The Canadian construction sector faced a significant setback in July, shedding 45,000 jobs as indicated by the latest Labour Force Survey from Statistics Canada. This decrease of 2.8% from the previous month follows a more modest decline of 0.8% observed in June.
Employment Trends
In a span since January 2023, the construction employment landscape has seen a decline of 71,000 jobs, offsetting the cumulative gains of 65,000 recorded between September 2022 and January 2023, as reported by StatCan. The impact of this decline was particularly prominent in British Columbia, Quebec, and Ontario. These provinces witnessed a contraction of construction employment by 8.9%, 3.5%, and 1.4%, respectively, translating to approximately 21,000, 11,000, and 9,000 jobs, during the period spanning June to July 2023.
Zooming out to a national perspective, the construction sector in Canada experienced a greater loss in jobs compared to other industries surveyed by StatCan. Although three other industries also saw a decrease in employment, namely public administration (-1.4%), information, culture and recreation (-1.8%), and transportation and warehousing (-1.3%), gains in sectors such as health care and social assistance (+0.9%), educational services (+1.3%), finance, insurance, real estate, rental, and leasing (+1.1%), and agriculture (+4.6%) balanced the job market. This resulted in a slight increase in unemployment to 5.5%.
Employment declines in four industries and increases in four others Employment change
| Industry | Employment Change (thousands) |
|---|---|
| Construction | -44.7 |
| Public Administration | -16.7 |
| Information, Culture and Recreation | -15.8 |
| Transportation and Warehousing | -13.9 |
| Business, Building and Other Support SVCs | -10.3 |
| Natural Resources | -0.3 |
| Utilities | 0.8 |
| Business, Building, and Other Support SVCs | 1.2 |
| Wholesale and Retail Trade | 1.9 |
| Manufacturing | 5.2 |
| Other Services | 7.2 |
| Accommodation and Food Services | 8.4 |
| Agriculture | 11.6 |
| Finance, Insurance, Real Estate, Rental & Leasing | 15.0 |
| Educational Services | 18.8 |
| Health Care and Social Assistance | 25.1 |
The Impact on Productivity
The reduction in the Canadian construction workforce presents a growing concern, amplified by the rapid population expansion and the widening gap in housing availability.
Benjamin Tal, Deputy Chief Economist at CIBC, highlighted the issue of labor scarcity in the construction industry. He emphasized the significance of supply issues and labor availability as central to any discussion among developers. Tal’s analysis, based on statistical evidence, underscored the pressing nature of this shortage, evident by over 80,000 vacancies within the sector. This vacancy rate, surpassing the national average by a full percentage point, serves as a key challenge.
The report also pointed out a decline of 15% in the number of registered apprentices and trade qualifiers over the last decade, indicating a potential future exacerbation of the labor shortage.
The Future Landscape
The scarcity of labor within the construction industry has unfavorable implications for housing production. Construction project timelines have experienced an upward trend since the mid-1990s, with a stretch to approximately 25 months in 2022.
The demographic shift within the workforce raises further concerns. The significant proportion of construction workers over 55 years old indicates an impending wave of retirements. This aging workforce, coupled with the industry’s lower average retirement age compared to the wider economy, underscores the urgency of the situation. Projections based on age demographics anticipate the retirement of no less than 300,000 construction workers within the next decade. Furthermore, even with a conservative projection of residential investment activity, the existing labor shortage of considerable magnitude is poised to grow by an additional 60,000 positions by 2033.
Addressing the Challenge
To mitigate the construction labor crisis, Canada’s newly appointed housing minister, Sean Fraser, has expressed optimism in the federal government’s move to prioritize immigration for skilled trades workers. This initiative aims to augment the workforce by including carpenters, plumbers, electricians, welders, contractors, and residential and commercial installers. A dedicated stream under the Federal Express Entry system has been designed to attract individuals in the skilled trades, with the goal of bolstering Canada’s housing workforce.
While this approach is hailed as a welcome development, more comprehensive actions are needed to attain the ambitious housing targets while restoring affordability. Benjamin Tal advocates for reforms in the immigration points system to enhance the contribution of new immigrants to alleviating the labor shortage in the construction industry.
Moreover, efforts to diversify the workforce by attracting more women to skilled trades and adopting strategies akin to Nova Scotia’s utilization of the tax system as an incentivizing tool can contribute to resolving the challenges faced by the industry.
In conclusion, the decline in construction jobs in Canada underscores a pressing need for concerted efforts to address the labor shortage and its implications for housing and infrastructure. The integration of innovative solutions, immigration policies, and proactive recruitment strategies will play a pivotal role in shaping the future of the country’s construction industry.
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