If you’ve seen our recent analysis in our latest quarterly Business Expectations Survey (BES) or the Alberta Snapshot, chances are you’ve noticed that business indicators are pointing towards an improving economy.
And yet, despite the general optimism about where the province is headed, one unexpected problem is already emerging: many businesses are having trouble finding workers with the skill sets they’re looking for. This, despite the fact that Alberta has been struggling for years with high rates of long-term unemployment.
There are always hiring challenges in one segment of the economy or another. What makes this different is that the COVID-19 pandemic has extended these challenges across the economy. That said, while a wide range of businesses is struggling to fill vacant positions, not every industry is experiencing these challenges with the same labour force demographics or for the same reasons.
The Business Council of Alberta (BCA) has partnered with both the Government of Alberta and the Alberta Chambers of Commerce to conduct an economy-wide survey of 487 businesses to learn more about their hiring expectations, the challenges they face recruiting workers, and where, specifically, they see the pinch points in terms of education and experience requirements.
After an overview of this survey’s findings, we’ll take a look at how these results mesh with some commonly cited labour force trends we’ve been hearing about here at BCA and in the media.
Survey Data: A birds-eye view
To start, businesses are generally expecting to increase their staff complement. A full 50% of businesses plan on employing more people over the next 12 months compared to the previous 12 (only 6% of respondents anticipate reducing their workforce). This optimism was shared broadly across all industries, whether they were directly or indirectly impacted by pandemic restrictions.
However, nearly seven out of ten of respondents reported that they are facing some degree of a staffing shortage, with almost half of businesses indicating that shortage was moderate or significant. Unsurprisingly, industries directly affected by public health restrictions (accommodation; food services; information, culture & recreation; entertainment; and retail trade) had the highest proportion of businesses reporting worker shortages large enough to cause a loss of sales and production opportunities.
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Ease of hiring by educational attainment and skillset/experience
Of course, not all businesses looking to staff up are aiming to hire employees with the same level of education or job experience/skill level. On the whole, businesses are finding it more difficult to recruit experienced employees, those with specialized skills, or those with higher or more specialized levels of education.
The number of such businesses is cause for concern. Our survey asked about challenges recruiting workers both in terms of their education level as well as their experience. When it comes to education, of those companies looking to hire, the following shares reported that it is either somewhat difficult or very difficult to find the workers they need:
- High school – 25%
- Post-secondary diploma – 46%
- University degree or higher – 62%
- Trade certificate – 64%
In terms of experience, the numbers broke down like this:
- Entry level – 28%
- Mid-level management – 64%
- Senior-level management – 76%
- Technical/trades – 75%
- Professional/scientific – 78%
Generally speaking, these numbers tell us that businesses are having less difficulty recruiting entry-level workers and those with a high school education. However, that’s not true of all businesses. Those in industries directly impacted by the pandemic are having a much harder time:
- 32% reported having a somewhat or very difficult time hiring workers with a high school education—about 28% higher than the all-industry average; and
- 49% reported significant challenges filling entry-level positions—about 88% higher than the all-industry average.
Barriers to recruiting
We asked businesses both to identify the various barriers they face in finding workers; and to identify their single largest barrier. The results are in the table below. The main obstacles businesses face include: a lack of applicants; competition from other employers; a lack of people skills or qualifications; and a lack of technical skills or qualifications. Of those, a lack of applicants was identified as the single largest barrier by 20% of respondents.
|TOP-CITED BARRIERS||% Identifying Barrier||% Identifying as |
|Business budget constraints||27%||8%|
|Can’t afford the going rates for the staff we would like to hire||35%||9%|
|Candidates unwilling to forgo government income support programs||24%||7%|
|Competition for skills from other employers||48%||14%|
|Lack of applicants||54%||20%|
|Lack of management and/or leadership skills||31%||3%|
|Lack of people skills or qualifications||48%||9%|
|Lack of technical skills or qualifications||45%||14%|
For businesses directly affected by the pandemic, the profile of their top barriers is slightly different. As with the all-industry profile above, they cite a lack of applicants as the single largest barrier (17%). However, the second- and third-most cited top barriers were: candidates being unwilling to forgo government income support programs (16%); and government regulation for hiring workers from outside Canada (9%).
In response to recruitment challenges, businesses are adjusting their hiring incentives. In particular, their pandemic experience with remote work has made them more willing to offer flexible work hours or working arrangements (65%). A significant share (44%) will provide skills training; and a full third of respondents plan to offer higher wages to attract the workers they need.
