Former StatsCan chief economic analyst explains labour shortage – youth unemployment dichotomy

·Politics Reporter

How can there be so many unemployed youth yet so many labour shortages?

It's a questions that's been asked a lot recently in light of the controversy about the temporary foreign worker program.

The provinces and labour groups say that there just aren't enough Canadian workers while social justice groups decry exorbitant youth unemployment numbers.

Meanwhile, the government recently announced tough restrictions on the TFW program in an effort to curb fraud and to ensure Canadians had the first opportunity to access jobs.

Statistics Canada's former chief economic analyst has weighed-in to the debate with a comprehensive report he penned for the Fraser Institute.

[ Related: 'There's always resistance to change': TFW program still a contentious issue for feds, provinces ]

Phillip Cross notes that there are indeed tight labour markets — particularly in the the trades and construction segments in the resource-rich western provinces and in Newfoundland.

The most compelling part of his report, however, is his explanation of why high youth unemployment rates persist in the midst of all this.

Firstly, he says that too many young people are going to university to get trained for jobs that don't exist.

"As the share of youths in community colleges declines and those in university increase, a mismatch may be created between the skills possessed by youths and the skills demanded by employers," the report notes.

"Youths also require more realistic expectations about where new jobs are being created and entry level wage rates."

The statistics support that theory: unemployment rate for young high school graduates with a post-secondary certificate or diploma (from a trade school, for example) is 7.3 per cent while the unemployment rate for young university graduates is 9.1 per cent.

Among young Canadians with a graduate degree, the unemployment rate rises to 9.4 per cent.

Moreover, Cross notes, unemployment numbers are skewed by the fact that so many full-time students still consider themselves to be part of the labour force.

"It is revealing that unemployment among youths who are not students is near a record low."

[ Related: Jason Kenney looks to Germany for help at curbing Canada’s youth unemployment rate ]

The report doesn't let employers off the hook either.

It includes some very interesting statistics about the lack of employee training in this country.

"Canada has always lagged in its investment in training, ranking 20 out of 26 OECD countries in hours of training. Only 29 per cent of Canadians participate in job-related education and training, compared with 44 per cent in the US," it claims.

"Firms appear to have cut back their investment in training. The Conference Board of Canada found that spending on learning and development per employee fell 25 per cent between 2006 and 2010. The Canadian Chamber of Commerce says that firms spent less than 2% of their payrolls on training in 2005–06."

Instead of bucking up and training young people, Cross says that these industries have combated labour shortages by using the temporary foreign worker program, by encouraging employees to delay retirement and requiring staff to work more overtime.

"Nearly one-third of Albertans, for example, work more than 50 hours a week. In fact, the number of Alberta employees paid to work overtime rose by 57 per cent over the past decade, and 60 per cent in Saskatchewan, compared to a 3.3 per cent rise in the rest of Canada," notes the report.

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High youth unemployment is a world-wide phenomenon.

According to a 2013 report by the International Labour Organization in Geneva, the unemployment rate for youth (age 15 to 24) in the developed world is at 18.1 per cent. If you include the discouragement rate — the rate at which young people just stop looking for work — the UE number jumps to a whopping 21 per cent.

Canada, unfortunately, is no exception — our youth unemployment rate is about 14 per cent.

Falling in-line with Cross' analysis, the Harper government's suite of policy solutions has included more money for apprenticeship programs while prodding business to do their part.

"Through Budget 2014, we have announced funding to create 3,000 paid internship opportunities in high-demand fields," Alexendra Fortier, a spokesperson for Minister of Employment and Social Development Jason Kenney, told Yahoo Canada News.

"Budget 2014 also supports another 1,000 internships in small and medium sized businesses. 395,000 Canadian apprenticeship grants have been handed out to youth since 2007, helping thousands of youth fill skilled trade jobs."

The silver lining with regard to Canada's high youth unemployment rate — unlike a lot of other countries — is that we actually have labour shortages.

Clearly, governments, employers and unemployed youth just have to find a way to match their needs.

Unfortunately, that's easier said than done.

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