Young Canadians aren’t interested in joining the trades, and it’s a big problem. RBC Economics took a look at skilled workers, and the anticipated shortage. The labor shortage isn’t just due to a large demographic cliff though. Not enough young adults are attracted to the field, nor are new immigrants. This squeeze can result in much higher costs for households, especially for housing.
Canada Will Face A 60,000 Person Shortage of Skilled Worker Apprentices By 2025
Canada is failing to attract more trade workers, and it’s going to add up really fast. The number of registered apprentices needed to stem the shortage is expected to rise to 60,000 by 2025. This is partially due to the pandemic’s lingering impact, which saw registrations drop 37%. A steep drop, for an area already hurting for recruits.
The number of skilled tradespeople across all skilled industries is falling. RBC sees a shortage of 10,000 skilled tradespeople in just 56 high-demand Red Seal Trades. The deficit is forecast to be 10x larger when all 250 regulated trades are included.
An Estimated 700,000 Tradespeople Are Estimated To Retire By 2028
The trade worker shortage is going to be complicated by a demographic cliff. RBC estimates 700,000 trade workers retiring by 2028. If this happens on that schedule, an even bigger shortage can materialize. Further, another 1 million of the 4 million trade workers need “upskilling” in the next 5 years. This is additional training to update their skills to new methods of delivery.
Canada has tried to fix this with its universal demographic spackle — immigration. The Federal Skilled Trades Program seeks to attract 3,000 skilled workers per year. It doesn’t appear there’s much demand for it though, because fewer than 2,400 people got the visa. Immigrating to be skilled labor isn’t that appealing at current wages, apparently.
Labor Shortages Mean Higher Households Costs
The skilled labor shortage is already contributing to higher home prices. Construction had 46,000 job vacancies in Q1 2021, the highest on record. Almost two-thirds were specialty contractors, such as masonry, painting, or electrical work. In other words, the people needed to build homes.
Rising labor costs, or a lack of labor, have been a huge contributor to rising building costs this year. Average weekly earnings jumped 9.5% in just 12 months, almost 9x greater than average. Those costs get passed onto consumers since builders aren’t a charity. The faster homes get built, the more labor gets squeezed, the greater the rise in costs. Who knew building more can sometimes make home prices more expensive? I mean, the industry does. But it’s never been more apparent why.
Fast-rising costs are said to be transitory, but that might only be true for the material portion of costs. Labor and labor-intensive industries still face a big shortage of workers. In the short-term, this is unlikely to be resolved due to the sheer scale of the problem. It can actually be intensified by the massive stimulus-driven public infrastructure projects planned.
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