Will Future Labour Shortages Imperil the BC Economy?

The critical role of human capital in today’s economy, the fact that many employers continue to report difficulties finding qualified personnel, and demographic forecasts pointing to a steadily aging population and slower labour force growth all raise questions about the future supply of skills.

Highlights

• There is growing concern that labour shortages and mismatches between the demand for and supply of skills could exert a dampening effect on economic growth in the province over time.
• From a near-term perspective, worries over labour shortages seem overdone. The province’s economy is still operating below potential, with only modest upward pressure on wages.
• When labour demand-supply imbalances do arise, the operation of normal market forces coupled with changes in public policy and in education and training programs can help to mitigate the impact of skill shortages and mismatches.
• Looking ahead, demographic trends point to an aging population as well as slower growth in the province’s labour force. These developments will accelerate the shift to an economy in which labour scarcity and skills gaps emerge as more prominent issues.
• BC’s labour market is expected to tighten toward the end of decade and into the 2020s, with the demand for workers growing faster than supply and the average unemployment rate trending lower. More employers will experience upward pressure on labour costs and find that it takes longer to fill vacant positions.
• In this environment of “relative labour scarcity,” increased investments in post-secondary education and employee training will be needed, along with a commitment to ensure close alignment between the demand and supply sides of BC’s education and training system.