration policy and other

aspects of the “human capital infrastructure” are

aligned with the economy’s needs.


Given the size and complexity of the labour market, and the speed with which conditions

can change (recall that BC’s unemployment rate jumped from 4% to 8% within eight

months over 2008-09), it is virtually impossible for governments (or employers) to fully

anticipate skill shortages and respond with appropriate training, education and human

resource initiatives. In addition to an aging population, labour market requirements are

changing. More jobs today demand specialized training and advanced skills. A steadily

growing knowledge economy and large numbers of projected openings in the skilled trades

and many technology-related fields means that more than three-quarters of future job

openings will require some form of education or training beyond high school. Invariably

there will be a certain amount of churn in the labour market. Some occupations will decline

or even disappear. The reality, however, is that with the increasing complexity of many

jobs, it may not be easy for people leaving one occupation to readily shift to another one.

As discussed in the previous section, some economists believe a fundamental mismatch

problem is one of the factors inhibiting employment growth and economic recovery in the

United States. Americans who were working in jobs that disappeared in the recession (e.g.,

in real estate, housing finance, and construction) are not able to move into other

occupations that are based on different skills and knowledge.

At a broad level, there is some evidence that skill mismatch is becoming a feature of the

Canadian job market.11 Prior to the 2008-09 downturn, the supply of newly qualified

workers in many provinces was falling short of demand in certain industries and

occupations. As the ranks of the unemployed gradually shrink and Canada continues to

rebound from the 2008-09 recession, the risk increases that economic growth may be

impeded by a disjunction between the skills that vacant jobs require and employers want in

new hires, and the qualifications of the available labour pool. In this environment it will be

incumbent upon policymakers, employer organizations and educational institutions to

constantly re-assess whether education and training systems, immigration policy and other

aspects of the “human capital infrastructure” are aligned with the economy’s evolving

needs.

11 Rick Miner, Job Without People, People Without Jobs (2010).


It must be noted that the micro-economic problems associated with skills mismatches are

not reflected in the aggregate or even occupation-based labour market projections

published by government agencies and discussed in previous sections of this paper. As a

result, there is reason to believe that future skill shortages in BC may be more serious and

persistent than suggested by the scenarios and forecasts summarized above.

Because of the difficulty in identifying skill requirements, policy initiatives instead should look

to the overall supply of workers in the province and its regions, with a focus on immigration,

improving education and training generally, and reducing labour market imperfections

predominantly through better information and careful monitoring. Creating structures and

institutions that are nimble and able to respond to changing circumstances may be one of the

best ways to mitigate and manage future labour shortages and skill mismatches.

Labour Shortages in the Tourism Industry

The Canadian Tourism Human Resources Council undertook an analysis of labour market needs in Canada’s tourism industry, a review that included provincial labour market projections. According to the report, the tourism sector could see a shortfall of more than 11,000 workers by 2015. Some of the most significant shortages are anticipated in the food and beverage industry.

The report notes that “labour shortages could be alleviated if wages were increased enough, but it would also force employers to pass the cost increases on to customers.” This is not a desirable outcome from the industry’s perspective, as it would stifle tourism demand and impose a toll on the industry’s profitability. (From an economy-wide perspective, however, wage adjustments in response to changes in a given industry’s labour market do not necessarily represent a serious problem.)

Priorities for industry to address labour shortages are identified as the following:

• Enhance the image and appeal of tourism jobs; ramp up efforts to promote tourism as a viable career option for young people

• Create partnerships to share part-time or seasonal workers

• Develop international work exchange programs

Priorities for government action:

• Address shortcomings in the Temporary Foreign Worker Program

• Revise Employment Insurance and Canada Pension Plan regulations

• Facilitate the transition of new immigrants into the workforce

• Provide tax incentives for training

• Increase tourism marketing efforts

• Increase awareness of current programs and services

Source: The Canadian Tourism Human Resource Council, “The Future of Canada’s Tourism Sector: Economic Recession Only a Temporary Reprieve From Labour Shortages” (February 2010).


