LMIC's acting executive director Tony Bonen was invited by the Canadian Association of Administrators of Labour Legislation (CAALL) where he spoke about labour market tightness, labour and skills shortages, and the future of work.

1. Labour market tightness and
the future of work
Tony Bonen, Acting Executive Director
2022.06.28

2. 2
Outline
1. Tight and tightening labour markets
2. Shortages in context: headwinds and benefits
3. Diagnosing the problem: labour or skills shortages
4. A longer-term perspective

3. 3
The demand for workers is rising rapidly

4. 4
The share of people working is at an all-time high

5. 5 Close to, or less than, one unemployed person per job
opening in most provinces

6. 6
Labour markets are extremely tight, but there’s no
accepted measure of “shortages”
First principles define shortages as:
• Demand is greater than supply given a certain price (=wage) level
• Price/wage adjusts to bring the market into equilibrium
• Therefore, rising wages both indicate and solve labour shortages
Real world is much more complicated:
• People are not widgets – they respond to many incentives, not only wages
• Wages adjust slowly for operational and cultural reasons
• With low unemployment, not certain how much further labour supply can increase
• Many business are facing skills shortages rather than labour shortages

7. 7
Potential headwinds from labour
market tightness
• Recruitment takes longer, diverting
resources from other activities
• Slowed and/or reduced output
• Contributes to cost-push inflation
cycles
Potential benefits from labour
market tightness
• Increased productivity (long-term)
• Shorter periods of unemployment
• Reduced income inequality
Why are shortages bad? And when might they be good?
The key long-term question is the how the additional costs of recruitment and retention
balance against the potential for new, innovative business and operational practices.

8. 8
Labour shortages: not enough bodies
• Employer/job-specific
• Directly hampering output
Potential solutions:
• Increase available pool of labour
• Change outreach/recruitment
techniques
• Reduce labour intensity of production
Skills shortages: not enough qualified
applicants
• Industry/profession-specific
• Trade-off between waiting and training
Potential solutions:
• Incentivize/reorient training and education
programs
• Prioritize immigration of those with
identified skills
• Expand on-the-job training opportunities
Labour shortages versus skills shortages: different
challenges with different solutions

9. 9
Labour demand growth, spread across a wide variety of sectors, suggests a
broad mix of labour and skills shortages

10. 10
Current
• Markets are running hot, but some
sectors are still recovering from
COVID-19
• Unclear what shifts will last (e.g.,
construction activity vs restaurants)
• Central banks are working too cool off
aggregate demand – we might not
have a “soft landing”
Long-term
• Focusing on sectors that will grow:
• Care economy (health & education)
• High tech and business services
• Just transition (engineering, skilled
trades)
• The era of ample labour supply is over
• Shifting power toward workers
• Greater emphasis on training and
retention
• Changing views on the value of work,
individually and socially
Current situation vs long-term considerations

11. 11
Questions?
Tony Bonen, PhD
Tony.Bonen@lmic-cimt.ca
Acting Executive Director, LMIC

12. 12
Appendix
Supplementary charts and data

13. 13
Over the long-term, vacancies are positively associated with growth.
Current vacancies reflect efforts to recover from COVID-19

14. 14
Wage pressures in key sectors, but no clear pattern

15. 15
Wage increases high in some sectors with lower labour demand

16. 16 Markets are starting to adjust labour shortages in
occupations that require lower education