Skilled trade shortages–a regional issue
June 11, 2013
Wage data are important indicators of labour shortages: if wages are rising much faster than inflation, this can be understood as a tight labour market. In such an environment, employers must offer increasingly higher wages to attract employees.
To demonstrate that wages are rising for workers with a particular skill set, however, it is necessary to demonstrate that wages for those jobs are rising relative to the average. That is, simply demonstrating rising wages for tradesmen in a given province does not demonstrate a shortage—wages for tradesmen would have to be increasing at a faster rate than that at which average wages are rising.
So, to figure out whether there is a skilled trade shortage in Canada, first we will examine wage inflation across all employment categories, and then consider some more specific skilled trades.
Real wage appreciation
(Wage growth above inflation)
These data suggest that on average workers in Quebec, Ontario and British Columbia have been able to maintain their wages relative to inflation, and indeed modestly improve their position over the past 10 years. Alberta, however, appears from these data to be experiencing a significant labour shortage in general: employees have been able to successful negotiate wage increases of almost 30% over inflation in only a decade. These data make sense with the national narrative in recent years: the resource boom in Alberta is generating many new jobs and a competitive job market, while the more muted economic performances of Quebec, Ontario and British Columbia have created less wage inflation.
Now on to adding skilled trades into the story. Using the National Occupation Classification for Statistics (NOC-S), real wage growth for various trades can be calculated inter-provincially, and compared to average wage growth in the province.
Real wage appreciation in skilled trades relative to provincial average (2003-2013)
From these data, one can conclude that at the provincial level in Ontario, there is no shortage of skilled tradespeople: wages for skilled trades have not kept pace with average employee wage increases. Indeed, the wages of contractors, plumbers, carpenters and masons have not kept up even with overall inflation in Ontario since 2003. In Quebec, however, real wages for plumbers, carpenters and masons has increased by almost 14% relative to the provincial average. This implies a relative shortage for construction related trades in the province. British Columbia is similar to Quebec in this respect, with a shortage of construction related tradespeople, as well as a potential shortage of heavy equipment operators and labourers. Alberta, however, is completely distinct, showing shortages in all trades. While overall real wages in Alberta increased by 28% over the past 10 years, trades wages increased even more. This implies a significant shortage of skilled trades in Alberta, potentially spilling over to a small degree into British Columbia However, this impact is completely absent in Ontario, while insofar as it relates to basic construction and renovation activities, it is present to a limited extent in Quebec.
The data on skilled workers considered here paints a picture where regional differences dominate the story rather than a consistent national trend. Alberta, and to a lesser extent, British Columbia, has what could be termed a skilled labour shortage. In Quebec, skilled trades that typically operate at a household level, such as plumbers, carpenters and masons, are in short supply. In Ontario, there is no skilled labour shortage at a provincial level. This implies that, as Eastern Canadian wood manufactures production rebounds over the next few years, firms should have little trouble accessing an adequate supply of workers. A similar expansion in Alberta (and parts of British Columbia) would present a larger challenge to firms.