Policies and Strategies

In thinking about “supply side” policies to help prepare for a world of heightened talent

scarcity, one key message is the continued necessity to upgrade the overall level of

educational attainment. This means ensuring that high school drop-out rates keep falling;

that more young adults receive some kind of post-secondary education/training beyond

high school; and that BC makes further progress in providing opportunities for educational

upgrading to First Nations and young people growing up in poor households. Boosting the

percentage of the working-age population with post-secondary credentials is important in

an economy that is based on knowledge, technology and creativity. A substantial body of

North American evidence indicates that higher

educational attainment produces positive

economic results, both for individuals and for

society. A recent US study reports that in 1969,

the average male college graduate working full-time earned 55% more than an average

male worker with only a high school diploma. By 2009, this earnings gap had more than

doubled to 116%.12 Canadian researchers have found broadly similar results: improved

workforce education and training lead to higher incomes, stronger productivity growth, and

better social outcomes.13 That said, there is some evidence that the value of a university

degree as measured by the earnings of graduates has diminished relative to the value of

college credentials. Importantly, university degree holders do on average still earn

significantly more, but the size of the gap vis-à-vis workers with college-level

qualifications has narrowed.14 This underscores that there are a variety of pathways to

further education/training which provide economic and other benefits to workers with post-

secondary qualifications.

12 Michael Greenstone and Adam Looney of the Brookings Institution, as reported in The Milken Institute Review (Third Quarter 2011), p. 19. 13 See for example W. Craig Riddell, “Investing in Human Capital: Policy Priorities for Canada,” In J. Leonard, C. Ragan and F. St.-Hillaire, eds., A Canadian Priorities Agenda: Policy Choices to Improve Economic and Social Well-Being (Montreal: IRPP, 2007). 14 “The Value of Education,” Martin Prosperity Insights, Rotman School of Management, University of Toronto (2011).

The evidence is clear that more education

produces positive economic results, both for

individuals and for society.


Immigration

One way to augment and improve the labour supply is through smart immigration policy.

Higher levels of immigration are clearly one route by which a jurisdiction can seek to

expand the labour pool. Indeed, the Business Council’s initial 2009 projections for the BC

labour market found that a moderate increase in immigration would result in measurably

stronger labour force growth. A review of immigration over the past 15 years indicates that

the federal government has generally come close to meeting its published target levels, and

in some years it has been at the high end of its stated range. The new Canadian Experience

Class (CEC) category of immigrant within the broader Economic Class should help to

open new avenues to permanent residency for individuals who have already spent time in

the country.15 The temporary foreign worker (TFW) program has proven to be effective in

helping to ameliorate labour shortages,

particularly on a regional basis. One of its

benefits is the capacity to target specific

occupations; another is the relatively quick

processing time. Given the regional aspect of

labour shortages, note too that in the past

temporary workers have been dispatched across the province to meet regional

requirements. The federal government recently extended temporary work visas from one to

two years, and it would be a simple matter to adopt three-year work visas if labour market

conditions warrant such an extension. TFW programs can play a role in expanding and

adding to the flexibility of labour supply, particularly in an economy that remains subject

to cyclical swings.

For many occupations, hiring a temporary foreign worker requires obtaining a labour

market opinion (LMO) confirming there is no suitable local candidate for the job in

question. It may be useful to clarify and confirm the criteria for LMOs. A concern is that

approval rates of LMOs may fluctuate in response to changes in the overall labour market

environment (i.e. a higher unemployment rate), while hiring conditions for a particular

15 BC Stats, “A Summary of the Federal Immigration Plan,” Immigration Highlights (Third Quarter 2008).

Greater use of the Provincial Nominee

Program (PNP) to expedite the immigration

process for individuals coming for a particular

job is also desirable.


industry have not changed. It may also be helpful for government to more clearly and

readily convey which industries can utilize temporary foreign workers without having to

apply for a LMO. It is likely that many companies in the province are unaware of the

temporary foreign worker program in general and the occupations that do not require an

LMO more specifically.

Greater use of the Provincial Nominee Program (PNP) to expedite the immigration process

for individuals coming for a particular job is also desirable. The Business Council has

advocated expansion of the PNP program, and in recent years the BC government has

taken steps in this direction. The PNP is a more flexible and responsive program for

meeting labour market needs than the mainstream federal economic immigration programs.

A recent review of the program found that 94% of PNP nominees stayed in BC, and 84%

are still in the community they planned to settle in at the time of nomination.16 The

program has also been effective at addressing regional skill needs, with 25% of nominees

settling outside of Metro Vancouver. In comparison, just 10% of federal Skilled Worker

Immigrants move to communities outside of the Metro Vancouver. In the context of both

the PNP and temporary foreign workers, employers and policymakers should recognize

that labour market conditions remain poor in the US, and this may provide a time-limited

opportunity to attract skilled workers from south of the border. In 2010 the cap for the PNP

was 3,500 nominees. The Business Council has urged that this number be doubled and

even stretched to 10,000, something that could be done with only a modest increase in

administrative resources.

