Canada: the lack of skilled workers causes skyrocketing prices

TORONTO – The cost of living also rises, in Canada, because there is a lack of specialized workers, according to some economic experts. A practical example? Until recently, a service call to a plumber to take a look at your malfunctioning dishwasher cost $70 or $80. Today it costs double that, said to CBC-RCI Mandy Rennehan, the company’s founder and CEO of “Freshco” (not the grocery: it’s a company specialized in building retail stores). But it’s just one of many examples we might do. 

Anyone can expect to feel the effects of this shortage, said Simon Gaudreault, chief economist and vice-president of research for the Montreal-based Canadian Federation of Independent Businesses (CFIB): even the shortage of chefs, which impacts menu prices at restaurants — everything is interconnected, Gaudreault said.

A report by CFIB (you can read it here: Small Businesses in Canada Hit Hard: The Big Financial Toll of Labour Shortages) found that Canadian small companies lost $38 billion in business opportunities due to labor shortages in 2022, with the construction sector bearing the largest share. But the shortage of skilled craftsmen has been going on for years. And it will get worse.

In fact, according to Employment and Social Development Canada, approximately 700,000 of the four million Canadians who work in the craft sector will retire by the end of the decade. According to CFIB job vacancy estimates, calculated using Statistics Canada data and 1,700 responses from its own owner-operator survey, the overall vacancy rate during the first quarter of 2024 was 3.5%. But key sectors that employ skilled trades have higher-than-average vacancies, Gaudreault said. In construction, for example, the rate was 5.1% (a figure that includes all industry roles, such as receptionists), and in hospitality it was 4% (you can see all the data here).

That fits with what Kelly Higginson, president and CEO of the industry association Restaurants Canada (based in Toronto), sees in her industry, where qualified chefs are difficult to find. “Currently, our industry has over 78,000 open jobs, so this has put significant pressure on wages” Higginson said, citing Statistics Canada data. “We have seen labor costs increase more than 15% in two years” …Higginson says the industry has always operated on slim margins, given the number of people and amount of overhead needed to run a restaurant. And, as CBC-RCI again reports, she says restaurants have tried to absorb rising labor costs but as other costs, such as utilities, food and insurance, rise, customers will continue to see the impact on the account.

Idem in construction: when it costs more to hire carpenters, because they cannot be found, construction costs will also increase and therefore consequently the selling prices of apartments or rents will have to be higher.

Where companies, in any sector, are able to acquire the labor they need, they probably do so by offering higher wages: and this higher cost is then “passes” to the consumer. A question arises spontaneously: what is Canada waiting for, to open its doors to skilled workers from all sectors?

Photo by Arseny Togulev on Unsplash