Manufacturing's skilled labour shortage

What job delivered the biggest opportunity for job growth in the years 2001-06?

If you answered "retail sales clerk" you would have been right. For both men and women, retail sales had by far the strongest growth in jobs over that period.

While this reflects strong consumer spending in Canada, it also raises a more worrisome question on whether we are employing more and more people to sell products and services made overseas.

It used to be that there were far more Canadians employed in manufacturing than in retail sales. In 2001, there were 379,000 more people employed in manufacturing than in retail sales. But by 2006 the gap had narrowed to just 81,400, according to 2006 census data from Statistics Canada.

Conservatives not worried

The Harper government says we needn't worry because we are shifting away from manufacturing to resource industries, notably development of the Alberta oil sands. But this isn't true. Despite the fast growth in oil and gas industry jobs, the mining and oil and gas industries still accounted for just 1.4% of all Canadian jobs (2006), with manufacturing accounting for 11.8%.

The paradox is that despite falling employment, manufacturing faces a skilled labour shortage due to a combination of factors (most notably the retirement of older workers).

This shortage could damage the future of manufacturing in Canada because the world is in a global skills race and investment will go to where the skilled workers can be found. Moreover, Canada's manufacturing future depends on a high-skill workforce because, to survive and grow, Canadian companies have to be high-value manufacturers.

There are several reasons for this shortage, as Andrew Sharpe, who heads the Centre for the Study of Living Standards, explained in a recent report, "Apprenticeship Issues and Challenges Facing Canadian Manufacturing Industries."

One problem, Sharpe said, is that the manufacturing companies have to compete with the resource and construction industries for many skilled trades. While the resource and construction industries have been enjoying robust and profitable growth, manufacturers have been squeezed by the high Canadian dollar and tougher market conditions.

This means manufacturers find it hard to compete for or retain skilled workers since they don't have the same flexibility to pay workers more. "Reported skilled labour shortages in manufacturing are no mirage," Sharpe said.

Sharpe argues that manufacturers, governments, unions and colleges have to become much more concerned with training. For example, apprenticeship programs, which matter for many skilled jobs in manufacturing, should include more time in college so that young Canadians get both a college diploma and trades certificate. More provinces could also follow Ontario's Youth Apprenticeship Program, which allows high school students to start learning the basics of trades while still in high school.

In fact, the need for much greater attention to education and training cuts across many areas of our economy. Statistics Canada says we rely heavily on immigrants for skills (see below).

In 2001-2006, some 51% of immigrants aged 25 to 64 had a university degree, compared to 20% of Canadians. Approx. 25% of recent immigrants had a degree in engineering, compared to just 6% of Canadian-born degree holders. And 6% of recent immigrants had studied computer and information sciences, compared to 2% of Canadian graduates.

If we are going to be more than a nation of shopkeepers, we had better pay much more attention to producing products and services we can sell to the rest of the world. The place to start is with ensuring our people have the highest quality education and skills found anywhere in the world.

115,000 new immigrants arrive in Toronto every year

And with them comes their own wealth, their own sense of purpose, a strong work ethic and a variety of skilled trades.

In a purely monetary sense these immigrants are pumping an estimated $2.7 billion dollars into Toronto's local economy.

They are also driving Ontario's housing boom, which is now 10 years old, and is the longest and strongest housing boom since WWII. Housing prices are soaring due to new buyers bidding, the construction industry is hiring like crazy and Ontario's construction industry surpassed $30 billion worth in new building permits in 2007.

Likewise Warren Buffet, the real estate mogul, recently passed Bill Gates as the richest man in the world. Most of his real estate earnings are in cities with higher rates of immigration.

The U.K. Financial Times describes Toronto as "the world's most culturally diverse city" and with its 115,000 new immigrants arriving in Toronto each year, too many prospective employers are still reluctant to hire qualified job applicants with unfamiliar credentials from foreign universities.

The Ontario government's requirement that the province's professional bodies regulating lawyers, doctors, accountants and architects streamline their membership applications has brought little progress, one suspects because the bodies are effectively guilds determined to protect their existing members from a supply glut and resulting fee-cutting.

Two promising initiatives have emerged from the non-profit sector, specifically the Toronto Region Immigrant Employment Council (TRIEC). With funding from Ontario, Toronto Dominion Bank, Manulife Financial Corp. and a private foundation, TRIEC has launched an internship program, 85 per cent of whose 600 interns placed so far have found work in or related to their vocational specialties. TRIEC also runs a mentoring program in which volunteer mentors help newcomers learn the ropes, including career networking and Toronto workplace culture.

