Alberta’s labour shortage solution: pay everyone to work a ton of overtime

Skills gap and lack of training mean more overtime, delayed retirement: Fraser Institute

Western Canadian businesses are using overtime and delayed retirement to make up labour shortfalls, according to a recent report from the Fraser Institute.

National employment figures would suggest there is no economy-wide worker shortage but that ignores province-level problems, according to report author and former Statistics Canada chief economist Philip Cross. “In Alberta and Saskatchewan employers have exhausted every possible avenue,” he says. “They’ve kept the older workers in the labour force, they’ve kept all their workers working longer hours, they’ve resorted to temporary foreign workers, they’ve hired young people. I can’t think of another source of labour out there.”

The country’s oil belt has leaned particularly heavily on existing employees, with a sharp rise in the number working overtime hours:

Chart showing change in the number of employees working paid overtime 2004–2013

Do Labour Shortages Exist in Canada? says companies know they can’t continue to stretch existing employees forever:

Squeezing more hours out of workers is a short-term fix to labour shortages for some employers. However, they are likely to view it as an unsustainable solution, especially the very long hours worked by people over 55 years old and multiple job holders working more than 50 hours a week. Knowing employees cannot be asked to work long hours and delay retirement indefinitely may be one reason why employers say labour is in short supply, even as they have found temporary solutions to contain the problem.

READ: Why hiring the right employee is about to get even harder »

But some companies may simply be too picky for their own good—the report suggests that too many employers are looking for the “purple squirrel” employee who meets the exact criteria for a job opening. Businesses expect prospective workers to have the necessary skills to execute their responsibilities immediately, because the onus of training has shifted from industry to higher education.

Companies in Alberta and Saskatchewan need more job market mobility to solve their labour problems, but not just anyone will do, says Cross. “We could solve some of these shortages out West if we could get people to move from eastern Canada to western Canada. But if we didn’t get the right people with the right skills to move, we might solve the problem of restaurant workers, but we wouldn’t solve the problem of engineering for the oil sands.”

READ: Who says the skills gap and rising wages are bad? » 

There are no easy fixes for Canada’s labour problems, with think-tanks and policy wonks suggesting everything from a reduction in EI to a Youth Employment Guarantee. And it’s not clear just how bad the imbalance is: though the ranks of Canada’s employed continue to swell, the health of the jobs market varies depending on the metric you’re using.

Unless there’s a sudden economic upswing, the best financial prospects for young eastern Canadians may still lie in going west.