Labour shortage cost Canada $13 billion in the past year

Labour and skills shortages have cost the Canadian economy nearly $13 billion in the past year.

Canadian Manufacturers & Exporters (CME) this week released these numbers as part of its annual labour survey, based on responses from 563 manufacturers from across the country.

Over the past year, 62 percent of manufacturers have lost or turned down contracts and faced production delays due to a lack of workers, resulting in $7.2 billion in lost sales and penalties for late delivery. At the same time, 43 percent of companies have postponed or cancelled capital projects because of labour shortages, corresponding to $5.4 billion of lost investment.

“Our survey confirmed what we’ve been hearing from manufacturers on the ground for a long time. Labour and skills shortages are a chronic and persistent issue for manufactures, and they continue to limit the growth prospects of the sector. If we don’t find the workers we need, Canada’s economy will suffer”, said Dennis Darby, president and CEO of CME.

The ongoing challenge of labour and skills shortages continues to be exacerbated by the fallout from the pandemic. For the second consecutive year, more than 80 percent of manufacturers reported facing labour and skills shortages, up sharply from 60 percent in 2020 and 39 percent in 2016.

Shortages are most acute in production-related jobs, and manufacturers continue to have trouble finding enough highly skilled workers to fill skilled trade occupations and other workers to fill general labour and assembly positions.

Eight-in-ten manufactures say labour shortages in related sectors, like transportation and logistics, are also negatively affecting their business.

The survey identified the biggest negative impacts of labour shortages on the manufacturing sector: delivery delays, increased costs, and mental health impacts on current employees.

More than 70 per cent of survey participants have responded to labour shortages by increasing wages and benefits. Up to 15 percent of manufacturers are considering moving some or all their production outside Canada due to a lack of workers.

Manufacturers are calling on governments to provide more support to encourage automation, do more to promote skilled trades to secondary students, introduce and expand apprenticeship programs and incentives, and increase the intake of immigrants.

“Today, CME is calling on the government to take concrete actions now to fill the more than 85,000 vacant positions in Canada’s manufacturing sector within a year,” said Darby.

“We’re asking for government action on four fronts: providing more support for automation, bringing in more economic class immigrants and enacting reforms that reduce backlogs and improve processing times, providing employer-led training benefits to help upskill and reskill the workforce, and renewing and increasing funding for programs that encourage persons from underrepresented groups to seek a career in manufacturing.”