What is the solution to skills shortages?

Outgoing BoC head Mark Carney had some interesting things to say about outsourcing yesterday:

Bank of Canada governor Mark Carney says the controversial temporary foreign workers program should not be used to drive wages down or to fill lower-skilled jobs. Speaking to the Commons finance committee for the last time before his departure for London in June, Carney said the intent of the program is that it be used primarily to fill needs for high-skilled jobs temporarily, until businesses can train Canadians to take over. He added that the program should concentrate on shortages of high-skilled workers, and not on service jobs and other lower wage categories that critics say are now being filled by foreign imports. The solution to that, said Carney, is for employers to pay higher wages and improve productivity.

Last Spring I went to a course in Boston and had the opportunity to chat with a number of Danes taking the training.  These were all folks involved in economic development in Denmark.  One of the senior officials told me there was a lot of frustration because there was a large segment of the population that didn’t work or only worked part of the year and weren’t open to retraining.    After chatting with her I checked the stats and Denmark has an adult employment rate of 76 percent – one of the highest in the world – New Brunswick’s employment rate is 56 percent (that is 56 percent of adults are working in an average month – I believe the methodology used to calculate this rate is a little different in Europe than here so the numbers may not be perfectly comparable).

But I took her point.  Folks like Carney view the labour market as a kind of machine that you can calibrate one way or another.  There are human factors at play here.

I say this because the temporary foreign worker has been widely used to bring in lower skilled workers – and into areas with high unemployment.  The government is clamping down on this and on paper that makes sense.  However, if employers can’t find workers from the local area – regardless of the headline unemployment rate – clamping down on the TFW program could just end up hurting their businesses.

I still remember a chat I had with an American who was adamantly in favour of legalizing the 13 million undocumented immigrant workers in the U.S.  He told me “these folks are doing the jobs ‘Americans’ don’t want to do” and helping to keep wages and prices in check.

My main point here is that the solution to skills shortages has to be partly about changing behaviours and attitudes.  The chart below shows the number of unemployed New Brunswickers per job vacancy across Canada during 2012.   In this province there were over 10 people unemployed for every job vacancy.  So why does the CFIB survey and other business surveys consistently show the lack of qualified workers as a top problem?  There are 10 available workers for every job.

We spend roughly $2.5 billion on education and training in New Brunswick every year (give or take a few hundred million).  This isn’t just a sorting or matching issue.  We have to understand this in the context of behaviours and attitudes.

What does this have to do with immigrants?  One employer in rural NB told me they work harder and are more productive and eager to get ahead.


5 thoughts on “What is the solution to skills shortages?

  1. My gut feeling is that the vast majority of unemployed New Brunswickers fall into the skilled and unskilled blue collar segments and these are areas of the labour force where there just aren’t that many job available. Speaking from my own experience I don’t know of any unemployed software developers but I am aware of many job vacancies that pay good salaries yet it is difficult to find good candidates. Obviously there is no easy solution to this problem.

  2. Is there a geographical disconnect between the location of the jobs and the location of the unemployed?

  3. For me, an effective solution would be for businesses to train these people through work study programs. Business has gotten used to employees training themselves and the costs and rewards are now whack in some sectors. Imagine choosing people on their ethics and character first rather then having a skills set that rarely ever fits perfectly with sector demands. Could that solve trust and efficiency issues?

  4. Its a very difficult problem to resolve. As mentioned above, it is not just training, it is also location. If we had some areas in the prov that were more vibrant economically, then relocation would be an option. Some small businesses do invest quite a bit of time in training new staff now, but because of a slow NB economy, the revenue to pay for that is getting hard to find.

  5. I travelled, living away from my family for months at a time, got various degrees and did whatever it took to get work. 3 years ago I moved to NB, doing IT contracts from home for US and Canadian clients in a niche market due to my experience, and at very high hourly rates. When people with few skills or education complain about no jobs in their area while collecting EI every year, it makes my blood boil.

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