Many immigrants face significant barriers in the Canadian labour market. Occupational

and professional licensing bodies often make it difficult for newcomers to work in their

chosen occupations. We believe all occupational and professional licensing bodies should

be required to establish mechanisms that allow immigrants to apply for certification

through a “timely, well-defined procedure of appropriate testing to ensure that their

16 BC Ministry of Jobs, Tourism and Innovation, “BC Provincial Nominee Program Evaluation Report, (2011).


qualifications meet the current standards of the occupation.”17 New and expanded bridging

and mentoring programs are also needed to facilitate immigrants’ transition into the job

market. While a number of programs are in place to help immigrants move into the

workforce, new and more innovative approaches are necessary. The Immigrant

Employment Council is one agency that is working to support the integration of new

immigrants. The City of Vancouver and some other large employers have developed

mentoring programs to assist newcomers make their way into the job market. Since so

much of the growth in BC’s labour force depends on immigrants, devoting additional

public and private resources to ensuring their success is prudent. This is a task that

government alone cannot undertake: industry, employer associations, occupational and

professional licensing bodies, educational institutions, and communities will all need to

contribute.

Increasing Labour Force Participation

Policies to encourage higher participation among some demographic groups are also

important. In this regard, the Aboriginal population is an important source of potential

workers. In the 2006 Census 196,075 people in BC identified themselves as Aboriginal,

representing 4.8% of the provincial population.18 Approximately 150,000 Aboriginals live

off-reserve. For those off reserve, the current labour force participation rate (ages 15-64) is

70.7%, compared to 77.9% for the non-Aboriginal population. Closing this gap would

generate a (one-time) addition of 10,000 people to the province’s workforce. The

Aboriginal population is much younger than the non-Aboriginal population, and it is

growing faster. With a median age of just 28, there is scope to encourage more young

Aboriginals to participate in the job market, even though the absolute impact on the size of

BC’s workforce would be modest. The abundance of opportunities in the north also means

that for much the Aboriginal population these jobs may be close to where they reside.

17 David Foot, “Some Economic and Social Consequences of Population Aging,” in J. Leonard, C. Ragan, and F. St.-Hilaire, eds., A Canadian Priorities Agenda: Policy Choices to Improve Economic and Social Well-Being (Montreal: IRPP, 2007), p. 200. 18 BC Stats, “The Aboriginal Population in BC and Recent Trends in Off-Reserve Aboriginal Labour Force Participation,” Infoline (March 28, 2008).


Taking steps to encourage females to pursue vocational and technical careers would help

meet demand for workers in the skilled trades. Females are underrepresented in these

occupations and should be part of a comprehensive solution to address labour shortages in

the building and construction industry. To address near-term shortages training and

apprenticeship programs will need to enroll more young adult females, but longer term the

K-12 system should implement programs that support females going into the trades.

As noted earlier, participation rates have increased for older workers. With recent legal

changes extending the protection of workers’ rights beyond age 65, mandatory retirement

effectively has been eliminated in BC across most industries and occupations. With this

policy in place, participation rates for workers beyond the traditional retirement age could

rise further. Modifying the rules governing the Canada Pension Plan – e.g., slowly

extending the basic retirement age, as some other advanced countries are now doing –

could also prompt more older workers to postpone retirement, thus boosting the available

labour supply. Recall, too, that participation rates for people in the 55-64 age group have

risen in recent years. It is possible that higher participation rates in this demographic group

could be further encouraged through additional support for training and the adoption of

age-based tax credits or other incentives. Employers interested in making greater use of

older workers may need to revise their internal policies and practices to accommodate their

needs and make it more attractive to work part-time.

Enhanced Labour Market Information

In terms of addressing labour market imperfections, one area where government can help is

through improved labour market information [LMI]. The provincial government has made

strides in this area, including by producing the detailed projections that were the basis for

much of the discussion in this paper. However, the development of a more robust LMI

system that includes enhanced regional intelligence would be useful. In smaller

communities regular monitoring of job openings and expansion plans at companies and

other larger employers may help provide more “real time” information that could be fed

back to local colleges and other provincial education and training facilities. Practices from


other countries may help inform advances in this area. The United Kingdom is viewed by

some experts as being world leader in the area of LMI.19 Australia makes use of the private

sector to develop LMI and focuses on providing students in school with relevant LMI. In a

recent review, Canada is characterized as having an excellent LMI system, with a highly

diversified set of information providers and sources. A notable weakness, however, is the

lack of institutional requirements to provide LMI in schools.20 This information gap makes

it harder for young people to gain a realistic appreciation of career, education, and training

options and opportunities.

