Reactions to Talent Supply Shortages
I often interact with labour leaders regarding talent supply. Recently I noticed a pattern among specific labour leaders and progressive commentators that concerns me.
Many notice a shortage of talent supply. That is a fact, and paying heed to that is necessary.
What gives rise to concern is some leaders’ reaction to it. Two often-heard reactions are:
- Union bargaining power has increased due to the shortage, so employers must simply pay more, and
- How dare you think about supplementing the supply with temporary foreign workers.
Labour Is Not a Commodity
Talent supply is not a commodity because:
- Labour ought not to be a commodity, and
- Labour is not a commodity!
Since 1948, the International Labour Organization’s fundamental principle has been that labour is not a commodity, which is in clause I(a) of the ILO Constitution.
It seems strange for some progressives to treat talent supply like a commodity. There is a fundamental and widely held principle among progressives and the population not to do so. Society should not treat people as though they are commodities or widgets. Yet many union leaders and progressive pundits declare that wages need to increase simply because of a shortage, as though wage rates should fluctuate as oil prices do.
Now to our second point. People are not commodities. Increasing wages does not increase the talent supply. People are not “produced,” and talent supply is not increased by simply adding a third line at the factory. It is not the same as supply-chain shortages resulting from a lack of microchips for the sale of automobiles. You can up the production on microchips, but that is not the case for increasing the supply of people. Yet, some labour leaders and employers behave as though that is the case.
Talent supply is increased in the short term by increasing productivity, adding hours, or immigration (permanent and temporary). Economies increase talent capacity over the medium and long term by increasing productivity, innovation and, through technological advances, increasing the population, training and aligning a proportion of education systems towards supporting talent needs.
Solution-based Responses, Not Reactions
The country needs thoughtful, grounded solutions. These include, yes, in some cases, labour market (wage) adjustments but also:
- Access to temporary talent supply from out of the country;
- Leveraging the gig-economy; and,
- Leveraging alternative talent supply sources.
Human Resources, Unions, and Many Employers React Instead of Respond
For years we have seen the demographic crisis coming, and it is now upon us. The talent supply situation is a function of many factors. Our inadequate response and surprise to this foreseen event mark an epic failure for labour organizations and employers alike in many industries and occupations.
Some unions kept membership intake low to ensure their stagnant and aging members were in short supply. In construction, we should note that 7-8% unemployment is needed simply to accommodate the movement between jobs. Some hiring halls have been planning to fail by default for a long time. Plant, transportation, warehousing, manufacturing, facility, and public sector unions push back on equity, diversity and inclusion efforts out of a protectionist stance.
Employers have relied too heavily on recruiters to drive their talent supply strategy. Comparing a recruiter and a well-rounded, degreed HR professional is akin to comparing a doorbell installer to an electrician. A doorbell installer can install doorbells faster than anyone. However, you would not ask a doorbell installer to diagnose and repair a problem with your electrical panel. Employers have been asking recruiters to diagnose their talent supply woes. Recruiters are capable of identifying and describing symptoms but are not usually capable of getting to root causes and developing solutions.
Employers, unions, and human resource professionals must act more carefully and professionally.
See Adverse Reactions to Temporary Workers for What They Are
Adverse reactions to responsibly designed temporary foreign worker programs are attempts to exacerbate talent supply concerns and create a crisis for self-serving ends. The same groups who push back against temporary foreign worker programs also push back against diversity, inclusion and equity programs to push themselves up by pushing others down.
Executive Operations Officer
With People, Inc.
April Alberta Labour market update:
Private Sector Surges, but Jobs in Goods Continues to Fall
Jobs in trades, healthcare, mining and oil and gas, professional, scientific and technical, finance, and education remain significantly lower than pre-pandemic levels. Meanwhile, services and manufacturing jobs have increased to levels greater than that experience pre-pandemic.
The Alberta economy is transitioning towards being more service-based. We expect mismatches of skill sets and drastic swings in displaced workers moving from industrial to service work in the coming months and years.
Unemployment and Labour Participation Rates
Average Wage Rates and Earnings
Increased operational costs leave less room for wage increases, and employers navigate tremendous uncertainty in today’s market. This reality creates the need for nuanced communications between employers and employees as each experienced increased costs to run their lives and operations.
Job vacancy rates are at 4.5%. Focused areas such as services and IT and general labour associated with civil work suffer staff shortages.
Alberta’s population growth is at 1.4% year to date. Increased immigration and access to temporary foreign workers are required to meet Alberta’s labour market demands.
The shortage of civil trades will eventually be the bottleneck for work opportunities for those involved in other industrial work. It is no longer good enough to look at a project from the standpoint of it being shovel-ready as a whole. Due to the uneven distribution of vacancies and unemployment rates across trades, it is necessary to determine what phase of a project will be shovel-ready.
The Current Economic Environment Introduces Head-Scratcher Interactions at Collective Bargaining Tables
- where the fair deal resides, and
- how best to communicate that to rank and file members.
Oil’s Influence on Negotiations
Employment Impact on Collective Bargaining
Inflation and Negotiations
Earnings, Average Wages and Collective Bargaining
Collective Agreement Negotiations
Canada Labour Market
The private Sector Leads the way in the Canadian Labour Market
Canada Labour Market Equity Improves but Gaps Remain.
No Great Resignation in Canada
These factors impact the Canada Labour Market in many ways, including adding uncertainty among employees, confusion among recruiters, frustration among hiring managers, and increased risk for employers.
