Canada and Quebec / Working on EI regulations will marginally help in responding to labour market needs

Unemployment worldwide and youth unemployment are a tragedy.

The number of unemployed in the world has exploded with 28 million people jobless in the five years following the global financial crisis. In 2012, there were 197 million people unemployed according to the ILO.

In 2013, about 210.6 million people will be unemployed according to the ILO. This does not even include people who have stopped looking for work, hiding the true extent of the jobs crisis.

Young people are three times more likely to be unemployed than adults, and more than 75 million young people around the world are looking for a job.

The ILO figures speak for themselves: higher overall unemployment rate worsens the situation of young people. Some examples among industrialized countries: Greece, Spain, Italy …

Moreover, it appears that the way training is organized is an important determinant of the ability of young people to enter the labour market.

From all evidence, some countries do better than others at integrating young people into the labour market because, first, overall, their labour market is in better health, but also because youth education better meets the needs of the labour market. This is the case in countries with well developed  apprenticeship programs like Germany and the Scandinavian countries.

Canada and Quebec enjoy a very enviable situation

Fortunately, the Jobs Gap dug by the recession has been more than filled in Canada. The general situation of the labour market compared to what is happening elsewhere in the world is quite enviable.

In Canada, employment had reached a level exceeding by almost half a million its top level before the financial crisis. This is not the case in the United States. The Brookings Institute estimated the Jobs Gap still to be filled at no less than 11.1 million jobs last September.

Certainly, Jobs Gaps coexist with Skills Gaps and labour shortages. Canada is a large country with labour markets varying in situations, by occupation, from one area to another and from one sector to another.

Moreover, the areas where the unemployment rate is still high are those where the aging workforce will generate the greatest needs. This is particularly the case in Quebec’s resource regions as they are those who will display the greatest labour market needs over the next 10 years.

This positive outlook provides an economic opportunity, unique in recent history for those regions where seasonal jobs have dominated local markets, but those regions must also be prepared. The unemployed who have lost their job during the last recession will not permanently regain the same job. Those jobs are gone forever. They will have to have the skills for the jobs available.

Workers in seasonal industries can enjoy greater occupational and geographical mobility, provided they get the skills for those jobs.

The challenge is to meet the changing needs of the labour market

In short, Canada and Quebec are facing a pressing challenge: meeting more effectively the needs of different labour markets.

Everywhere, the labour market has changed dramatically since the late 90s. This is a fact that should be taken into account for the needs of the labour market will be drastically different in the future.

For instance, take a look at those facts for Quebec:

In 1997, there were nearly 410,000 unemployed in Quebec. In 2021, in 8 years, they will be 235,000 according to Emploi-Quebec forecasts. The unemployment rate, which was 11.4% in 1997, will be halved to 5.3%.

Can we believe that the needs of the labour market remain the same? Clearly not.

The match between the supply of labour and needs: the case of Quebec

The historically low level of unemployment will be attained despite moderate employment growth, provided that there is not another recession hitting by the meantime. This is due to demographic trends.

Thus, employers will find it increasingly difficult to recruit and retain their workforce in the tighter job market. Given the relative scarcity of labour, the balance between supply and the needs of the labour market will be even more strategic than today.

The figures

In fact, according to Emploi-Quebec’s forecasts, nearly 1.4 million jobs will be filled between 2012 and 2021.

Over a million of these, 1.1 million will be made available as a result of retirement, 80% of the total, and the remaining 264,000 is due to economic growth. This shows the importance of the aging workforce on the dynamics of the labour market.

Unfortunatly, these jobs will not be available where the workforce is now. Some sectors will decrease. The same applies to regions and occupations.

Who will integrate the labour market to meet these needs?

Between 2011 and 2021 (quoting a report by Emploi-Quebec, freely translated):

• ‘Young people who are currently between 5 and 24 years, will fill 56% of the 1.4 million jobs;
• Immigration to Quebec by 2021 will provide 17% of the workforce for these positions;
• Higher participation rate among 15 to 64 and for those aged 65 and over will fill 12% and 7% of the needs respectively;
• Unemployment will go down as jobless people will fill 7% jobs to be filled. ‘

The unemployed provide only apart of the answer to labour market needs

First conclusion: these figures clearly show that the unemployed are only a small part of the answer to the labour market needs as they account for only 7% of jobs to be filled.

Considering that about half of the unemployed are Employment Insurance recipients, it could be concluded that working with EI regulation can represent at most 3% of the answer to the labour market needs in Quebec. Thus, one must look elsewhere to answer the forthcoming needs.

Second conclusion: the importance of youth

According to these forecasts, youth will fill the majority of the needs. This is not a surprise, but the emphasis on the ageing labour force lately has obscured this basic fact.

In addition, the contribution of each group must be weighted according to the length of working life. Let’s assume that a person under 25 years is expected to be active for 35 years and that a 65 years will average about 18 months. By weighting the contribution of each by the span of his active life, the result become quite convincing: youth represent ¾ of the response to needs, experienced workers, less than 1%. In other words, the contribution of youth to the needs of labour will be 190 times greater than 65 years and more!

It is then time to address to their problems.