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Wages not a silver bullet

Tuesday August 26, 2014 Written by 
For businesses experiencing labour shortages, paying higher wages may not be the key to attracting staff.

The latest Help Wanted report from the Canadian Federation of Independent Business’ (CFIB) reveals that when employers have open jobs, they try to attract talent by raising wages, yet severe labour shortages persist. This disproves a common belief that businesses with labour shortages simply need to pay higher wages to attract staff. 

“Employers with at least one long-term job vacancy expect to increase wages by significantly more than do employers without vacancies,” said Ted Mallett, CFIB’s chief economist and vice-president. “This differential exists across all provinces and industries, and interestingly, is most pronounced in the hospitality sector.”

Most businesses in the hospitality and retail sectors were recently excluded from using the Temporary Foreign Worker Program (TFWP) to address severe labour shortages. Minister of Employment and Social Development Jason Kenney has told employers that all they need to do is raise wages to attract local Canadian talent. And yet these latest findings, based on CFIB data from 2009 to 2014, suggest employers are already doing so - to little effect.

“This is remarkable labour market data that no one, not even the government has gathered,” said Kelly. “We think this merits the government taking a fresh look at the TFWP and other options like using the permanent immigration system to help employers that are desperate for workers, and just can’t attract the staff they need locally.”

The latest job vacancy numbers – for Q1 – remained fairly stable, with approximately 312,000 full and part-time jobs remaining unfilled, a rate of 2.6 per cent. The quarterly report is based on surveys of CFIB members on economic and business conditions, including labour shortages. Job vacancies in the report are defined as openings that remain unfilled for at least four months because business owners have been unable to find suitable employees.

The smallest businesses (between one and 19 employees) continue to bear the brunt of labour shortages, with a vacancy rate of 4.1 per cent.

Broken down by province, the vacancy rate was once again highest in Alberta (3.8 per cent) and Saskatchewan (3.6) in Q1. British Columbia (2.8) had the biggest increase in the quarter. Meanwhile, Manitoba (2.7), Newfoundland and Labrador (2.6) and Quebec continued to hover around the national average (2.5). The lowest vacancy rates were in Ontario (2.2) and the Maritimes (around 2). 

Vacancies were steady in most sectors in Q1, with retail, hospitality, manufacturing and construction continuing to have the most potential job openings, more than 35,000 each.

Click here to download the full report.

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