Employees notice their purchasing power shrink and consume news with mixed or nuanced messages about inflation. Messages surrounding the causes of inflation are politically torqued with a spin—objective and unbiased information on the topic is challenging to find. Anxiety is created not only by actual and perceived loss but also by a fear of missing out as news of a tight-labour market comes from loud and vocal stakeholders. Employees agonize over whether they have pressed hard enough to get more favourable terms with their employer and in the labour market. Speculation over the expected length and extent of current inflation levels creates more uncertainty about what people should pursue and how they should position themselves to navigate these conditions.
Recruiters receive cold responses and combative candidates with aggressive positions regarding salary expectations. There is movement in the market, and a mismatch of skills, uncertainty, and physical isolation create communication challenges during the exchanges. As recruiters fall short of meeting fill rates, they seek to increase terms and conditions. Increased rates do not create more candidates when looking in the wrong places. Increased rates do create structural cost increases for businesses.
Hiring managers are frustrated by difficulty managing budgets and risk and delays in recruiting, and employees with demands at times with overtures to leave.
Employers face increased input costs, downward price pressure, uncertain financials, and rough market conditions. The Canada Labour Market, if approached without foresight and sophistication by employers, recruiters and hiring managers, has the potential to exacerbate inflationary pressures as what occurred in the United States.
Canada and the United States experienced what the Bank of Canada and Federal Reserve call transitory inflation throughout 2021.
Without getting into politics, it is clear that this inflation did not result from a stable, healthy, growing economy. It is not business as usual. Aspects of price pressure result from:
- pandemic pressures,
- changes within the economy, and
- supply chain issues.
Price pressure also arises from public policy directions taken during trying times.
Concurrent to this inflation environment, US employers faced labour movement, including resignations in their workforce. Employers experienced job vacancies and labour shortages. Displaced workers scanned job postings. Human resource practitioners and applicant tracking software disqualified them. The workforce movement and misalignment resulted in jobs without people and people without jobs. Absent any more strategic approaches, human resource and recruitment personnel engaged in a wage escalation, rather than focusing on increasing supply.
US human resource practitioners and employers adjusted their recruitment tactics. Sadly, they sought to overcome shortages by pulling primarily one leaver. That leaver was increasing wages. Upping wages did not increase the labour supply. They made the existing workforce more costly to employ.
Companies passed on the increased costs to customers. US employers’ wage increases, structurally increase prices. This wage inflation makes inflation in the US economy permanent.
Disruption in Canada’s workforce is comparatively less and focused on specific sectors and certain jobs. True, CPI is also up, but it is decoupled from wage increases year over year.
Canadian wage increases do not track CPI. Whether those increases result from collective agreement settlements or through direct negotiations in non-union settings, wage and settlement data confirm this trend.
Permanent Inflation is Regressive
Governments, industry and policymakers should avoid permanent inflation if possible.
Some will say that wide-ranging wage increases are precisely the redistribution society needs. But it is not that simple. Those pursuing such a policy would do so with progressive intentions, resulting in a regressive outcome.
The permanent inflation brought about by broad wage increases will not affect all in society equally. Increased prices negatively affect those who spend most of their income. Furthermore, price increases significantly harm those who spend a higher portion of their income on essential expenses. Price increases are regressive.
A Comment About Wages
Employers should seek mechanisms to react to today’s inflation for those most impacted and smooth the increase over a two or three-year period of forecasted commitments. By forecasting multi-year increases and front-end loading those increases for lower-paid employees, employers can accomplish this.
There is justification for attraction, retention and equity purposes, to embrace adjustments in 2022 for pay bands lower than roughly $25/hour. An example would be committing to 6% over three years, with 3% in 2022, 2% in 2023, and 1% in 2024.
For pay bands over roughly $25/hour, CPI prompted adjustments are unnecessary. Employers should avoid tracking CPI for higher-paid employees. Current price increases do not result from a strong and growing economy and coincide with significantly increased business risk and vulnerability. An example for higher-earning employees would be committing to 3.5% over three years with 1.5% in 2022, 1% in 2023 and 1% in 2024.
The above are examples only and overlaid on this needs to be an analysis of each market factor, competition, job classification and sector. There is no one-size-fits-all solution.
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Respectfully submitted by Workforce Delivery Inc.
(c) Workforce Delivery Inc. 2022
Alberta Employment and Labour Market Update
For the week of February 7, 2022
Employment Update: Canada lost 200,000 jobs in January. It is worth noting that Ontario and Quebec felt most of these losses after confronting the Omicron wave.
Meanwhile, Alberta employment increased by 7,000 jobs. However, full-time jobs receded by 3,900, and part-time employment increased by 10,900 positions.
The goods and manufacturing sector drove gains, with 18,400 positions filled. Service sector jobs (including education, professional and science services) declined by 11,300 positions month over month. Reductions experienced by the service sector would have been more significant were it not for gains in food, cultural, healthcare and accommodations roles.
These shifts have significant implications for Alberta employment. The trend displaces workers within specific skillsets and targets specific industries where much of the displacement occurs. Meanwhile, lower-paying jobs grow in service industries with fewer hours of work offered.
Construction permit values increased by 14% in 2021 – inflated input costs drove 60% of that increase.
Alberta inflation year over year increased to 4.8%, matching the national CPI rate.
On the bargaining front, 2022 negotiated wage settlements in the private sector average 1.26%. 2023 average negotiated private sectors wage settlements are 1.12%. Public sector settlements average 0.8% in 2022, and Public sector settlements average in 2023. The recent nurses’ wage settlement of 4.25% over four years, ratified by 87% of their membership, reaffirms this pattern.
Province-wide average wage rates in Alberta employment contracted 1.2% month over month and are down 2% year over year.
All the above factors must be considered when considering compensation and collective agreement negotiations strategies.
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Respectfully submitted by Workforce Delivery Inc.
(c) Workforce Delivery Inc. 2022