Skilled trades deficit colliding with energy boom

For many years we have been told Canada faces an acute “skills mismatch,” where the economy has lots of great jobs for the highly qualified – notably engineers, information technology professionals, and science PhDs – without enough of these people to meet the demand.
But a second skills shortage has crept into the economy that promises to dwarf the professionals deficit. This less-talked-about shortage is being driven by two forces on a collision course: unprecedented demographic change and an equally unprecedented boom in one large, growing and labour-intensive sector of the economy.
This is the skilled trades deficit – an acute shortage of electricians, welders, pipefitters, plumbers and carpenters. Exacerbating the problem is the corresponding economic boom in the energy infrastructure sector, with a projected investment over the next 20 years that is breathtaking.
The collision of these forces of declining labour supply and booming energy construction demand requires governments – federal and provincial – to develop a pan-Canadian strategy to meet the challenge and seize the economic opportunity.
Growth in the labour force is slowing as baby boomers retire. Forty years ago, the labour force grew at about 4 per cent a year, on average. A decade from now, growth will fall to almost zero.
This trend is particularly acute in the skilled trades. Between 2011-19, according to the Construction Sector Council, 208,000 skilled tradespeople will retire – with only 111,000 new recruits entering the trades. If you think you have trouble finding an electrician today, wait five years.
This trend is running headlong into two distinct forces on the demand side of the ledger. First is the boom in the oil sands, which depends intensely on skilled trades. Second, and less well known, is a requirement over the next 20 years to refurbish Canada’s aging system for electricity generation and distribution, which has been allowed to atrophy over the past two decades.
The Canadian Energy Research Institute estimates that about 800,000 incremental jobs, many of which are skilled trades, will need to be filled in the oil sands alone over the next 20 years; and that capital investment in the oil sands will exceed $250-billion over that time frame.
Add to this the Conference Board’s estimate that the electricity sector will invest nearly $300-billion over the same period to maintain existing assets and meet market growth, and you have the largest construction boom since the postwar period.
As a result of these two competing forces – unprecedented labour force contraction running up against equally unprecedented demand for skilled trades – the next seven years alone will see the economy coming up short by about 156,000 skilled tradespeople.
On one hand, this is a good-news story. Long-term career prospects in the skilled trades look very promising. But we have nowhere near the number of people in the pipeline today to meet this demand, nor do we have the public policy framework to significantly increase the skilled-labour pool. And as each year passes, we have fewer skilled people to pass along the expertise, making the replacement work force challenge that much greater.
Immigration is an important short-term fix, but it alone cannot solve the longer-term problem. Nor should immigration of skilled tradespeople be seen as the long-term solution for a country with an unemployment rate of nearly 8 per cent, and much higher for some population segments, notably native people and other underrepresented groups.
This historic construction boom represents a unique, once-in-several-generations, opportunity that Canadians should seize upon. Labour market policy is an area of shared jurisdiction. Ottawa has some levers, such as immigration and financing for training; the provinces have others, such as education policy, training programs and credential recognition; and internal labour mobility is shared between the two levels of government.
All these levers need to be pulled in a co-ordinated fashion to ensure that the Canadian economy and Canadian workers reap the full benefit. Canada needs a national work force strategy.