Good afternoon, Chairman Allison, distinguished members of the committee, and fellow panellists. It is a privilege to be here to share the work of the Atlantic Institute for Market Studies, specifically our research on the labour market.
On first read, the article in The Globe and Mail last Thursday, which highlighted a backlog of over 20,000 immigrant cases in part due to forty vacancies at the Immigration and Refugee Board, was ironically funny. However, recently released business condition survey figures show that 9% of firms experienced production difficulties due to a lack of skilled labour, and a further 5% reported difficulties due to a lack of unskilled labour.
In this light, the backlog of immigrant cases must be seen as a serious strain on our economy, and there are some examples locally. We have a huge restaurant and food sector here, in part due to our tourism industry and in part just because we love to eat.
The Canadian Restaurant and Foodservices Association has just released a report projecting huge labour shortages throughout the industry. This industry, like many other services, cannot be outsourced to China or India. It must be done by people right here in Canada, not offshore.
The Dalhousie business school had more recruiters on-site last month than in all of the previous years. The Warren Group, a Maritimes trucking company, recently brought in ten drivers from Europe to help ease the acute shortage of long-haul truck drivers. In P.E.I. there are twenty Russian guest workers at a fish processing plant and a request for twenty more. These are just some examples.
In response to requests from businesses across the region, every provincial government in Atlantic Canada now has an immigration policy and, I believe, an agreement with Ottawa. Under these provincial nominee programs, needed workers can be fast-tracked. However, immigration is not enough. We have an aging population that birth rates do not offset. Furthermore, the profile of immigrants mirrors our society in that many of our immigrants face retirement as well.
Recent studies have shown that if existing trends continue, the Maritimes will be faced with an unemployment rate of below 3% within ten years. As you know, 3% is approximately the minimum unemployment rate associated with structural and frictional shifts in the labour market. Below this level, the economy must shrink.
That's a very unique situation for Atlantic Canada. We haven't had this before.
We need to lose the assumption that everyone needs to be a software engineer or a biotechnician. Many of the jobs that are already going begging in Canada are for skilled and semi-skilled blue collar workers. I've already mentioned truck drivers, fish plant workers, and restaurant workers. If Canadians are unwilling to perform these tasks, we are going to need to think about how we are going to get them done, as many of them cannot be outsourced but must be done close to home.
Part of the solution lies in taking up President Vicente Fox's invitation for Canada and Mexico to set up a guest worker program. Mexico is the NAFTA partner we ignore, and yet as both Canada and the United States enter a period of labour shortages, having a large pool of unemployed labour on our doorstep may prove to be a huge boon. However, we should not take these workers for granted. Just as employers compete for more workers, Canada will have to compete. The highest-value guest workers or immigrants are much sought after everywhere. They have more destinations to choose from than ever before that offer high standards of living and personal security. At the very least, we need methods to fast-track the recognition of foreign credentials.
Another part of the solution is increased productivity. It's not a question of whether a firm can hire the people it thinks it needs, because nobody is going to find the workers they need. The problem is trying to find out whether the firms and governments can modernize themselves through the use of information technology, outsourcing non-core functions, more rigorous management, etc. That's allowing them to do their essential work while drawing far less on the country's labour pool. You actually need far fewer people to do what you really need to do, and you need to pay them much better.
Productivity can come from many sources. One key area is removing barriers to worker mobility. The usual examples in the literature include architects, accountants, and engineers. However, my wife, for example, had to take an additional course for early childhood education here in Nova Scotia when we moved here from Saskatchewan. A research report last year from the OECD ranked Canada as the worst in the G-7 in barriers to labour mobility.
By the way, deregulation is nothing to be afraid of. Remember, a labour shortage is a worker's best friend. Workers are entering an era of high and rising bargaining power, and not just on wages. For example, many long distance drivers have negotiated a rework of the delivery chain as a series of six-hour drop-offs. No longer do they need to be away for a month at a time. They can live at home and have a normal family life.
In an effort to maximize the available labour pool, many people are leveraging technology to help disabled people. I'm reminded of the story from a colleague who told me of a PowerPoint presentation delivered by a blind person. The JAWS program reads the slides rapidly to the presenter. As such, he could make allowances for those in the audience who needed visual aid.
This brings us to the elimination of regionally differentiated EI and regional development spending on business support and many kinds of other business subsidies. Political opposition is going to be much more muted as the labour shortages spread across the country. It is no longer necessary to leave Mabou or Bathurst for Toronto and Calgary. It may be quite sufficient to go to Moncton or Halifax.
In fact, Halifax needs this rural-urban move today. In 2005, Halifax's employment rate was higher than Toronto's, Vancouver's, and Montreal's. It was one thing when people had some sympathy, when we had the argument that there were no jobs, but in an era of massive labour shortages, the moral and economic arguments coincide. There is no case on either score for continuing to pay people not to work or to try to create artificial employment at the cost of higher taxes when genuine, sustainable business has to shelve development plans for lack of workers.
In short, we are experiencing an acute labour shortage, and the situation is getting worse. Immigration may provide short-term softening of the blow. However, it is not enough. Furthermore, we are in competition for quality immigrants and guest workers. We need to streamline the process for them and recognize their qualifications. For that matter, we need to recognize our own qualifications and remove barriers to worker mobility. We need to identify the labour gaps and promote those fields aggressively, whether they be skilled, semi-skilled, or non-skilled.
Lastly, we have to stop paying for regional schemes that are disincentives to resolving these pressing problems. All these barriers directly hurt our productivity, and in the age of competing global supply chains, productivity is king. We need to leverage technology to expand our worker force and to make do with fewer workers.
Thank you very much for your attention.