A Looming Labour Shortage

I was recently speaking to a number of business leaders here in Calgary. We were discussing the state of business affairs both here and in the United States. I expected there to be a number of complaints about regulations, taxes and the like. Interestingly, the conversation quickly turned to human resources.

One statistic stood out – the consensus around the table was that in the next 3-5 years 45% of Alberta’s work force is due to retire. 45%!!

Assuming that these businesspeople are right this will have a dramatic effect on both Alberta and the country as a whole. Think about it. We are already short of workers in Alberta. Yes, the 2009 downturn created a new pool of unemployed but Calgary’s newly released unemployment rate is only 6.7%. That is higher than what we saw in 2007 but still a rate to be envied by many jurisdictions across North America (Many American states are running over 10%).

In 2007-2008 when unemployment rates in Alberta were running at 3% or lower we saw an overheated job market that had 15year olds starting at $16.00 an hour flipping burgers, engineers earning signing bonuses in the 10’s of thousands of dollars and Alberta companies bringing in foreign workers in the thousands.

Imagine what it will be like when 45% of the work force can retire. Granted, not all workers who can retire will. Many will want to stay on past the often mandatory 65 retirement age but they will stay on under very different terms.

Those who choose not to head for sunnier climes will be demanding more money, shorter working hours and better benefits. If an employer refuses the worker’s answer will be simple “I think I will retire on Friday, take my pension and go across the street to work for the competitor.” The reality is they will be able to do just that.

Companies will be forced to change how they manage and compensate older workers to hold them in the work force while scrambling to hire a diminishing pool of new grads. A small HVAC contractor here in Calgary told me that he is paying the full tuition for a student so that that student will come to work for him on graduation.

An expensive solution – sure. However, as the small business owner told me “I don’t know any other way to get the kind of worker I need – they are just not in the labour pool today.” Again, this is when we are at 6.7% unemployment. Wait until we are at 0% - or less.

In the absence of a home-grown work force Alberta will again need to turn to foreign trained workers. The challenge is that in the absence of a comprehensive system to recognize foreign credentials and training and in the face of a four year plus backlog in clearing applications foreign workers are a long tern solution at best.

There are no simple answers to the looming worker shortage but one thing is certain. Without a comprehensive solution that includes governments, business, unions, community groups, universities and colleges and the pubic as a whole hiring an employee is about to get a whole lot more difficult – and a whole lot more expensive.