As Canada’s skills mismatch persists, many employers lag in the talent game

You’ve seen the headlines. The ones issuing dire warnings about Canada’s skills mismatch between job seekers and hiring companies—and the contrarians arguing things aren’t so bad.

It’s hard to tell who’s right because Canada’s labour data are sparse. But anecdotal evidence and available numbers suggest vacancies in sectors such as energy—Canada’s main growth driver—are harder to fill because many candidates lack specific skills. While this has prompted some companies to step up their attraction and retention efforts, experts say many still miss the mark.

“You get the sense from the media that employers are starving to hire new people and they can’t because of the skills misalignment,” says Derek Burleton, deputy chief economist at TD Bank Financial Group. In 2013, 66% of Canadian and U.S. companies in various sectors reported difficulty attracting critical-skill employees, says Towers Watson’s 2013-2014 Talent Management and Rewards Study, which polled 63 Canadian companies and 258 in the U.S. Almost half (49%) of respondents reported difficulty attracting highpotential employees. And 41% had trouble retaining critical-skill employees.

So do these numbers mean Canadian employers are facing a labour crisis?

Labour market information “brings more confusion than clarity as discrepancies in data collection and interpretation exist even within the federal government,” says a recent Canadian Chamber of Commerce report.

For example, the report cites 2013 and 2014 federal budget documents, which put the job vacancy rate at about 4%, while Statistics Canada estimates it at 1.3%. The federal budget estimate implies a serious skills mismatch, while Statistics Canada’s results suggest limited misalignment, the report says.

Tracking of labour markets is also insufficient. “We’re very hungry to get more data to get a more accurate understanding of what’s going on under the surface,” says Burleton.

Years ago, Statistics Canada conducted a Workplace and Employment Survey, which was “an important source of information on the frequency and outcomes of workplace training as well as workplace conditions,” says the Chamber of Commerce study. That survey was cancelled in 2006. It was replaced in 2012 with a one-time workplace survey, but those results haven’t yet been released.

Based on what’s available, Canada has pockets of skills mismatch—although its unemployment is near a six-year low of 6.8%, and its job creation rates have surpassed other G-7 nations since 2009.

“Occupations related to natural and applied sciences (e.g., engineers, architects) have had persistently high job vacancy rates over the recovery, suggesting unfilled labour demand in this occupation group,” finds a 2014 study by the Department of Finance. “Job vacancy rates in the skilled trades (e.g., construction workers, mechanics, machine operators) have also risen sharply over the recovery. Unfilled demand for this type of skilled labour has been most acute in Alberta and Saskatchewan.”

Still, says Burleton, this misalignment doesn’t amount to a crisis. In an October 2013 report he co-authored, he notes “vacancy rates outside of some pockets (e.g., trades) are not significantly higher than the national average.” The report’s findings—based on analysis of wage, joblessness and vacancy rates of 140 occupations—hold true today, he adds.

“There definitely is a skills shortage in the oil and gas industry,” says Carla Campbell-Ott, executive director of the Petroleum Human Resources Council (PHRC), which studies labour market trends. It projects Canada’s oil and gas sector will need between 125,000 and 150,000 skilled workers over the next decade: 20,000 to 40,000 due to industry growth; 50,000 to replace retiring workers; and 62,000 to 65,000 because of turnover.

“People may say, Why can’t you just move [unemployed] people to the oil and gas industry? Yes, they have a warm body; yes, they have a pulse. But they may not have the skills—or not be trainable to those skills—at the right time and at the right place,” Campbell-Ott explains.

Can’t Travel
The energy industry needs mainly engineers, plus some other skilled tradespeople. “We’re finding a short supply specifically in the mid- to senior-level engineers,” says Kelly Murphy, HR director at Devon Energy in Canada, adding this includes project, simulation and reservoir engineers.

“All of those projects are being built within the same amount of time, so we’ve got competition [created by] the same type of projects wanting the same type of skills,” she explains.

The industry also needs skilled workers such as welders, insulators and pipefitters, says Campbell-Ott. “You can’t just pick those people off the corner of the street. We’re talking about years of training and certification to get where they are.”

Getting a certification in the skilled trades requires four or five years of school, explains Larry Cann, administrative assistant to the general president at the United Association Canada, which trains people in the pipefitting and plumbing trades. Then, he adds, it takes another five years to become experienced enough to tackle any job in their field.

“There was an attitude about the skilled trades—I’ve heard it,” says Cann, explaining many think people go into skilled trades if they can’t finish Grade 12. “But we demand at least Grade 12, with math, English and science being important.” This sentiment is changing, he adds, as high demand teaches people to respect and value those skills.

Inhibited labour mobility makes talent in the trade professions even more scarce. Provinces have different training and certification requirements for tradespeople. “What a scaffolder is in B.C. may not be the same [as] in Alberta,” says Campbell-Ott. “Trades mobility is a huge issue.”

Canada does have a national program for skilled trades credentials: receiving a designation from the Interprovincial Standards Red Seal Program lets someone work anywhere in the country without having to get more certifications. But “not all trades are designated as Red Seal in all provinces and territories, and the Red Seal trades in [one] may be different from those in other parts of Canada,” says Service Canada.

Add to this the imminent retirement of Canada’s baby boomers, and you have a recipe for a growing skills shortage. Remember PHRC’s estimate that 50,000 oil and gas workers will retire over the next decade? “With that goes senior experience,” adds Campbell-Ott.

Although it varies by trade, the average age of Canada’s skilled trade workers is around 47, says Cann. Recruitment of young people is critical—but the stigma attached to that industry and limited understanding of job prospects often drive youth away, he explains.

Finding the One
So what are firms doing to get and keep talented people? Not enough, experts say.

“The oil and gas industry needs to be more innovative in attracting and retaining workers,” says Campbell-Ott. Current practices of poaching workers from competitors escalate labour costs but don’t end the shortage, she notes. Hiring contractors has also been prevalent in the industry—and while it’s sometimes necessary, it’s expensive in the long run, Campbell-Ott explains.

What companies should do instead, she argues, is build their workforce by helping entry-level workers chart career paths through lateral moves, promotions or department transfers.

And it isn’t just the energy industry that misses the mark on career development. The Towers Watson survey finds most companies in different industries across North America are lagging.

Only 26% of North American companies say their managers effectively give staff career management support, the survey says. Only 16% of companies say their managers hold career development discussions with employees outside of annual reviews, and only 32% have effective career management tools.

To make managers more effective, companies need to give them leadership training, says Campbell-Ott, adding some firms are already doing this amid recognition that technical expertise isn’t enough for managerial roles.

Also, don’t forget training current staff, says Deborah LaMere, vice-president of HR strategy and employee engagement at Ceridian. One way to do that is through partial tuition reimbursements for employees who take classes to get skills their firms need, she adds.

Flexible schedules are another way to attract quality employees and build a workforce, says LaMere. Flexibility can mean having a compressed workweek, varying arrival and departure times during the week, and telecommuting. More Canadian companies are jumping on the flexibility bandwagon, and some are moving data to the Cloud so employees can access it from anywhere.

Internships and co-op programs can be a good source of new talent. Many companies partner with local universities and high schools to get student placements, but Canada’s private sector needs to do more, Burleton argues. “A lot of young people just don’t get the experience. It becomes a catch-22.”

While the biggest problems are now in the resource sector, Burleton warns the economy can change, and employers need to take note. “There’s no guarantee that resources are going to be as important in 10 or 15 years’ time.”

Yaldaz Sadakova is associate editor of Benefits Canada.

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Copyright © 2019 Transcontinental Media G.P. This article first appeared in Benefits Canada.

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