Federal Labor Minister says government focused on labor shortage, but offers no immediate policy solution

Seamus O’Regan in St. John’s in this file photo from February 14, 2022.Paul Daly/The Canadian Press

The federal government is paying close attention to Canada’s labor shortage and is working urgently to figure out how to streamline immigration as an immediate measure to address labor shortages across a wide range of sectors, according to the Minister of Labour.

“We’re there,” Seamus O’Regan, the federal labor minister, told The Globe and Mail during an interview at the fourth Unifor convention in Toronto. “Certainly, if we are looking at short-term solutions to the labor market, immigration is essential.”

Mr. O’Regan said his department was working closely with the Department of Jobs, Workforce Development and Disability Inclusion, as well as the Department of Immigration to find “holistic solutions” to labor shortages. But he refrained from detailing what exactly those solutions were, beyond a general reference to increasing the number of immigrants.

The country has been plagued by a shortage of skilled workers over the past year, a shortage that is particularly acute in the health, construction, food and accommodation sectors. In March, there were one million vacancies across the country, an all-time high.

A confluence of factors has driven the supply of labor to historic lows — the changing relationship of employees with their workplace; an exodus of older workers from the workforce, catalyzed in part by the pandemic; and most importantly, a large backlog in the number of immigrants entering the country due to a pandemic-related pause in processing applications.

In April, the federal government used a number of policy levers to increase the number of foreign workers. It expanded the temporary foreign worker program, allowing employers to hire up to 20% of low-wage TFW program workers.

And after suspending applications under the Express Entry program for highly skilled immigrants for nearly 18 months, the government has resumed invitations, but is simultaneously facing a gigantic backlog.

Frustrated by the severity of the labor shortage crisis and under pressure from businesses, several provincial immigration ministers have asked the federal government to give them more control over the immigration process. Ministers from Ontario, Alberta, Saskatchewan and Manitoba said this week they want to be allowed to choose more immigrants “with the skills they need most”, instead of be subject to an allocation process.

Critics of policy tools claim that Canada’s immigrant processing system is still too fragmented and inefficient. “The Express Entry program was working fine until it was discontinued in 2021. It’s just a complete mess,” said Mikal Skuterud, an economics professor at the University of Waterloo. He’s also been a vocal critic of the TFW program, which he says encourages wage suppression and offers employers a quick fix for labor shortages that doesn’t prioritize better wages and working conditions. work for migrant workers.

“The federal government should think about ways to increase the number of workers in this country without downward pressure on wages. So first, they should fix the immigration problem. And second, we can increase the labor force participation rates of older Canadians,” he said.

In 2016, the Liberal government reversed a policy to raise the age of eligibility for Old Age Security to 67, which would have effectively deterred older workers from leaving the workforce.

When asked if his department, alongside other departments, was considering policies to keep Canadians working longer, O’Regan was unclear. “It’s technically not under my jurisdiction. But we have an aging population, and that’s a challenge,” he said.

Some economists believe that solving the labor shortage essentially requires companies to raise wages.

“The quickest relief valve for labor shortages is an increase in wages,” said Robert Kavcic, an economist at the Bank of Montreal. “The problem with immigration is that there is not always a perfect match between the skills of people coming into the country and those leaving the labor force,” he added.

According to Mr. Kavcic and Professor Skuterud, wage growth in Canada is slowly starting to pick up, but it is still a long way from incentivizing workers to take jobs they may not want.

On the issue of wages, Mr. O’Regan said that getting companies to pay their workers more is not so easy. “Of course, if you treat your workers well, if you make sure they have benefits, paid sick days, then yes, they will stay with you.”

But, he warned, many employers have gone into deep debt during the pandemic recovery and are still struggling themselves. “We need to find the most transparent way to do this to ensure that the prosperity of employers is also taken into account. They are the ones who create the jobs.

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