Regional Labour Supply

Regionally targeted approaches to boosting the qualified local labour supply are also worth

exploring. For example, with the anticipated shortage of trades in the Cariboo, it may be

time to consider expanding technical training in the north. This could entail more capacity

at the College of New Caledonia, or perhaps enhancing the university transfer mandate of

the colleges and/or establishing a satellite BCIT campus in Prince George. Developing an

engineering education program at UNBC also merits consideration. Because regional skill

shortages are likely to present the greatest challenges, incentives to encourage people

(including migrants) to settle in areas outside of the main urban centres may make sense.

These might include tax credits and partial forgiveness for student loans if individuals

commit to working in communities experiencing labour shortages.21 Provincial assistance

or funding mechanisms linked to regional “resource rents” could also be used to upgrade

regional and community infrastructure. Enhanced transportation infrastructure improves

connectivity with the rest of the province and supports population growth in smaller

communities. Investment in community amenities also makes staying in or migrating to

smaller centres more attractive.

19 Human Resources and Social Development Canada, “Adjustment in Markets for Skilled Workers in Canada: A Synthesis of Key Findings and Policy Implications” (April 2008), p. 22. 20 Ibid., p. 23. 21 Of interest, the province of Manitoba provides relief on student loans to Manitoba university graduates who remain in the province after completing their degrees.


Focus on Education and Training

Education and training is a large and complex policy area covering an array of institutions

and programs, and it warrants a more in depth analysis than can be provided here. Some

general comments relating to skill shortages and overall policy directions are noted.

A simple but important point with respect to education is that adjustment in labour markets

for higher skilled occupations doesn’t occur overnight; it usually is a multi-year process,

since many of these jobs require four or more years of training. Addressing anticipated

skill shortages in 2016 or 2017 through the education system means students need to be

entering relevant post-secondary programs now. However, if young people are to respond

to changing labour market demands through education, they can only do so to the extent

that space and suitable programs are available. While BC has greatly expanded the overall

capacity of the university system in recent years, an outstanding question is whether the

space and resources are allocated to areas where more graduates are actually needed. Some

commentators have also noted BC and Canada continue to trail other OECD counties in

producing advanced degrees (doctorates), as well as engineering and other science and

technology-related degrees. Doctors, nurses and other medical practitioners are also going

to be in short supply in the coming decade. A related issue is whether BC should be

looking to train sufficient numbers of people in all high-skill occupations, or intentionally

supplement local supply with immigration (and the PNP) and in-migration from the rest of

Canada, as we have traditionally done. In at least some areas, the educational system needs

to add capacity to provide more non-university technical and vocational training for young

adults who complete high school but aren’t necessarily interested in or oriented toward

university academic study.

In terms of training “the overall picture that emerges is that training (other than that

imposed by regulatory requirements) should be viewed as a complement to education as a

source of skills, not as a substitute.”22 That is, for many people, career- and job-related

22 Human Resources and Social Development Canada, “Adjustments in Markets for Skilled Workers in Canada: A Synthesis of Key Findings and Policy Implications” (April 2008), p. 28.


training occurs after they have obtained a prior post-secondary credential of some kind.

Higher skill workers usually cover much of the cost of their own training and prefer to

make their own training choices.

Apprenticeships are a form of employer-based training (with a classroom component) that

attracts a significant amount of attention. Some analysis indicates that apprenticeship

completion rates are low in Canada and exhibit a long-term downtrend. Research also finds

that most of the public funding for employer-supported training in Canada goes to

apprenticeships.23 A question posed in a recent review of national labour markets is whether

a broader reexamination of the apprenticeship system should be considered. The same

review asks whether the highly developed system of community colleges could be used to

develop more comprehensive college programs combined with work terms.24

British Columbia has established an industry-driven trades, apprenticeship and technical

training system overseen by the Industry Training Authority (ITA) that involves several

Industry Training Organizations (ITOs) as well as a number of colleges and other

educational institutions that supply the classroom component of training leading to a

recognized credential. The BC government spends in the vicinity of $100 million per year on

the apprenticeship system, with additional funding provided to support technical and

vocational education/training outside of apprenticeships. To prepare for future opportunities,

it is clear the workforce will require a higher level of recognized and advanced skills, both

through university/college credentials but also in the trades, technical and other career-

focused areas. Government needs to ensure that all parts of the public education/training

infrastructure are contributing to the goal of building a world-class human capital base in

British Columbia. All institutions in receipt of public money should demonstrate an

understanding of the relevant parts of the economy and the labour market. They must be

willing to work collaboratively with industry and employers – and on a cross-institutional

basis – to develop and deliver programs aimed at upgrading the skills and qualifications of

the workforce.

