What does Victoria's labour shortage look like?

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This is the first installment of our new in-depth series, Pay Check, exploring Vancouver Island’s changing labour market from the mountains to the high seas, and from health workers to hospitality.

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As Canada’s average age rises, so too do fears of an impending labour shortage.

Baby boomers, long the largest generation in the Canadian workforce before millennials took that title, are getting older, stoking fear that a large wave of retirements will leave many positions vacant—often without a chance of being filled with qualified people.

This, paired with the COVID-born Great Resignation, and a perceptible increase in “Now Hiring” signs in the windows of local shops and restaurants, may leave some wondering what will happen to the workforce in the coming years.

It stands to reason that Victoria, with one of the highest percentages of people over the age of 65 in Canada, would be hit hard if a sector-wide, aging-induced labour shortage were to happen.

But are we really on the cusp of a labour shortage? And if so, how will Victoria fare?

We looked at the data and talked to experts to find out.

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By 2031, the tail end of the baby boomer generation will reach the age of 65. People in this generation began retiring in earnest a few years ago, but the number leaving the workforce is only going to rise in the next decade. It’s been described as a demographic time bomb, especially in places like Europe and South Korea, where the average age is older than in Canada. Add to that shrinking birth rates and increased life expectancy, and some researchers worry that we won’t be prepared.

Source: Statistics Canada

The question of whether or not Canada is approaching a labour shortage is something that has fascinated Susan McDaniel, UVic adjunct sociology professor and affiliate with the Institute for Aging and Lifelong Health. Six years ago, then director of the Prentice Institute for Global Population and Economy at Alberta's University of Lethbridge, McDaniel teamed up with a couple of colleagues, and dug through peer-reviewed French and English articles on labour, labour shortages, demographics, and immigration to get a better sense of what’s happening.

What she found runs contrary to the popular understanding.

“The reality is there are not labour shortages, per se,” she said in an interview with Capital Daily.

In fact, there isn’t even evidence that sector-wide labour shortages are going to occur in the foreseeable future; it’s more likely that the workforce will continue to grow for decades to come.

That being said, however, some sectors are having a harder time recruiting workers than others.

There are sectoral shortages, McDaniel said, most felt by the food services and hospitality sectors. These sectors, including bars and drinking establishments, tilt very strongly to young workers, and these workers are often part-time and overqualified, she said. In many cases, workers are in those industries to make enough money to continue their education or wait for permanent employment.

This shortage has been further heightened by the pandemic, McDaniel said. These industries have been far less certain and less stable, and the on-again, off-again nature of these jobs as restrictions and capacity rules have changed led many to leave the industry altogether. White-collar work, on the other hand—especially employment in which people can work remotely during the pandemic—has not seen these shortages.

People are also more educated in general, meaning that many will not settle for a low-paying service job long-term when they can get a better job down the line.

McDaniel added that looking at wages offers key evidence that these sectoral shortages are not due to a lack of available workers. If there’s a real shortage, she said, demand goes up for workers, and the wages follow suit. But that isn’t what’s happening.

“So it’s kind of not quite a labour shortage, but it’s rather a mismatch, if you like, between what’s available and what employers have on the horizon to hire.”

Food services and hospitality sectors aren’t the only ones to experience labour-related pressures, however.

She pointed to the nursing shortage that is being seen across the country, and the global mariner shortage, as real examples of aging workforces.

Not enough nurses have been recruited for years for a variety of reasons—government cutbacks and burnout, for example. Mariners, as well, have not been recruiting enough young people into the occupation for quite some time.

“What happens in the media is all this gets conflated,” McDaniel said. “‘This sector has shortages, therefore, it’s population aging.’ It’s not. It’s nothing of the sort. It’s a quite different phenomenon.”

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For more than a decade, Victoria has consistently had one of the lowest, if not the lowest, unemployment rate amongst BC metropolitan areas. In January, Victoria’s unemployment rate dropped to 3.9%, the lowest in Western Canada.

Source: Statistics Canada

Quebec City is one of four eastern Canadian cities to match or beat Victoria’s unemployment rate. According to Bruce Williams, CEO of the Greater Victoria Chamber of Commerce, there are a few key similarities between the two cities: as capital cities, both have thousands of provincial government jobs, which sheltered many workers from the effects of the pandemic, and both have large and robust tourism sectors.

Williams knows of many jobs available here for workers who want to work, but the shortages seen by certain sectors, like hospitality and tourism, have meant that some employers haven’t been able to recruit enough employees to operate at full capacity.

McDaniel said unemployment rates can be interpreted in a number of ways, but as a rule the rates are based on the number of people actively looking for work as a percentage of those who could potentially work. While a low unemployment rate may be an indicator of a strong economy, that isn’t always the case—especially now, with an economy recovering from the ongoing pandemic.

