Labour Shortage? Raise Wages!

I have been hard on our new Employment and Social Development Minister, Jason Kenney, for buying into a widespread myth about labour shortages and skill mismatches in Canada. So, to give credit where credit is due, it appears Minister Kenney has been listening to the growing chorus of voices disputing the existence of a labour shortage in Canada.

Surprisingly (or not), Minister Kenney turns to a simple market solution to business complaints of difficulty finding candidates: raise wages. “The single most powerful tool employers have to address labour skill shortages is raising wage levels,” Kenney reportedly told his business audience. This was not a simple slip of the tongue, accidentally speaking truth to a friendly audience – Kenney later repeated the statement on twitter, saying: “Employers should use market mechanisms, like higher wages & investments in training, to help address skill shortages”. (It’s interesting that this message is coming from the one-time provider of low-wage, easily exploitable migrant workers through the TFWP).

The advantage to this approach is that higher wages are an extremely effective signal for job seekers, and investments in training can pay significant dividends for both employers and employees, and in fact are key to future productivity growth in Canada.

And, of course, the government has a wonderful new plan to encourage employers to invest in training: the Canada Job Grant.

Never mind that the Canada Job Grant proposes to take its funding from a pot already funding training for vulnerable workers who don’t qualify for EI. Never mind that there is no evidence that this program will encourage *new* employer spending on training, but instead is likely to subsidize existing employer training schemes. And never mind that $300 million toward training is a relatively tiny drop in the bucket of what is needed.

So, while I applaud the Minister on his assessment that employers need to raise wages and increase training, I remain puzzled by where this government chooses to intervene in the labour market. To get the ‘most bang for your buck’, as they say, governments should invest in areas where businesses won’t and individuals can’t. Instead, the Canada Job Grant does the opposite, giving employers money for training from a pot of money dedicated to helping unemployed workers who have fallen through the cracks.

At the end of the day, despite the tough talk, Kenney is still selling something that looks a lot like corporate welfare at the expense of the real ‘little guy’.

Angella MacEwen is a Senior Economist at Canadian Labour Congress and a Research Associate at the Canadian Centre for Policy Alternatives. Her twitter handle is @amacewen

One comment

  1. Big problem with schools teaching the wrong things necessary to get a job. I think APPRENTICESHIP PROGRAMS are the way to go. University & College degrees with no relevance to any job, coupled with big student debt hinder our country rather than help it. Everyone needs a job and they need to do it to the best of their ability. Union wage, benefit & pension demands have forced job losses. If your job can be learned in a few hours or done by anyone, it likely can’t be high paying.

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