Boomers are exiting the workforce in droves
The number of people who are leaving the workforce due to the retirement of baby boom generation is expected to increase, leaving more job vacancies than people who are looking for work. According to statistics released by Canada’s Statistics, the country’s unemployment rate is at a historic low.
Economists believe that the pandemic isn’t the sole reason why the country is experiencing a labor shortage. It’s the result of a seismic shift in the country’s demographics, that’s expected to last for decades.
According to Armine Yalnizyan, an economist, the lack of workers is expected to happen for the next couple of decades. She noted that society has already known about the demographic changes for quite some time.
The alarming numbers behind the various help wanted signs that have been posted across the country are startling. According to statistics released by Statistics Canada, the country’s unemployment rate is at a historic low. The number of people looking for work is also at a historic low. The unemployment-to-job vacancy ratio, which measures the number of available jobs compared to the number of people looking for work, is also at a historic low.
Economists believe that the main reason why the number of job vacancies has increased is due to the lack of workers. This is because the country’s post-war baby boom generation has already left the workforce.
Construction is one of the industries that is experiencing the most difficulty hiring and retaining workers due to the labor shortage, according to Statistics Canada.
The number of people who are 55 and older who have left the Canadian workforce has been increasing steadily. Economists believe that the pandemic was partly to blame for this, as many of them opted for early retirement.
In May, the participation rate for people aged 25-54 reached almost 90 percent, which is a significant increase from the previous year.
According to economist David Yalnizyan, the lack of workers is what happens when the baby boom generation finally exits the workforce. There aren’t enough people entering from the right side of the stage.
Armine Yalnizyan is a fellow at the Atkinson Foundation and an economist. She noted that the lack of workers is expected to happen for the next couple of decades.
Ian Lee, an associate professor at the Sprott School of Business, said that the increasing number of job vacancies is not the result of a great resignation among working-age Canadians. He noted that many of them took advantage of the government’s pandemic income support.
Economist Gordon Betcherman of the University of Ottawa noted that the first suspicion that comes to mind when it comes to analyzing the labor shortage is that the number of people in the workforce has suddenly decreased. However, he noted that the situation is back to pre-crisis levels.
An employees’ market
According to Betcherman, the increasing number of job vacancies is a reflection of the changing balance between job seekers and employers.
Statistics Canada noted that the country’s labor shortages have been unprecedented. They said that the number of job vacancies has increased significantly across different industries.
The manufacturing and construction sectors are having a hard time finding skilled workers. The accommodations and food services industry is also experiencing a shortage of workers.
According to David Yalnizyan, the lack of workers is also contributing to the increasing number of people finding other jobs. He noted that there aren’t enough people who are willing to do low-wage jobs.
Lee noted that workers have more options nowadays. If they don’t have to work in a certain industry, they can easily find a better career path and earn more money. According to Lee, people tend to gravitate toward industries that offer better hours and predictable schedules.
With the increasing number of job vacancies, Lee noted that the demand for certain jobs could increase, which could cause employers to raise their wages. He also predicted that wage inflation would occur in the future.
In the restaurant industry, the lack of workers is also contributing to the increasing number of people finding other jobs. Many people prefer to work in higher-paying positions.
Wages predicted to rise
According to Yalnizyan, the rapid emergence and evolution of new competitive industries will force employers to raise wages in order to retain skilled workers.
Unfortunately, many people who are trained to become early childhood educators are leaving the field due to the low pay. They would rather work in another sector.
Statistics Canada reported that the reservation wage, which is the lowest acceptable wage for most job seekers, is now surpassing the current offer in every sector. Canadian workers, on the other hand, have historically been more willing to settle for less.
Economists believe that various possible outcomes can be expected due to the lack of skilled workers. One of these is the increasing automation in the labour market. This could allow industries to hire more temporary foreign workers to fill the gaps in the labour market.
Despite the possible effects of automation on the labour market, economist Aram Yalnizyan believes that increasing wages can help eliminate some of the inequalities that have been caused by the system for years.
According to her, increasing wages can help create a more resilient middle class by allowing people to afford to spend more on their purchases. This is something that has been missing for a long time now.
Despite the negative effects of population aging on business, she believes that it’s still important to treat it as a positive opportunity for everyone.
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