Post-Pandemic Labour Shortages in Canada – Increase in voluntary job turnover will exacerbate them

As shortages grow, so will the urgency for Canada to turn to new and under-utilized sources of labour force growth, including immigration, women, and visible minorities. However, these will not provide much relief in the short-run. While the government has lifted the number of new permanent residents to pre-pandemic levels, most of this only reflects a change of status from temporary to permanent. It won’t increase the population overall. Still, with the border now open to more immigrants we can expect the flow of newcomers to reduce the pressure on labour markets. Ensuring women and visible minorities can participate at their potential will require new strategies and more time.

The Stakes:

• 16,700: number of recently non-employed people who left their positions due to dissatisfaction in June (nearly triple the level in June 2020);
• 125,000: expected number of retirements in second half of 2021, in line with long run trends;
• 550k: job vacancies in Q1, a return to pre-pandemic levels;
• 4.6%: vacancy rate in the professional, scientific, and technical services industry (compared to 3.6% across all industries);
• 65.2%: Canada’s current labour force participation rate (hovering near lows not since the mid-1990s, excluding pandemic lows last spring).

People are once again willing to quit if unsatisfied with their current positions—among the clearest signs that confidence in the labour market recovery is firming. Indeed, the number of recently non-employed people who left their positions due to dissatisfaction lifted significantly in June. Retirements have also started to tick higher already, and we expect a return to long-term trends to be continued into the second half of the year, driven by the large cohort of aging baby boomers.

A surge in retirements will worsen Canada’s already declining labour force participation rate—which has bounced-back from pandemic declines but is still at a level not seen since the mid-90s. Coupled with a rise in demand where job vacancies are back at pre-crisis levels, we expect this increase in voluntary job turnover to exacerbate post-pandemic labour shortages.

Source: RBC Capital Markets | Emerging labour shortages in Canada