These findings are relatively consistent across industries, with two notable exceptions: manufacturing and construction. Those two industries are twice as likely to raise wages or compensation; 1.3 times as likely to expand benefits; and 1.5 times as likely to offer skills training. Work hour flexibility ranks lower than the provincial average, likely due to the nature of the work itself.
What’s Going On?
First of all, Alberta businesses are looking to add workers. That is unambiguously good news. That said, if their hiring challenges persist, our economic recovery could be delayed.
The fact that such a broad cross-section of businesses and industries are struggling to hire the workers they need suggests that there is no one overarching explanation for this challenge. Indeed, based on the survey results, our previous analyses, and broad-based consultations with BCA members, we have identified several factors that are likely at play:
1. Ongoing Skills Mismatch
Alberta is struggling with record long-term unemployment. Tens of thousands of Albertans have been out of work for more than a year, meaning there should be an ample supply of workers willing to fill positions. In this context, difficulty hiring suggests a mismatch between the skills employers are looking for and those possessed by job seekers.
Of course, the collapse of oil prices in the mid-2010s has exacerbated long-term unemployment. For many former oil and gas sector workers, it is a difficult proposition to settle for work in a new field with lower wages, especially if it means uprooting your family and leaving your community.
Moreover, today’s workplace is rapidly changing. Factors like the energy transition, automation, and digitization are changing both the types of jobs that are available and the skills needed to do them.
2. A Shuffling of the Employment Deck
As the world emerges from the worst of the pandemic’s impacts on employment, the nature of white-collar work has changed drastically, and employees are responding to these changes.
For one, after spending the last 17 months just happy to hold onto their jobs, many office empoyees are starting to reassess their career trajectories, objectives, and values. Dubbed The Great Resignation or The Summer of Quitting, many workers are contemplating making career changes they feel are necessary to find the right job and work-life balance going forward.
Combined with the new post-pandemic era of greater remote working flexibility, competition for workers is increasingly defying geographic boundaries. Now more than ever, an in-demand worker living in Edmonton can entertain job offers in San Francisco without needing to relocate. As employers compete for workers from an increasingly global talent pool, wages and benefit packages for in-demand skill sets are facing upward pressure. Companies that have a tough time matching these compensation packages will have to get creative with other employment perks in order to attract top-quality workers.
3. Government income support programs are a higher barrier to pandemic battered industries—but not that prominent
Many businesses in sectors directly affected by public health measures (accommodation; food services; information, culture & recreation; entertainment; and retail trade) were forced to shut down during the pandemic or dramatically curtail their activities. This led to massive job losses—often in relatively low-wage positions that did not require extensive education or experience. With the economy re-opening, these same businesses are now reporting a much more difficult time re-hiring for those same positions.
Part of the challenges is that for many lower-wage workers, income losses were low compared to pre-pandemic levels because of generous government income support programs. For some qualifying part-time workers, it was even negative. The assumption is that people will be unwilling to return to lower-wage jobs while these supports persist.
Our survey supports this assumption, but only to a small degree. About one quarter of businesses say that income supports are a barrier to finding workers, but only 7% say that it is the most significant obstacle. As these supports are wound down, it will be instructive to see the impact on labour force participation to get a clearer picture of how Albertans respond. It’s also worth noting that, given that our survey focuses on the business perspective, it does not capture other barriers or hesitancies to rejoining the workforce that might be loosely related to pandemic supports. These include concerns over health risks and a potential fourth wave, the fact that some businesses may only be offering temporary (as opposed to stable or full-time) work, and related uncertainty over schooling, access to child care and associated infection risks.
As businesses look to add staff and ramp up activity, many are already running into challenges finding the workers they need—even as Alberta continues to post the highest rate of long-term unemployment in Canada. Addressing this gap needs to be a top priority for both government and the business community.
Policymakers will need to be wary of the challenges posed by the high rate of long-term unemployment. This will involve establishing training programs for workers looking to learn the new skills needed for in-demand work. It will require low-barrier support programs that put unemployed workers in the position to learn on the job. It will require a vision for creating an adaptable, skilled, and well-rounded population capable of applying innovative ideas in the field.
For their part, businesses will need to be more open to training and developing talent in-house where possible. Increased compensation, more remote work flexibility (when possible), improved skills training and micro-credentialing, or some combination thereof, may be necessary to attract workers and reduce job turnover.
In the coming weeks, BCA’s Task Force on Long-term Unemployment and Workforce Transition will be diving into ways the government and the business community can work together approach hiring challenges and long-term unemployment. Stay tuned!