Imbalances Between Labour Demand and Supply 2011-2020
Labour Market Research and Forecasting
Policy Research Directorate
*In this document, the term occupation refers to the 3-digit occupations of the National Occupational Classification (NOC), unless specified otherwise.
The projections show a total of 6.5 million job openings (those due to economic growth plus those due to replacement needs) over the next 10 years.
Two-thirds (66.5%) of these are in occupations that usually require postsecondary education (college, university or vocational) or management occupations.
Over the next ten years, about one-third of job openings (around 2.2 million) are expected to be in occupations requiring high school education or only on-the-job training.
It is projected that a total of 6.3 million job seekers (from the school system, immigration or other sources) will enter the labour market over the next 10 years.
Two-thirds (65% - around 4.1 million individuals) of these entries are anticipated to be in occupations that usually require postsecondary education (college, university or vocational) or in management occupations.
By contrast, over the next ten years, one-third of job seekers (around 2.1 million) are expected to look for work in occupations requiring high school education or only on-the-job training.
These charts show unemployment rates and real wages by skill level relative to the average unemployment rates (or real wages) in the other skill levels.
In order to get a starting point for our projection, it is imperative to look at the past. Since the number of workers demanded by employers is impossible to observe historically (as demand might be constrained by supply), we have to look at other indicators, such as relative wages and relative unemployment rates, to assess historical imbalances in the labour market.
These charts show that relative unemployment rates and relative real wages have been fairly stable since 1990 and 1997 (when the latter data starts), suggesting that the labour market has not experienced significant imbalances by broad skill level over this period. This situation suggests that from the point of view of employers, there was enough labour to fill the required demand for all broad skill levels.
The chart shows, for each skill level for the period 2011?2020, the projected number of job openings on the vertical axis and the projected number of job seekers on the horizontal axis as a share of the 2010 employment level. For example, a job openings rate of 4% indicates that the average annual level of job openings (which consist of expansion and replacement demand) in a specific skill level over the next 10 years represents 4% of its employment level in 2010.
Overall, the points fall close to the 45° line, which means that job openings (demand) and job seekers (supply) by broad skill level are projected to be roughly in balance over the next 10 years.
With limited incidence of imbalances between labour demand and supply in recent years, and with the projections showing similar levels of job openings and job seekers for each broad skill level, no major imbalances by skill level are projected over the next decade.
Job seekers and job openings can be broadly in balance for an aggregate skill level, while imbalances (shortages or surpluses) prevail in many occupations within that same skill level.
On each side of the 45 degree line above are the boundaries that separate occupations projected to face a marked excess of job openings over job seekers or a marked shortfall of job openings from those projected to be in broad balance. The overall distribution of the growth in the supply and demand of labour determines the position of those boundaries.
The majority of 3-digit occupations are within the boundaries indicating a balance situation over the 2011-2020 period, However, some occupations, mainly high skill occupations, are in an excess demand situation, while several other occupations, mainly in skill level C, are projected to be in excess supply situation. Even if the assessment of future imbalances between job openings and job seekers give a good indication of the future labour market conditions, the combination with recent labour market conditions is essential to conclude about the future conditions of an occupation.
The approach used to assess the outlook by occupation is similar to what was done for aggregate skill levels. For each occupation, recent data on labour market indicators such as unemployment rates and wages are examined for signs of shortage or surplus, in order to have a sense of the supply-demand balance in that occupation at the start of the projection period. Second, the gap between projected job seekers and job openings in each occupation over the next 10 years is taken into account. Those occupations that display signs of an imbalance in recent years and/or a gap between projected job openings and job seekers are considered to be in surplus or shortage.
An occupation is considered to be facing a:
The table above presents the occupational outlook for all 140 3-digit occupations. A majority of occupations (those in the white cell) are found to have a balance outlook. Indeed, the occupations with a balance outlook represent almost 60% of the 2010 employment while occupations with an outlook of shortage (those in the green cells) represent 15% of the 2010 employment. Occupations with an occupational outlook of surplus (those in the red cells) represent 25% of the 2010 employment.
In a diversified economy such as Canada's, with different regions having quite different industrial mixes and demographics, a national-level assessment of pressures in occupational labour markets could easily mask major differences across regions. Some parts of the country may be facing a labour shortfall in an occupation while other regions may have excess supply in that same occupation. Also, it is important to remember that the analysis is based on aggregate data. For example, although our projections do not show shortage conditions for university professors in general, given the projected increase in the total number of people completing their doctorate degree, there may be a shortage for professors working in particular fields.
Source: HRSDC 2011 COPS Reference Scenario.
The table shows the distribution of occupations in shortage among skill types. This table shows that, although most skill types are represented in the table, most occupations in shortage can be found in the health sector.
