Thank you, Mr. Chairman.
I appreciate the opportunity to speak with you today about the number one issue facing Canada's $51-billion food service industry, and that is labour shortages.
For our members in western Canada, this is already a crisis. For the balance of the country, it's a growing problem that will get progressively worse over the next 20 years. There is no getting around or wishing away two realities that confront the labour market: first, the country's birthrate has fallen precipitously in the last three decades, seriously constraining growth in the labour market; second, we are on the verge of the biggest exodus from our labour market in the country's history. The baby boomers are already starting to retire, and the numbers are truly daunting.
The Conference Board of Canada projects that there will be a shortfall of more than 950,000 workers by 2020, unless we do something to increase the available labour pool.
All industries will suffer from this labour shortage, but the outlook for the food service industry is particularly serious, because the labour force will be older, and of course our labour force is a lot younger. In fact, 44% of today's food service workers—more than 440,000 employees—are 15 to 24 years of age. So projections suggest that by the year 2025, the population of 15- to 24-year-olds in Canada will actually decline by 330,000.
At 3.1%, the unemployment rate in Alberta is the lowest in 32 years. The number of unemployed youth fell a staggering 25%, or by 7,000 people, in the last year. This is having a devastating effect on food service operations in the region.
Employers are working 17-hour days, spending too much time on food preparation and service, and not enough time managing their businesses and training and mentoring their staff.
Labour shortages are forcing operators to reduce store hours, reduce menu offerings, shut down parts of their operations, and abandon their expansion plans.
Average weekly wages in food service increased 21.2% from January to July, 2006, compared to the same period in 2004. In contrast, the average industrial rate in Alberta has increased 10.1%. Despite this huge jump in wages, the average number of employees per restaurant fell from 14.3 in 2004 to 12.4 in 2005. This represents a shortage of more than 13,000 people.
In addition, for the first time in 14 years, the number of food service establishments in Alberta declined this year. So the industry is actually contracting when food service demand has never been higher, due to the labour crunch.
The demographics tell us that the situation in Alberta and B.C. is only the beginning and will spread across the country within the next few years. We are already hearing from members in Saskatchewan, Manitoba, Ontario, and Atlantic Canada who are having a difficult time recruiting staff.
We recognize that the labour shortage is a complex challenge and there is no magic bullet. Businesses must be more flexible and creative in their recruitment of workers and must place a higher priority in terms of retention of existing employees.
Food service operators are increasing wages and benefits and increasing capital investment in labour-saving devices, although they are limited in what they can do in that regard, since we are a service industry. They are putting more emphasis on attracting and accommodating under-represented groups, such as aboriginals and persons with disabilities, and on looking for new pools of talent, such as older workers, to entice into the industry. But these are not enough. We can't overcome the demographic reality confronting the Canadian labour market. We need dramatic changes in public policy.
Our employment and immigration policies were developed in an era when unemployment was a national challenge. The new challenge is finding workers, and we will be in a vicious international competition for immigrants with developed countries, such as the U.S., Europe, and Australia, which are experiencing the same demographic trends and labour shortage challenges.
Clearly there are some changes that need to be made by government now to encourage greater participation in the labour force. Our recommendations are outlined in the submission, which hopefully all of you have received, and I will review them briefly.
We need to modernize our immigration system, and in particular the point system, so that it recognizes the diverse needs of Canada's labour market. We need to put more emphasis on Canadian work experience and school credentials, and less emphasis on foreign education and experience.
We need to make the temporary foreign worker programs into bridging programs to permanent residency.
We need to streamline the temporary foreign worker program, allowing for bulk applications and more efficient processes.
We need to expand the working holiday program through negotiation of a larger cap and longer permanent period.
We need incentives for labour mobility within Canada, encouraging the unemployed to move from areas of high unemployment to areas where labour is in high demand.
We need to remove structural impediments to employment and policies that discourage work, such as high marginal tax rates for lower-income employees and seniors. This means increasing the basic personal tax exemption, lowering payroll taxes, and lowering clawbacks on income-tested programs such as federal retirement benefits.
In summary, Mr. Chair, the labour shortage issue is already a crisis in western Canada and it is the greatest single issue our industry faces in the years to come. We believe your committee and this government must move as quickly as possible to address the labour shortages today, so that we will be able to compete tomorrow.
Thanks.