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Quebec poised to enter an era of serious labour shortages

Quebec poised to enter an era of serious labour shortages

Quebec could face a shortfall of 292,000 workers by 2025, rising to 363,000 by 2030, according to a Conference Board analysis released today, From Baby Boom to Labour Crunch: Quebec's Impending Labour Shortage.

"Tight labour markets are no longer an exclusively Western Canadian concern. Quebec is already facing a lack of workers with specific trade skills, and more generalized labour shortages could be felt in the broader economy as early as 2010," said Marie-Christine Bernard, Associate Director, Provincial Outlook.

Given current demographic trends, the overall labour force participation rate most likely peaked in 2007 and will gradually subside over the long term. By 2030, the labour shortage will amount to 8.5 per cent of Quebec's total labour force; in comparison, Ontario's labour shortfall is forecast to be 6.2 per cent.

Labour will provide virtually no contribution to long-term production gains in Quebec after 2020. As a result, the growth in Quebec's potential output-the maximum output that an economy can achieve without triggering inflation pressures-is projected to slip to 1.5 per cent by 2030.

In practice, a large worker shortfall is not sustainable, and markets will respond to it.  A severe workforce shortage would prompt a swift increase in real wage rates, and firms would increasingly substitute capital equipment for labour.

There is no simple solution to Quebec's impending labour shortfall, but two strategic approaches are proposed. One approach would target improving labour productivity, through enhanced training programs, increased access to education, and fiscal support for investment in new technologies.

A second approach involves increasing the labour force itself-by attracting more skilled immigrants, streamlining foreign accreditation recognition, promoting higher fertility rates, and encouraging labour market participation among underemployed groups (such as Aboriginal peoples, mature workers and women). A combination of these approaches will likely be required.

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Québec Landlords Association (1)

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