Scofield: Canada’s worker shortage has one big upside for employers

And employees:

The supertight job market that is bedevilling employers and the Bank of Canada alike has an upside: it has managed to do quickly what employment equity practices and public policy have struggled with for years.

It has drawn in racialized workers, new immigrants, young people, older workers and women in astounding numbers, making history along the way.

Whether that kind of inclusion can last, however, is an open question that will depend on employers and public-policy makers alike.

For one, the current pace of hiring is not likely to last.

In May, the unemployment rate hit a record low of 5.1 per cent, Statistics Canada reported on Friday. Employers created just 39,800 new positions over the course of a month — solid although nothing to write home about.

Still, from the start of the pandemic, the job market is now 497,000 positions larger than it was back then. In other words, after all of the ups and downs, closures and reopenings, illness and fear, that’s half a million more jobs than what we used to have, and it speaks to the resilience of the Canadian labour market.

That resilience has benefited a wide array of people who used to have a hard time getting a fair shake.

Let’s look at workers between the ages of 25 and 54 years old, to start. First Nations women in that age bracket have seen their unemployment rate plunge 9.3 percentage points over the past year to 7.3 per cent. Southeast Asian women have a 4.1 per cent unemployment rate, which is 6.3 percentage points lower than a year ago. Filipino men have a 3.4 per cent unemployment rate, down 4.7 points on the year.

Participation rates — how many people are actively working or looking for work — are also proof of significant progress for some key demographics. The participation rate is at a record high for women aged 25 to 54, at 85 per cent. That’s still lower than men of the same age (91.9 per cent), but after all of the troubles women had at the beginning of the pandemic, it’s remarkable.

The experience of newcomers to Canada is also eye-opening, says Brendon Bernard, senior economist at jobs website Indeed.com. He points out that immigrants who have been in Canada for five years or less are jumping into the job market in leaps and bounds, and they’re landing pretty good jobs.

Before the pandemic, their participation rate was 76.5 per cent. Now, it’s 84.3 per cent. And wage data shows they’re being hired into higher-income areas.

“One of Canada’s longest-standing labour market challenges has been the underemployment of newcomers. And there really has been a noticeable shift,” Bernard said in an interview.

Can it all last? Or will the pending slowdown in the Canadian economy make for “last hired, first fired” and erase the gains for demographics that have been struggling to catch up?

Jean-François Perrault, chief economist at Scotiabank, suggests it can actually last. For sure, hiring is set to slow down as the economy overheats and the central bank moves to cool it off by dramatically raising interest rates. But at the same time, Perrault points out there are about one million vacancies in the job market right now, and they’re not just going to evaporate with a slowing economy.

“There’s this huge backlog of jobs to fill,” he said. For companies hoping to just get by day to day, “these vacancies are massive, and they’re critical.”

He suspects even if the pace of hiring slows down over the next few months, vacancies will remain high. So employers are deeply concerned about long-standing labour shortages and they’ll hang on to their workers for as long as they can. It’s just too hard to ramp back up.

For politicians, this means they can’t really afford to let up on their policy attempts to draw more people into the workforce, even if the job numbers soften.

Even if there’s a downturn, the long-standing trend toward an aging population means Canada will need to encourage older workers and women to join the workforce in greater numbers over the next few years.

Ottawa’s $30-billion child care strategy was supposed to dramatically increase women’s participation in the workforce, but it has been slow to fully gear up. The returns, in terms of labour participation, are likely still years away.

And the federal Liberals are unlikely to reverse their dedication to retiring at 65 to encourage older workers to stay in the workforce longer.

But if employers and policy-makers are wise, they’ll take a look at what the tight job market has accomplished for them, appreciate what the gains to inclusivity have done for their workforce, and then lock them in.

The next slowdown doesn’t have to set us back.

Source: Canada’s worker shortage has one big upside for employers

About Andrew
Andrew blogs and tweets public policy issues, particularly the relationship between the political and bureaucratic levels, citizenship and multiculturalism. His latest book, Policy Arrogance or Innocent Bias, recounts his experience as a senior public servant in this area.

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