23 Human Resources and Social Development Canada, “Adjustments in Markets for Skilled Workers in Canada: A Synthesis of Key Findings and Policy Implications” (April 2008), p. 28. 24 Ibid., p. 28.


In the area of education and training, it is noteworthy that a significant number of students in

BC obtain a bachelor’s degree from a university and subsequently pursue career-based

training at a college or at BCIT in order to acquire more specialized employment skills. The

province and the various post-secondary institutions could explore the potential to create

hybrid programs that involve perhaps two years of university/college training in conjunction

with two years of career-oriented or more vocational training. The primary objective would

be to speed up and streamline the education and training process for people who are looking

to supplement academic credentials with career-oriented training, and vice versa.

The province’s post secondary institutions should also take further steps to expand work

co-op programs for students. Co-op programs are an effective means to permanent

employment for students and provide an opportunity for employers to evaluate potential

new employees. More widespread use of co-op programs may also result in a greater

number of skilled residents if they lead to more foreign students remaining in BC when

they complete their education.

MITACS

Mitacs is unique organization working to develop the next generation of innovators with vital scientific and business skills. In partnership with companies, government and academia, Mitacs helps place university students in advanced internships and supports the development of people through a number of unique research and training programs.

Accelerate is a premiere research internship program that connects companies with over 50 research-based universities. Graduate students and postdoctoral fellows are able to apply their expertise to specific business research and development challenges. The key benefit of the program is that interns gain experience applying their skills to real-world applications, while the companies benefit from high-quality research expertise.

The Mitacs Elevate program provides companies access to a highly qualified and skilled pool of newly-minted PhDs. Through Mitacs Elevate, new PhDs create and lead a major industrial research project while establishing vital connections within the local business community.

Mitacs’ Globalink is designed to introduce top undergraduate students from around the world to research and innovation opportunities in Canada. Students in the Globalink program undertake a research project with the supervision of a local faculty member while connecting with local, cutting-edge companies. Participants are also mentored by a local graduate student. One benefit of the program is that some talented foreign students who go on to obtain a Canadian graduate degree will remain the country after completing their studies.

As the name suggests, Step is a comprehensive program designed to assist individuals in making the transition from an academic research environment into the business world. Step trains graduate students and postdoctoral fellows in essential interpersonal, project management and entrepreneurial skills required for them to succeed in their future career.


Finally, we recommend that the province undertake an updated review of the structure and

capacity of the publicly-funded post secondary education and training system to ensure it is

aligned with labour market demands and economic trends. This would build on the work

done for the Campus 2020 exercise several years ago. In a world of talent scarcity,

increasingly specialized skill requirements, and limited taxpayer funds, it is becoming

more important than ever to educate and train people in an efficient and cost effective

manner. Such a review should be comprehensive and examine the overall capacity of the

system, the mechanisms for delivering education and training, best practices in other

jurisdictions, as well as some of the ideas identified above (regional vocational schools,

hybrid programs).

Employer Initiatives and Adaptation

To the extent that British Columbia does experience significant skill or wider labour

shortages within the next decade, employers will certainly feel the pinch. In addition to

advocating for sensible government policies and programs, employers will have to manage

and make adjustments. For example, in certain fields there will be upward pressure on pay

and benefits. This will be most notable in areas of skill shortages, but it may also spill over

to other occupations. In turn, some employers will rationally respond by making greater

use of capital (including new technologies) to substitute for more costly and harder-to-find

labour. With skilled workers scarce, job-hopping and career shifting will become more

common, particularly among workers keen to take advantage of their enhanced bargaining

power and the existence of a wider range of job opportunities.

Some employers will decide to undertake more training and development of the existing

work force – including “older” employees – because of the difficulty of hiring qualified

people from outside the organization. There is already evidence of this in the retail industry

and some other sectors across North America. International out-sourcing to labour-

abundant developing countries is likely to become an option for more industries operating

in a labour-constrained Canadian economy.


