Canada in transition between excess labour supply and excess demand

BY DENIS GIBBONS The Business Executive

Pedro Antunes

HAMILTON — The growth of Canada’s labor force will slow down drastically after the year 2010.

Pedro Antunes, director of national and provincial forecast for the Conference Board of Canada, made that prediction in a presentation at the recent Global Experience@Work Business Forum, hosted by the Hamilton Chamber of Commerce.

Antunes said because Canada’s domestic economy is doing very well we are currently experiencing strong employment growth at an average of two percent per year since 2002. But he said labour markets are so hot today, it will be difficult to maintain that rate of growth in the future.

“We’re now at a point of transition between a world of excess labour supply and a world of excess demand for labour,” he said.”

Antunes said Canada is becoming a service and knowledge economy. Businesses will have to plan for weaker employment growth and look to alternatives such as outsourcing or increasing capital activity, he said, and there will be more and more pressure on labour-intensive sectors because of rising real wages. He said the competition for skilled labour will be omnipresent.

The service industry has shown the biggest increase in jobs, with 1.5 million of a total of 1.6 million jobs created in that sector alone since 2002.

He said Canada now has an unemployment rate of about six percent and it will be difficult to get it much lower than that. People with a university education are less likely to be unemployed, he said, with the figure for that group being only four percent.

Answering questions from the audience, he said he does not forecast an increase in the labour force participation for people 65 and over, even though recent legislation has eliminated the retirement requirement at that age.

“The decision on retirement really comes down to people’s cumulative wealth,” he said. “Studies have shown that the number one factor in that decision is do they have the money to do so.”

Antunes said that in the period between 1998 and 2004 nominal wages were running below the rate of inflation and people’s purchasing power was being eroded, but since 2004 it has been running above the inflation rate.

However, he added that Canada has suffered from a productivity rate that consistently has been below that of the United States and overall productivity will have to improve if we are to maintain the rate of GDP growth we have had in the past.

Len Crispino, president of the Ontario Chamber of Commerce, also spoke at the forum, emphasizing the need to take advantage of the expertise of immigrants to help fill skilled jobs vacancies in the province.

Crispino cited the major contribution made by Svetlana Diomin, an immigrant from Moldova, who served as the Chamber’s senior policy analyst. TBE