Skilled labour gap exaggerated, BMO says

The skills gap that the federal government says is threatening Canada's economy is much smaller than advertised and in fact in better shape now than it's been for most of the past two decades, a major Canadian bank says.

Bank disputes federal government claim of yawning skills shortage

The skills gap that the federal government says is threatening Canada's economy is much smaller than advertised and in fact in better shape now than it's been for most of the past two decades, a major Canadian bank says.

Officials at the Department of Finance and other policymakers have been banging the drum in recent weeks about a growing skills gap — a chasm between the number of available jobs, and a lack of qualified applicants to fill them because they don't have the right skills.

"The skills mismatch in Canada has gained extraordinary prominence in recent weeks, with the federal budget highlighting the issue," BMO economist Doug Porter said in a report published late Tuesday.

A key plank of the budget was a new subsidy called the Canada Job Grant of up to $5,000 to be matched by the provinces. It was aimed at offsetting the expenses that any company undertakes associated with retraining a worker for an available job. It's clear policymakers think a skills gap is holding Canada's economy back.

Training gap

People tend to focus on the jobless rate — the percentage of working-age people who have any sort of job — when gauging the health of an economy.

Currently, Canada's national unemployment rate is seven per cent. That's much lower than it was during the depths of the recession. But many private sector groups and some within the federal government warn that the number belies the reality of the job market, which is that there aren't enough qualified people to work badly needed jobs in the fast-growing resources sector.

Indeed, groups as diverse as the Canadian Chamber of Commerce, Engineers Canada, lobby groups representing the mining and oil and gas industries, and even BMO rival CIBC have issued reports on the issue in recent months, calling attention to the gap between jobs and workers with the skills to fill them, and underlining it as a key labour issue for the Canadian economy moving forward.

"The focus on skills and training and [Canada's] skills shortage is an issue that's happening now," Alyson Queen, a spokesperson for Minister of Human Resources and Skills Development Diane Finley, told CBC News on Wednesday.

"We're hearing directly from employers in a number of the high demand sectors that there is indeed a skills shortage," she said. "There's a push from employers for a market-driven solution."

But a report from Bank of Montreal published late Tuesday questions that narrative, pointing out that only 25 per cent of companies polled in the Bank of Canada's latest business outlook survey reported a lack of qualified workers. That's actually 10 percentage points below the 15-year average of 35 per cent.

Even smoothing out the last two quarters of data still gives a below-average reading of 29 per cent, Porter noted in his report.

"What’s more, for today’s seven per cent unemployment rate, that share of firms reporting shortages is especially low," Porter noted.

As the chart above shows, only a quarter of respondent's to the Bank of Canada's quarterly survey say they're seeing a skills gap. And that rating is actually much better than things used to be — the 35 per cent average, the line shown in red.

"Finally, most major wage measures are crawling along at about a [two per cent annual] pace — a strangely subdued pace if we are facing acute skills shortages," Porter says.