Given that "all the labour force growth is coming from immigration," says David Pecaut, head of Boston Consulting's Canadian practice, employers need to do more to review their hiring practices, inform immigrants of job fairs and get the message across to their own businesses about the value of workplace diversity and contacts immigrants offer to the world's most dynamic industrializing economies.

Canadian Born Canadians Falling Behind

Canadians aren't doing enough to improve their job skills. Despite the fact that universities and colleges are pumping out highly-skilled students at a record rate (over 200,000 per year) the percentage of high school students who skip university and college is still stubbornly high. Indeed, Canada's high school drop out rate is also still stubbornly high 9.8% in 2005, and only about half of high school graduates attend university or college.

For the past 20 years, the proportion of students who graduate from high school has continued to grow. In addition, an increasing number of young people go on to postsecondary education, and girls are now more likely than boys to do undergraduate university studies full-time. At the graduate level, university enrolment among women was also almost equal to that among men.

The school-age population should decline in the coming year because of the drop in the birth rate. This decline could, in some areas, result in underutilized facilities, overstaffing and fewer program offerings. Conversely, areas where enrolment has been rising may feel pressure to spend more to maintain per-student expenditure.

The increasing cultural diversity of Canada’s school-age population can also have repercussions on the school system. For example, some provinces have school boards or commissions that reflect religious and language preferences. Moreover, students who have difficulty in the language of instruction, be it English or French, usually take additional language training.

Student Population

The number of students enrolled in public elementary and secondary schools in Canada has slipped compared with the 1997/1998 school year. Nearly 5.3 million children were enrolled in public schools in 2003/2004, down 1.2% from 1997/1998.

During this period, enrolment in public elementary and secondary schools, measured in full-time equivalents, rose only in Ontario and Alberta. In Ontario, enrolment reached 2.1 million students in 2003/2004, up 1.6% from 1997/1998, while in Alberta, enrolment rose to 549,500 students, a 3.2% increase. In Ontario, the increase is essentially the result of immigration; in Alberta, it is the result of migration from other provinces.

The biggest drop was in Newfoundland and Labrador, where enrolment has fallen 19.9% since 1997/1998 to 81,545 in 2003/2004. Net migratory loss to the other provinces largely explains this situation.

The number of students enrolled in Canadian universities reached the 1 million mark for the first time in the 2004/2005 school year, the result of the double cohort in Ontario, an increase in the number of foreign students, and an increase in the number of young adults in school. This was the seventh consecutive year that enrolment peaked. However, the increase compared with the previous year was only 2.1%, the lowest since 2000.

High School and College
Graduates Vs. Drop Outs

Just over 335,000 students in public elementary and secondary schools graduated in the 2003/2004 school year, up 3.0% over 1999/2000. The main reason for this increase is the elimination of Grade 13 (OAC) in Ontario. If graduates from the double cohort in Ontario are excluded, the total number of graduates in Canada was relatively stable from 1999/2000 to 2003/2004.

Since the early 1990s, the high school drop-out rate has fallen considerably. In the 1990/1991 school year, 16.7% of youth aged 20 to 24 did not attend school and had not graduated from high school. In 2004/2005, this rate had dropped to 9.8%. Almost two-thirds of the 212,000 drop-outs in Canada in 2004/2005 were boys.

In 2004, university students earned an unprecedented number of bachelor’s and master’s degrees. In fact, universities awarded a record 209,100 degrees, diplomas and certificates in 2004, up 5.3% from 2003, and over 30,000 more than in 2001.

From 1996 to 2004, the number of bachelor’s and first professional degrees increased 15.8%, offsetting the 6.4% decline in the number of undergraduate diplomas and certificates granted in this period.

Nearly 31,600 students earned a master’s degree in 2004, up 9.0% from 2003, the seventh consecutive annual increase. For the first time, master’s degrees comprised more than 15% of all degrees awarded.

Once again, more women graduated than men. In 2004, 124,800 women received a degree. Women made up approximately 60% of graduates for the third year in a row.

The number of degrees, diplomas and certificates rose in all fields of study in 2004, except agriculture, natural resources and conservation. The fields with the greatest increases were health, parks, recreation and fitness, visual and performing arts, and communications technologies.