A large number of occupations that are expected to face labour shortages (excess labour demand) over the next ten years are in health, management, trades, transport and equipment and in the primary sector. They are almost all high skilled occupations (occupations usually requiring a college or a university education, or management occupations).
Data on employment growth, wage growth and unemployment rate suggest that all the occupations projected to face labour shortages in the medium term were already in that situation or in balance in recent years. For instance, higher health care needs due to population ageing will increase demand for several health care occupations to levels markedly higher than can be met by current projected supply. Retirements will contribute more to these shortages over the medium term than new job creation.
The gaps between job seekers and job openings anticipated in the next ten years are often considerable for some occupations projected to face shortage. In some cases the annual number of job seekers from the school system and immigration would have to be two or even three times larger than projected to meet anticipated demand. Such substantial increases in the number of new job seekers in those occupations would be unlikely to materialize quickly.
However, other occupations, such as Supervisors in Mining, Oil and Gas, College Instructor or Managers in Health, Education, Social and Community Services have, as a major source of job seekers, workers coming from other occupations. In most cases significant experience is required. This explains the large number of workers coming from downstream occupations. Nevertheless, even when job seekers from other occupations are considered, excess demand remains present in many occupations.
Over the 2008-2010 period, this occupation has displayed a small decline in employment. However, this was accompanied by a small drop in the unemployment rate. The unemployment rate in 2010 was lower than average (6% compared to 7.6%). Also, the average hourly wage, which was already very high for an occupation not requiring a university diploma, has increased slightly over that period. These labour market indicators suggest that the number of job seekers was not large enough to fill all the job openings in this occupation.
Based on the projections and considering that this occupation was recently in shortage, this occupation will remain in shortage as job seekers will not be in sufficient number to fill all the job openings over the 2011-2020 period. Over that period, job openings will be coming as much from expansion demand as from retirements. The number of job openings coming from economic growth will be numerous since this sector is expected to grow faster than average but it will remain smaller than what was observed over the 2001-2010 period. This industry was in full expansion for several years because of the rise in global demand and the cost of energy products. Major investments in modernizing current facilities and launching new projects, particularly in the oil sands, contributed to the high labour demand during this period. However, over the projection period, new job creation is expected to slow down as a result of technological advances in oils sands treatment, which will reduce labour force needs and increase productivity, and, also, because of less rapid growth in international demand. Retirements will also be an important source of job openings despite the average retirement rate. In terms of supply, job seekers will come primarily from the school system. As a result of the favourable job perspectives and wages that characterize occupations in the oil and gas industries, these occupations are expected to attract workers from other occupations.
Source: HRSDC 2011 COPS Reference Scenario.
The table shows the distribution of occupations in surplus among skill types. This table shows that, although most skill types are represented in the table, most occupations in surplus can be found in processing, manufacturing, trades and transportation.
There are also several occupations that are projected to have a labour surplus over the coming decade. These are mainly low-skilled occupations, i.e., occupations that usually require less than college or university education. These occupations are often specific to the primary and processing, manufacturing and utilities sectors, where expansion demand is not projected to be as strong as in the rest of the economy.
This list also contains a number of high skill occupations. Those occupations are mainly in industries that have been declining over the last ten years such as occupations in processing and manufacturing.
This list contains a certain number of trade occupations. Those occupations have a surplus outlook over the medium term as investment in residential structures is expected to decelerate. Computer and Information Systems Professionals (NOC 217) have not shown signs of pressures in recent years. Yet, this occupation is projected to show excess supply over the 2011-2020 period. In the coming decade, a large number of school leavers and immigrants will seek work in this occupation. Despite the high number of job openings due to economic growth, the projected number of job openings does not exceed the number of new job seekers. The reason for the relative lack of job openings is the small number of retirees from this occupation (which is populated largely by younger workers).
Over the 2008-2010 period, job losses in this occupation were high, resulting in a significant increase in the unemployment rate, which rose to 19.3% in 2010. The average hourly wage remained stable and low. This suggests that there was a surplus of workers in this occupation. In other words, the number of job seekers exceeded the number of job openings. Although this precarious situation is in large part due to the 2008-2009 recession, which greatly affected the manufacturing sector, the decline in employment in this occupation actually started well before the recession.
Based on projections and considering the surplus of workers in this occupation in recent years, it is expected that the labour surplus will continue over the 2011-2020 period. In other words, the number of job seekers will continue to exceed the number of job openings. Employment growth is expected to be relatively weak over this period. However, this will be an improvement over the job losses recorded over the 2001-2010 period. In addition to the impact of the recent recession, the weak employment outlook can be explained by productivity gains as the industry becomes more capital intensive. In the automotive sector, the outlook can be explained by buyer preference for vehicles built abroad. Retirements will be the main source of job openings in this occupation, but the retirement rate will nevertheless be on par with the average for all occupations. The main source of job seekers will be workers from other occupations, followed by school leavers (especially high school graduates and people who have not completed high school). Immigrants will also represent a significant proportion of job seekers since this occupation is particularly popular among new immigrants entering the Canadian labour market.
