In this podcast episode, CPABC's economist Aaron Aerts speaks with Vince Kanasoot, communications specialist, about economic trends, including the robust labour market, high inflation, and rising interest rates. Part of our Coffee Chats with CPABC podcast series. Access CPABC's full BC Check-Up 2022: Work report.
Over the past two and a half years, British Columbia’s economy has navigated significant economic challenges relatively well. However, as many businesses return to more normal operations, employers across the province are now facing labour shortages.
In October, our province’s workforce reached 2.76 million, an increase of 2.6 per cent compared to October 2021, and well above the 1.5 per cent working-age population growth over that period. As a result, B.C.’s unemployment rate dropped to 4.2 per cent, well below the 4.7 per cent unemployment rate in 2019, when the province last faced record labour shortages.
Currently, employers in B.C. are struggling to find enough talent to fill open jobs. In September 2022, there were nearly 160,000 open, unfilled job positions, considerably more than the 122,500 unemployed individuals seeking work.
B.C.’s labour participation rate (number of people who are employed or looking for a job, divided by the total working-age population) recovered from a significant decline in 2020. However, the labour participation rate was only 64.9 per cent in October 2022, below the 65.7 per cent participation rate in October 2019. While this may seem like a small decline, it has a very significant impact on the labour market. For example, a one percentage point decline in the participation rate represents over 44,000 individuals leaving the labour force.
There is also a skills mismatch in the province, with some industries facing more acute labour shortages. For instance, the construction, agriculture, hospitality, and other services (e.g., personal, household, and repair) industries all have considerably higher job vacancy rates than the provincial average.
Labour shortages have a negative impact on overall productivity and employers’ ability to provide goods and services. This reduces tax revenues and places downward pressure on B.C.’s economic outlook. For this reason, government should look at this issue holistically, concentrating on policies that will 1) increase labour participation; 2) grow the labour force; and 3) provide more skills-training, particularly for those industries with the highest job vacancies.
To increase labour participation, government policies should focus on reducing barriers to entering the labour market as well as policies to encourage employees to stay in the workforce, such as greater access to childcare. Employers facing labour shortages should also ensure they are flexible, accommodating those who may not be able to work a standard schedule or who may need other accommodations.
To grow our labour force, we must also welcome more immigrants. In that regard, the federal government has put forward plans to welcome a record number of immigrants over the next few years, which will help expand our workforce.
Finally, we need to invest more in skills-training, including targeting industries facing the largest shortages and providing more workplace experience for students. While a boost to our labour force is important, we must also ensure that both existing and future workers have the right skills to add value to their employers and to fully participate in British Columbia’s economy.
Lori Mathison, FCPA, FCGA, LLB is the president and CEO for the Chartered Professional Accountants of British Columbia (CPABC).