Partnerships between business and post-secondary institutions to produce educational and

skill development programs designed to meet industry requirements should become more

prominent. As discussed above, here the BC community college system may be

particularly well-positioned. Also, expanding the use of programs that provide students

with credit for work experience can help bridge the high school to post-secondary pathway

and expedite young adults’ transition to the workforce.

New initiatives are needed to facilitate the recognition of foreign academic and professional

credentials. Currently, many immigrants are unable to work in occupations for which they

were qualified before coming to Canada. Mechanisms are needed to enable immigrants

with credentials in high-demand fields (e.g., nursing, engineering, skilled trades) to proceed

more quickly through the steps necessary to obtain certification to work in Canada. The

federal government, some provincial governments, and a number of occupational and

professional licensing bodies are starting to address this important issue but more must be

done as immigration becomes virtually the sole driver of population and labour force growth.

In light of the demographic trends discussed earlier, an increasing number of job

opportunities will become available for older workers who are prepared to remain in the

labour force. More employers will need to take a fresh look at their pension and other

benefit plans, with a view to lessening disincentives for workers in their 50s and early 60s

to stay on the job. In the long run, we believe that raising the retirement age in statutory

public pension plans like the CPP will be necessary, as has already occurred in the US,

Sweden and some other European countries.

Looking ahead, particularly to the latter part of the decade, some organizations may have

to revisit their hiring expectations. With highly specialized skills increasingly difficult to

find, employers may need to hire people who are not fully qualified and then provide the

necessary training. Some may have to boost compensation to attract workers with the right

mix of skills. In this environment, it will be important for human resources staff to

communicate the extent and nature of hiring challenges to senior management.


IX. Summary and Conclusion

This paper reviewed two independent labour force projections. The first was developed by

the Business Council in 2009 and explored the likely trajectory for labour force growth in

BC. The picture that emerges is shaped primarily by demographics, with some recognition

that tighter labour markets will prompt a labour supply response through increased net

migration and higher participation rates. The results of the 2009 study indicate that the

growth in the labour force will slow, particularly toward and after 2020. During this

decade, the labour force is expected to expand by an average of 1.3% per year, which

should be sufficient to accommodate a reasonable pace of economic growth and avoid

pervasive province-wide labour shortages. Previous work examining the impact in changes

in some of the factors affecting the labour force suggests that small shifts in various

demographic parameters can significantly mitigate and delay the slowdown in the growth

of labour supply arising from the macro-trend of population aging. There is already

evidence that more individuals from older population cohorts are staying in or rejoining the

workforce. And the recent boom/bust economic cycle confirms that younger people readily

enter and exit the workforce in response to prevailing economic conditions.

The more comprehensive supply/demand forecasts done by the BC government also

anticipate somewhat stronger labour force growth through 2019. In large part this reflects

the calibration of the provincial model, in which labour supply is assumed to respond to

demand, mainly via in-migration. The modelling is predicated on a fairly robust economic

outlook. We believe the provincial model understates the likely extent and impact of skill

shortages, but it is worth noting that the government’s analysis does point to significant

labour shortfalls in some resource dependent regions.

While projections can identify areas where shortages are expected to emerge and thus

assist in planning and policy development, some caution is warranted. The behaviour of

the provincial labour market and the interaction and operation of the sub-provincial

markets are complex matters. And as the most recent economic boom and subsequent

downturn showed, labour market demand can change rapidly. Fully anticipating economic


developments over the long term is exceedingly difficult. Enhancing LMI systems and

building institutions that are flexible and responsive are high level strategies that can guide

longer-term planning.

One thing is clear: the impending retirement of the large baby-boom generation heralds big

changes for the labour market and will give rise to human resource issues for employers in

many sectors of our economy. The baby-boom generation is well-educated, with many

having entered the workforce at a time when the post-secondary education and training

system was in a strong expansion mode. In previous decades, younger workers entering the

job market were typically much better educated – and more numerous – than their older

counterparts transitioning towards retirement. However, over the next decade the

educational attainment gap between new and retiring workers will narrow. Moreover, the

number of young workers in BC will not be increasing at the same pace as in the past.

Thus, the baby-boom retirement wave that is about to begin can be expected to create a

more complex labour market for employers, and it may also slow down the improvement

in overall skill/education levels – or “human capital” – in the economy as a whole.25

*****

25 A useful discussion of this topic can be found in David Neumark, Hans Johnson, and Marisol Cuellar Mejia, “Future Skill Shortages in the US Economy,” National Bureau of Economic Research, Working Paper No. 17213 (2011).


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