A lack of highly educated talent is not causing a labor shortage in Canada

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Labor shortage in Canada appear to be mostly focused on jobs requiring little education, while employers who find it difficult to fill positions requiring higher levels of education are unlikely to face problems because candidates do not have the necessary degrees, a new Statistics Canada research paper suggests.

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A letter issued on May 24 said that for everyone vacancy requiring university education in the fourth quarter of last year, there were at least two unemployed persons with the necessary education. In contrast, the study found that the number of job openings requiring a high school diploma or less exceeded the number of unemployed Canadians with an equivalent education as of the third quarter of 2021.

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The findings suggest that employer complaints about labor shortages cannot generally be attributed to a national shortage of highly educated job seekers.

“In order to treat properly, you have to come up with the right diagnosis,” said René Morissette, the paper’s author and chief economist at Statistics Canada.

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“The early diagnosis we came up with mainly focuses on labor shortages. This paper shows that the early diagnosis may have been an oversimplification of reality and that we may need to come up with a more nuanced diagnosis of the problem,” he added.

In order to treat correctly, you need to come up with the correct diagnosis

René Morissette

In 2022, job vacancies in Canada averaged 942,000, roughly two and a half times the 2016 average of 377,000. To address high job vacancies and labor shortages, government officials and businesses often point to immigration as a solution. Indeed, the shortage was the main reason behind the federal government’s decision last year to raise immigration targets to 500,000 new arrivals a year by 2025.

Morissette’s paper says that of the 113,000 job openings in the fourth quarter of last year that required a university degree, there were 227,000 unemployed Canadians and permanent residents who met the education criteria, 123,000 of whom were unemployed immigrants with a bachelor’s degree or higher.

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Those numbers are not an anomaly. Morissette writes that during every quarter from 2016 to 2022, the number of unemployed individuals with a bachelor’s degree or higher exceeded the number of job openings requiring such education.

“The finding is quite surprising,” Morissette said. “It suggests that for these highly educated vacancies, employers’ problems cannot be attributed to a lack of highly educated workers. It has to be attributed to something else.”

The “something else” that the author refers to includes a number of reasons such as a skills mismatch between what is required and what the job seeker has, new entrants seeking the appropriate licenses to work in their fields, or , to learn the language, or even an exodus of employees due to deteriorating working conditions. For example, Morissette pointed to the health care workforce shortage, which is caused by nurses leaving the industry “because the working conditions are no longer what they want.”

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But it is also difficult to fill low-skilled positions. In the fourth quarter of last year, there were 497,000 job openings requiring a high school diploma or less, compared to 296,000 unemployed Canadian-born individuals and 70,000 unemployed immigrants with appropriate documentation.. This means that Canada’s job shortage is almost entirely made up of low-skilled positions.

Employers’ problems cannot be attributed to a lack of highly educated workers. It must be attributed to something else

René Morissette

The newspaper said the relatively large number of these vacancies likely reflects factors such as low salary offers and fringe benefits, work schedules that may not match job seekers’ preferences, and a lack of candidates with relevant experience in some – but not necessarily all – professions with low qualifications..

Tonie Chaltas, executive director of the newcomer advocacy group Achev, said the paper highlights the need for provinces to break down barriers that prevent immigrants from getting jobs.

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“While several government programs prioritize immigration pathways for skilled workers, once workers arrive here, they will continue to face barriers such as Canadian work experience and qualification requirements,” Chaltas said. “Some professional organizations are beginning to address these barriers, but employers also play a key role.”

Laura Gu, an economist at the Bank of Nova Scotia, said in a statement that to get a “clearer picture of labor market dynamics and wage growth, it’s necessary to go beyond education levels.” Skills shortages, she says, increase the demand for jobs, not education levels.

Morissette acknowledged that sentiment, but said it’s difficult to judge whether there are enough workers to fill a particular position based on skill set because aspects such as problem-solving skills or languages ​​spoken, commonly displayed on a person’s resume, are not measured in the workforce . surveys from which data is collected.

This is the key reason why Morissette decided to use education to separate the collected data.

“Obviously, we’re not saying there’s no shortage anywhere, but we’re saying there are other factors at play,” Morissette said. “So when you think about these things, you have to keep multiple factors in mind. It’s not a simple story.”

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