As shown previously, the management skill level is projected to be in balance over the 2011-2020 period. In 2010, this skill level employed about 1.5 million workers (9.5% of total employment in 2010) in 2010. Over the projection period, we expect about 708,000 job openings and 723,000 job seekers.
However, at the occupational level, imbalances will exist. Over the 2011-2020 period, four occupations are projected to be in shortage. Those four occupations employed, in 2010, 343,000 (2.2% of total employment in 2010).
Ten occupations in management are in balance over the projection period. Those occupations employed 1.1 million workers in 2010 (6.9% of total employment).
Finally, three management occupations, accounting for 66,000 workers in 2010 are in surplus over the projection period. Those workers represented 0.4% of total employment in 2010.
As shown previously, skill level A is expected to be in balance over the 2011-2020 period. In 2010, this skill level employed about 3 millions workers (19.2% of total employment in 2010). Over the projection period, it is projected 1.4 million job openings and 1.3 million job seekers.
However, at the occupational level, imbalances will exist. Over the 2011-2020 period, 11 occupations are projected to be in shortage. Those eleven occupations employed, in 2010, 1.1 million workers. Among those occupations we find mostly health occupations. As the Canadian population ages, the demand for health services is projected to greatly increase and the need for health care professionals will therefore rise. The type of knowledge required to work in this occupational group is highly specialized and because of this, immigration and mobility from other occupations cannot meet the increase in labour demand. School leavers are projected to be the main source of job seekers. A substantial increase in the number of school leavers is needed to fill the projected gap between job openings and job seekers. However, training takes a long time, which makes it difficult to substantially increase the number of job seekers from the school system.
Over the projection period, eleven occupations are projected to be in balance. In 2010, we found 1.5 million workers in those occupations (9.5% of total employment in 2010).
Finally, only one occupation is expected to be surplus in skill level A, Computer and information systems professionals (NOC 217). Over the next decade, a large number of school leavers and immigrants will look for work in this occupation. Despite stronger than average employment growth, the number of job openings is not projected to exceed the number of new job seekers. The reason for the relative lack of job openings will be the small number of retirees from this occupation (which is populated largely by younger workers).
As shown previously, skill level B (occupations usually requiring college education or apprenticeship training) will be in balance over the 2011-2020 period. In 2010, this skill level employed about 5.3 millions workers (34% of total employment in 2010). Over the projection period, 2.2 million job openings and 2 million job seekers are expected.
However, at the occupational level, imbalances will exist. Over the 2011-2020 period, seven occupations are expected to be in shortage. In total, those occupations employ about 1 million workers (6.6% of total employment in 2010). This is the case for medical technologist and technicians (NOC 321) and some primary sector occupations.
Over the same period, 14 occupations are expected to be in surplus. Several trades and manufacturing occupations have shown signs of surplus in recent years. This is not surprising as the manufacturing sector has been declining for a long period and was significantly affected by the recent recession.
Also, 33 occupations, with combined employment of 3.4 millions workers in 2010 (21.4% of total employment) are projected to be broadly in balance.
As shown previously, skill level C ( occupations usually requiring secondary school and or occupation-specific training) are expected be in balance over the 2011-2020 period. In 2010, this skill level employed 4.4 million workers (27.7% of total employment in 2010). Over the projection, we expect 1.6 million job openings and 1.7 job seekers.
However, at the occupational level, imbalances will exist. Over the 2011-2020 period, 2 occupations are projected to be in shortage. These occupations employed 356,000 workers in 2010 (2.3% of total employment). Although assisting occupations in support of health services (NOC 341) will be in balance over the projection period, it has shown signs of shortage in recent years. With the Canadian population ageing, the demand for healthcare services and professionals will continue to increase.
Over the same period, 24 occupations of this skill level are expected be in surplus. Those occupations employed 2.2 million workers in 2010 (14.3% of total employment).
Also, over the 2011-2020 period, 9 occupations are expected be in balance. The workers in those occupations represented 11.2% of total employment in 2010.
A significant imbalance for skill level D. In 2010, this skill level employed 1.5 million workers, almost 10% of total employment of that year. Over the projection period, we project, for this skill level, 563,000 job openings and 471,000 job seekers.
However, at the occupational level, imbalances will exist. Over the 2011-2020 period, 10 occupations are projected to be in surplus. In 2010, those occupations employed 1.1 million workers (7.1% of total employment).
Over the projection period, only one occupation requiring on-the-job training is projected to be in balance: Cleaners (NOC 666).