Overcoming labour shortage – the road ahead for Canada’s labour market

Small Business Canada

The onus to finding the right balance and maintain the talent demand is now on Canadian businesses

By Jim Mitchell, President of LHH

Throughout the past year, employers and employees across the world experienced unpredictable uncertainty that forced innovative strategies to mitigate the relentless disruption. As we move closer to a post-pandemic world, Canadian businesses have optimistically started preparing for recovery with return-to-work plans.

The key question that lies ahead of Canada’s labour market is, how can we maintain the equilibrium of talent demand and supply when a record surge in job openings is anticipated?

Learning from neighbouring labour markets 

Looking at the reopening roadmap of the United States, where the hiring surge was synonymous with labour imbalance, it is reasonable to anticipate that a similar trend could occur in Canada. As Canadian businesses begin to reopen after months of restrictions, severely hit industries like retail, hospitality and transportation will likely have the strongest rebound. This reopening also presupposes a surge in job openings and a struggle to find replacements for employees who were laid off.

According to Statistics Canada, a significant number of job losses (54,000)were shed in part-time work, provoking worry amongst businesses seeking to fill positions.

In 2020,  approximately 10 to 15 per cent of hotels and restaurants in Canada closed their doors, accounting for 71 per cent of the 500,000 Canadian jobs that disappeared early in the pandemic. Now, as these full-time and part-time jobs begin to return, many previous employees have redeployed to other sectors or resorted to the wage subsidies offered by the Canadian government. Over the coming few months, the Canadian labour market will open its doors to a range of jobs across the service sector, and the onus to attract Canadian workers back into the labour force will fall upon Canadian employers across these industries.

Moving away from subsidies to build a sustainable talent

Currently, around three million Canadians are receiving jobless benefits through Employment Insurance (EI) or Canadian recovery benefits.

Many Canadian workers have come to rely on the income support offered by the government, creating another headwind for Canada’s labour market recovery which could be shaped by the heavy reliance of potential employees on these wage subsidies.

The pace of job openings may soon outweigh the number of job applicants across the labour market in Canada. With this imbalance of supply and demand for talent, organizations and employers will need to introduce innovative strategies that re-engage potential employees and break away from existing income supports. The early stages of the recovery will potentially see an increase in overall wages.

Remove barriers to training and skilling

Statistics Canada data from March showed that the professional, scientific and technical services sector had more than 46,600 job vacancies. While there are a plethora of opportunities for labour entrants with STEM skills, industries and companies seeking new employees need to offer training opportunities to new hires from other educational backgrounds. They also need to encourage lateral employee career moves and help employees upskill and reskill for in-demand roles. This will soon be a core selection criterion that will define an employee’s decision to accept a job. Keeping this as the foundation of their talent strategies, companies will need to make structural changes that better reflect a confluence of factors such as training, reskilling and upskilling of new hires. It is also important for companies to help employees identify transferable skills to be considered for other internal roles.

As Canada’slabour market bounces back from the shock of the pandemic, the summer months should witness staged growth as public health measures are relaxed.

A healthy combination of lower entry barriers for new hires, relevant training opportunities and incentives will ultimately help Canada’s labour market recover more evenly.

Jim Mitchell, President of LHH leads the Executive Committee for LHH in Canada and is a Global Executive Vice President. He is responsible for all Canadian lines of business: Career Solutions, Talent & Leadership Development and Executive Search & Recruitment. Jim.mitchell@lhh.com

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