I'd like to thank the committee for the invitation to appear today.
I'm going to speak English, but I would be pleased to answer any questions in French.
The Centre for the Study of Living Standards is a national, independent, non-profit, economic research organization focusing on analysis of trends in productivity, living standards, and well-being. We also do a lot of work in the labour market area and have recently done work on employability.
Since I have just seven minutes, I thought I would basically highlight seven issues that I think are very relevant to the work of this committee. I will tell you what I want to talk about in my seven minutes.
First, I want to talk about the drivers of employability. Then I want to look at the asymmetry for well-being of the implications of job shortages versus labour shortages. Third, I want to talk about what I call the chimera of massive impending labour shortages. Fourth, I want to talk about the importance of labour reallocation for productivity, and then I want to briefly talk about the dismal record on apprenticeship completions. Then I want to talk very briefly about the failure of Canada to integrate its immigrants into the workforce, and finally about the need to rethink the concept of retirement.
There are two determinants of the employability of the population. There's the demand side and there's the supply side. If there is strong demand for labour, employers are keen to hire many people who normally would not be considered for jobs in a weak labour market. In other words, full employment is the best policy to help persons on the margins of the labour market find jobs.
On the individual level, however, supply side factors come into play. Increased skills also increase the employability of an individual, but if there's high unemployment, training workers is not going to create jobs. You need the labour demand there.
Fortunately, we are in a situation of very low unemployment and high labour demand, unlike the case in the 1980s and 1990s. We're very fortunate to be in the current macroeconomic situation, and let us hope that situation continues.
The second point is the asymmetry and well-being implications of job shortages and labour shortages. When you look at the newspapers, there's talk of massive job shortages. The size of the headlines is the same as when we had massive high unemployment and job shortages. It seems in the press that the labour shortages we are supposedly facing are as bad as high unemployment. But in reality, unemployment is a much more serious societal problem than labour shortages. If you're unemployed, you have low income, low status, no workplace connections. Studies have shown that what creates unhappiness in society is unemployment.
When we have labour shortages, basically all that happens is that employers can't find workers. There are no wasted resources. There's no welfare loss in that sense. There's really no comparison between a situation of job shortages and labour shortages.
My third point is about the chimera of massive impending labour shortages. We hear all the time about projections of massive labour shortages in the future—certain occupations will need 80,000 jobs.... It's very important to beware of those types of predicted situations, because they are not going to take place. Labour markets adjust over time, wages rise, demand falls, and the supply of workers increases: people coming in from other countries, other occupations, from education institutions, and from upskilling of workers. In that sense, these adjustments take place over time.
Now, maybe you need these wake-up calls of headlines of massive shortages just to motivate people to act, but the reality is, we are not going to be seeing massive labour shortages in the future. There's no evidence of that at all. There is evidence of it in certain specific areas, but of generalized labour shortages, no. It's really a good situation to be in.
My fourth point is on the importance of labour reallocation for productivity growth. Much productivity growth comes from moving workers from low productivity activities to high productivity activities, whether we're talking about regions, occupations, industries, or firms. The movement out of agriculture after the Second World War added significantly to aggregate productivity growth.
Persons moving from Newfoundland to Alberta right now, from low-productivity jobs in Newfoundland to higher-productivity jobs in Alberta, contribute to productivity growth. It's very important that governments facilitate this movement of workers between different regions and between different industries.
It's important for employability that barriers to mobility, such as occupational licensing, be addressed. We also need to provide information on labour market opportunities so that people are made aware of the possibility of moving.
My fifth point is our dismal record on apprenticeship completions. The apprenticeship system is important for training persons in the traditional trades. In fact, there have been massive increases in the number of registrations in apprenticeship programs since the mid-1990s, reflecting the high demand for workers in those areas. But less than half the registrants in apprenticeship programs actually follow them to completion. Some people debate whether this is a problem. I think it is a serious problem. We have to understand this issue better and develop new policies to reform the apprenticeship system so that more can finish.
My next point is on the failure to integrate immigrants into the workforce. The previous speaker addressed this issue. So I'll just point out that this question turns on the failure to recognize foreign credentials and foreign experience, together with the poor language skills of many recent immigrants. It's important that government address these three areas.
My final point has to do with the need to rethink the concept of retirement. In the past, one worked full-time until one hit 65, then one ''worked retired'' or not at all. We have to address this issue in two ways. First, we should abolish mandatory retirement. This is already happening—in Ontario, for example. Before long, it will probably happen in the hold-out provinces. This is certainly good. People should have the right to work after 65 if they want to. Obviously, you need competency standards for those people, as you do for all workers. Second, we should be looking at a more phased-in retirement, in which people would leave the labour force gradually, working by choice from 60 to, say, 70. This ought not to have any negative effect on their benefits. Phased-in retirement is important for society, both for employability and for dealing with the aging workforce issue.
I'll conclude there.
I'd like to thank the committee for its attention, and I'd be happy to take any questions.