Noticing a labour shortage? Here’s what’s really going on in Ontario’s job market

The vast majority of Ontario workers have never experienced anything quite like it in their entire working lives: a labor market tilted in their favor.

Statistics show that unemployment is at an all-time low, job vacancies are at record levels and the activity rate is unprecedented.

The job market is “as tight as it has been in Ontario for half a century,” says economist Armine Yalnizyan. “It’s happening all over the Global North, everywhere there was a baby boom after World War II.”

“There’s a backlog of employers hiring,” says Brendon Bernard, senior economist at Indeed, a job search site.

This article kicks off a year-long project by CBC Toronto called Workers Wanted. It will explore what is happening in the GTA and provincial labor market, the impact on employers and employees, possible solutions to the labor shortage and the impact of the changing workforce on our daily lives. Do you have a story to tell? Contact us using the callout at the bottom of this story.

This profound shift in the job market is affecting almost everyone, whether you are a regular worker, an employer, a political leader, or someone waiting to be treated in a hospital or in a restaurant.

It could lead to significant changes in the world of work – from hiring tactics to workplace culture to salaries – but that depends largely on how governments and employers respond.

The federal government allows certain employers, including hospitals and gastronomy, to fill up to 30 percent of the positions with foreign temporary workers. (Evan Mitsui/CBC)

Premier Doug Ford spoke of “endless job opportunities” in Ontario during a press conference in Brampton last month.

“You could walk down every street in this province and find a job in every single sector. We need 380,000 people to fill the existing jobs that we have right now,” Ford said.

The latest figures from Statistics Canada show 372,000 job openings in Ontario in the third quarter of 2022. That’s nearly double the average number of job openings (195,000) reported in the three years leading up to 2020.

But how good are these jobs? For a more complete picture of what’s really going on in the job market, take a closer look at what Statistics Canada found about current vacancies:

60 percent of Ontario jobs required no more than a high school diploma and paid an average of less than $20 an hour.

Nearly 200,000 jobs required less than a year of experience.

More than a third of the vacancies were in sales and service.

Nevertheless, the overall dynamics of the labor market in the province differ significantly from the situation before the COVID-19 pandemic.

Politicians and business leaders sometimes describe what’s happening as labor shortages, but that framing doesn’t sit well with some observers.

“I’m not sure if it’s a lack of labor so much as a lack of employers willing to pay the wages necessary to get people to work for them,” said Don Wright, former chief of public service in British Columbia. now a Fellow in the Public Policy Forum think tank.

Bernard also objects to the use of the term “labor shortage” as it has negative connotations and lacks precision.

“I tend to focus more on the balance of power and power in the labor market when it comes to job seekers and employers,” Bernard said in an interview.

The way that balance of power has shifted should force employers to change their mindset, particularly when it comes to compensation, says Yalnizyan, a fellow of the Atkinson Foundation on the future of work.

“They had a labor surplus for 40 years and they still think workers are a dime a dozen,” Yalnizyan said in an interview.

Economist Armine Yalnizyan, fellow of the Atkinson Foundation for the Future of Work, says the sectors with the greatest difficulty in finding workers tend to be those with the worst wages and working conditions. She says these employers need to rethink their approach to hiring. (Christian Patry/CBC)

“Companies that increase wages and improve working conditions, provide more flexibility in leisure time, or provide more benefits find it much easier to fully staff their businesses in these places.”

Not all employers are willing to do this.

Make current employees work more

Even among Canadian companies that viewed labor shortages as an obstacle, fewer than two-thirds planned to offer a pay rise to current employees, less than half planned to increase wages to attract new employees, and just one-fifth planned to increase benefits for workers, according to a Statistics Canada report last year.

So how do companies want to deal with the labor shortage? The same report found that half of all companies said they expected current management and employees to work harder.

The federal government’s primary solution is to recruit more workers from abroad.

The Trudeau administration last year quietly launched its largest-ever expansion of Canada’s Temporary Foreign Workers (TFW) program.

The latest figures from Statistics Canada show 372,000 job openings in Ontario, nearly double the average in the three years before the COVID-19 pandemic began. (Laura Meader/CBC)

The changes mean foreign temporary workers can now make up 30 percent of an employer’s workforce in certain sectors, including accommodation and food services, construction, some manufacturing industries, care homes and hospitals.

In all other sectors, employers can now hire up to 20 per cent of their employees from the TFW scheme, doubling the previous 10 per cent cap.

Hiring more temporary foreign workers

Employers took the opportunity.

According to the latest available federal statistics, permits to fill Ontario positions with temporary foreign workers more than doubled in the July-September 2022 period compared to the same months last year.

In sales and service occupations in Ontario, approvals to hire foreign temporary workers tripled.

Wright – who describes himself as “a big proponent of healthy immigration” – questions the wisdom of this approach.

“I just think this idea, ‘I’m a company, I can’t get workers to work the wages I want to pay, so the government should solve this problem,’ is really misguided,” Wright said in an interview.

For its part, the Ford government is also looking at other ways to expand Ontario’s labor pool, such as: For example, streamlining accreditation for certain foreign-trained skilled workers and craftsmen or expanding programs aimed at easing the entry into the labor market for the long-term unemployed.

The labor shortage is undoubtedly most acute in certain sectors of Ontario’s economy. This is what you see measured by the job ratio: the number of vacancies as a percentage of the employed labor force.

From 2017 to 2019, Ontario’s job vacancy rate averaged 3.1 percent across all sectors. Last year it was an average of 5.3 percent.

According to Statistics Canada, particularly high job vacancies are currently found in restaurants and bars (10.2 percent), nursing homes (8.5 percent), trucking (8 percent) and building construction (7.7 percent).

If the Bank of Canada prevails, the job market will shift back toward employers.

“Companies continue to tell us they are struggling to find all the workers they need. It’s a symptom of an overheated economy,” Gov. Tiff Macklem said in a news conference on Wednesday following the Bank of Canada’s announcement that it would raise its benchmark interest rate again.

“Part of rebalancing demand and supply in the economy is rebalancing the labor market,” Macklem said.

“We expect the labor market to cool down to some extent. We expect him to find a better balance.”

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