indicatorThe Owl

Labour shortages and high unemployment

What gives?

By Rob Roach, ATB Economics 19 October 2021 3 min read

As of September, the unemployment rate in Alberta was sitting at 8.2%. That translates into over 200,000 people actively looking for work, but unable to find a job.

Meanwhile, the job vacancy rate has been rising and some business owners are having difficulty finding workers.

There are a number of factors in play that help explain this paradox:

1. Skills and experience - It’s a problem that predates the pandemic and one that will get worse over time: employers need workers with skills and experience, but these same skills and experience are in short supply among available workers. The aging of the population is causing an exodus of skills and experience out of the labour force while new technology is ramping up the specific skills employers need. At the same time, employers are also looking for soft skills such as leadership and problem-solving, but these are hard to come by without pre-existing job experience.

2. Government income support during the pandemic - The pandemic and the public health measures aimed at containing it put a tremendous number of people out of work. The federal government stepped in and provided emergency income support (now largely through the Employment Insurance program). As a result, the number of Albertans on EI in July 2021 was 244% (131,300) higher than in February 2020.

A side-effect of this is that some workers are better off collecting EI than going back to work (which points to the low incomes of these workers). This has led some Albertans, especially those in high-contact sectors where there is also the risk of contracting COVID-19 to consider, to delay their return to work. Now that the temporary changes made to make EI more accessible have ended, this should help alleviate some of the shortage.

3. Child care - While this issue predates the pandemic, it has been exacerbated by it due to school closures, COVID-19 outbreaks at daycares and reduced availability of babysitters. A lack of reliable or affordable child care options has forced more workers, especially women, to stay home or reduce their hours.

4. The great resignation - Coined by Texas A&M University Business Professor Anthony Klotz, the great resignation refers to the large number of workers who have quit their jobs during the pandemic. According to Dr. Klotz, between a backlog of people who didn’t quit during the pandemic, increased levels of burnout brought on by the pandemic, pandemic epiphanies that have led workers to make a major change to their career path, and people who are quitting if they can’t continue to work from home, the labour market is in the midst of a rejigging period that has left many positions vacant.

How long it will take for the pandemic-related effects to dissipate is unclear with the desire to keep working from home or do something different on the part of a large number of workers potentially leading to durable shifts in the labour market. Either way, the need for more and better education, skills and experience to find work will keep increasing as will the phasing-out of lower skilled jobs through investment in technology and the importance of addressing the child care needs of workers. All of this points to a challenging and interesting time ahead for employers and workers alike.

Answer to the previous trivia question: Russia is home to the longest crude oil pipeline in the world. The Eastern Siberia-Pacific Ocean Oil Pipeline is a 4,857km project operated by Russian oil transportation company Transneft.

Today’s trivia question: In what year did the much-discussed book The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era by Jeremy Rifkin come out?

Alberta's labour market is in transition

Alberta's labour market is in transition

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