People would not be listed as unemployed, for example, if they are waiting for recall from a pandemic-induced layoff, dropped out of work to take up self-employment, or going back to school or upgrading certifications—and there is evidence of all of these things happening in Victoria

According to BC’s Labour Market Outlook, retail and food-service jobs make up four of the top 10 occupations in the Vancouver Island and Coast region, while retail and accommodation and food services also rank amongst the Island’s top 10 industries. In fact, retail and accommodation and food services make up a combined 30% of the region’s jobs. According to Statistics Canada, these, along with agriculture, are the lowest-paid industries in the province. Accommodation and food services, with an average hourly wage of $18.77, doesn’t even reach Greater Victoria’s living wage of $20.46, meaning that even if there is work available, it isn’t necessarily work that many people can survive off of without stretching or getting a second job.

Sources: BC Labour Market Outlook and Statistics Canada

Greater Victoria has had a large influx of young people from elsewhere in Canada. They’re drawn in by the weather, the ocean, and the lifestyle. Many of them are flooding to the Westshore seeking affordable and available rentals.

Langford, especially, has been growing at an incredible rate. Between 2016 and 2021, Langford had the highest population growth in BC—and the third-highest growth in the country—ballooning by 31.8%. The city is evidence of a trend seen across Canada: people are increasingly moving to municipalities outside of major cities in search of lower housing costs.

Sources: BC Labour Market Outlook and Statistics Canada

The Westshore community has also made headlines in recent years, including topping the BC Business Magazine list of most economically resilient cities two years in a row, and ranking first in BC in the Maclean’s list of best cities in the country.

Those rankings look at a variety of factors, including employment rates, growth rate, and housing costs. While Langford is one of the more affordable municipalities in the region, it is still far more expensive than cities elsewhere in BC and Canada. Workers in Greater Victoria have to deal with inflated costs of living without the wages to reflect this in some cases.

Solutions to labour do not live in a bubble, McDaniel said. If workers can’t afford rent with their wages, they’re going to try to find another job—or move.

“So what I’m trying to say here is that when we think about population aging, labour force, we have to think about sectors, we have to think about housing, we have to think about birth rate,” she said. “We have to think about all those things in conjunction, because that’s the way it actually works. It’s not only bodies, it’s also skills… It’s all those kinds of things that matter greatly.”

Canada as a whole has a robust immigration system; when there are needs in certain industries, the country brings in immigrants to fill those gaps. Immigrants currently fill about 31% of BC’s jobs, and that percentage will increase over the next decade as an estimated 346,000 new immigrant workers arrive.

According to the BC Ministry of Advanced Education and Skills Training, there are not enough young people entering the workforce to fill all job openings; however, immigrants and migrants from other regions will fill those gaps. In the first nine months of 2021, nearly 85,000 people arrived in BC from elsewhere in Canada and the world—the largest net migration in 28 years.

But in Canadian cities like Victoria, where housing options are expensive and limited, the question remains: where are they going to live?

Williams said that the chamber has heard anecdotally that many people are leaving Greater Victoria’s workforce in favour of more affordable places, and said it’s up to all levels of government to find solutions that will keep workers in communities.

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According to the BC Labour Market Outlook, a total of 111,000 jobs will become available in the Vancouver Island and Coast region between 2021-2031 to replace retirees and people leaving the workforce. An estimated 50,400 jobs will be created at the same time, a growth rate of 1.1% per year for 10 years.

The pandemic accelerated (or forced) some retirements, but people are still staying active in the workforce far longer than they used to.

Canadians are living longer and they’re retiring later and later. Sometimes they’re retiring from one job with a pension—then taking on another job, working part-time, or opening a business. But the data on retirements and workforce participation doesn’t fully capture this.

“We don’t capture the extent to which this kind of phenomenon occurs,” McDaniel said. “But all kinds of research shows that that’s exactly what’s happening. People are living longer, and they want to work in retirement, but maybe not in the same job they had before.”

It’s a much different world than it used to be, she added. It’s becoming less common for people to retire at 65 and stay retired.

Williams adds that there is a cultural shift happening where positions often held by younger people, like jobs in the food and hospitality sectors, are now being backfilled by older people instead of younger people.

As a population ages, there are other considerations, such as how the labour force will have to change to accommodate that. People retiring in place will reduce the labour supply and increase job openings, while retirees moving to Victoria will need services to live, and people to provide those services. The BC Labour Market Outlook estimates that health care and social assistance will see the largest increase in job openings in the next decade, 40% of which will be due to an expanding health-care system both to care for the aging population and increase the system’s capacity.

But with workers joining or returning to the workforce over the next 10 years, estimates show that there will be enough people to fill the gaps. And the Ministry of Advanced Education and Skills Training is working to increase education and skills training for industries that will see more job openings over the next decade.

McDaniel notes that while there are more retirements, fewer workers are required to keep our economy going—more jobs are becoming automated. In the 20th century, many more workers were required in labour and manufacturing jobs, for example. Labour requirements are shifting away from that.

“We have to think about how we create a new economy but are still productive. So how do we shape that in the future?” she said.

“We all know, that’s true, that there are fewer workers required to keep the economy going than there used to be. But we still haven’t figured out how we develop an economy that builds on that.”

This is part one of a multi-part series looking at Victoria's labour shortage. To make sure you don't miss a story, subscribe to the Capital Daily newsletter .