The Broadbent Blog


Labour market policy is about more than unemployment

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When we talk about jobs during the current election campaign, we should be concerned about both the short term and the next few years. We badly need to create jobs now, and also need better labour market policies to avoid emerging skills shortages.

The short term issue is a high national unemployment rate of 7.0%, and especially high unemployment among youth (13.1%) , recent immigrants and aboriginal Canadians. Many persons with high level skills and qualifications are also under employed in low wage, insecure, dead-end jobs.

The new National Job Vacancy and Wage Survey shows that there are many more skilled and available workers than there are unfilled jobs. While there are some shortages of skilled workers in areas like health occupations and the trades, about one half of all vacancies are filled after just one month, and about 40% of all vacancies are in the lowest skilled occupational category of sales and service workers.

That said, the situation is likely to change quickly due to the ongoing retirement of the large baby boomer age cohort. One in six of all workers today are aged 55 to 64, and the great majority of them will exit the labour force over the next few years.

It is true that retirement is being postponed compared to a decade ago. But the labour force participation rate is still just 53.4% for those age 60 to 64, falling to 26.1% for those age 65 to 69, and to just 6.9% for those age 70 and over.

Even with relatively high levels of immigration, labour force growth will soon slow to under one percent per year, and skills shortages are highly likely to increase significantly.

One way we could boost labour force participation is to further close the still significant gap between women and men. Due primarily to an unequal division of caring responsibilities, just 81.9% of women age 25 to 54 participate  in the paid work force compared to 90.5% of men in the same age group and the gender gap has stopped closing.

Public policy strongly influences the choices of women. Quebec's low cost child care program has significantly boosted the participation rate of women with younger children, and also made it much easier for single parents to transition from welfare to work.

On the other side of the ledger, family income splitting as recently introduced by the Harper government is intended to reinforce a traditional family model, and actually creates disincentives to work for the lowest earning partner in high income families.

As importantly, labour market policy can and should ensure that young people gain the qualifications and experience they need to fill skilled jobs as they begin to open up due to the growing wave of retirees. The problem is not so much gaining post secondary qualifications – the great majority of youth now go on to some kind of post secondary education - as it is gaining valuable and relevant work experience.

The federal government's Youth Employment Strategy is mainly tilted towards the creation of summer student jobs, and funding has been cut under the Harper government despite very high levels of youth unemployment since the recession. Employment programs geared to recent graduates are very limited and tilted towards a handful of high demand occupations.

Both of the major opposition parties are to be congratulated for proposing new measures to promote co-op education programs, paid internships and more apprenticeship positions to give young people relevant work experience. Employers, especially large profitable corporations, should also be prepared to do much more on their own dime to create more opportunities for students and college and university graduates seeking relevant experience.

The biggest gap in our current labour market policy is the lack of opportunities for life long learning. Government training programs are directed to the unemployed rather than to adult workers who have limited formal education and are employed in relatively low skilled and low paid jobs. Programs to help recent immigrants gain Canadian work experience to match international qualifications are few and far between.

Few of these workers can afford to take leaves from work to upgrade their skills. One option would be to expand support for training leaves under the Employment Insurance program, and to encourage employers to also support such leaves.

To take one example, support workers in health care should be supported and encouraged to gain the qualifications needed to move into better jobs where shortages already exist.

Many studies show that long periods of  under employment as well as unemployment lead to the erosion of skills and the devaluation of formal qualifications. Given the clear potential for major emerging shortages of skilled workers over the next few years, we can ill afford not to create ladders to better jobs

Andrew Jackson is Adjunct Research Professor in the Institute of Political Economy at Carleton University, and senior policy adviser to the Broadbent Institute.