Commentary,  Employment & Unemployment,  Labour Standards,  Young Workers

Is There Really a Shortage of Labour?

With restaurants and stores opening up again after the pandemic, loud complaints are emerging from employers in the hospitality and retail sectors that they can’t find enough workers. Many point the finger at government income supports which supported people through the pandemic (including the former CERB, cancelled last September, and subsequent improvements in EI benefits). Many also want the federal government to open the taps on Temporary Foreign Workers, to bring in more low-cost labour from other countries.

However, the hard economic evidence does not support this complaint about a supposed ‘labour shortage.’ Yes, it is certainly an operational challenge for restaurants and stores to reconnect with former employees after many months of closure – and they’re all trying to recruit former and new staff at the same time. But unemployment remains elevated: the official unemployment rate is 7.8%, and the true rate (including underemployment, people who have left the labour force, and other ‘hidden’ pools) is closer to 15%. Wages in retail and hospitality remain very low, and they are not rising – which we would expect if labour was genuinely ‘scarce.’ An even bigger barrier in these sectors are hours of work: most staff are part-time, and their shifts are very unreliable.

If employers in these sectors want to recruit and retain a more stable workforce, they should start by improving wages and conditions: better pay, stable shifts, better benefits, improved training and safety. If government responds to these employer complaints by cutting income supports or liberalizing temporary migrant labour, that will only forestall the improvements in the quality of jobs that workers in these sectors desperately need.

The Centre’s Director Jim Stanford has made several interventions in recent weeks highlighting the problems with the ‘labour shortage’ hypothesis – and urging employers to improve wages and working conditions as their industries emerge from the pandemic. 

For example, Jim was recently interviewed by Amanda Lang, host of the BNN Bloomberg Markets program. Their wide-ranging chat about the future of work after the pandemic addressed the claims of labour shortage, and also whether unions would be more assertive as the economy re-opens in pressing demands for better wages and job security.

Jim also spoke with Michelle Eliot on CBC Radio’s province-wide call-in show, BC Today, along with Ian Tostenson (head of the provincial Restaurant Association). Audio from the segment can be heard here (starting at the 34:00 mark). Like other business leaders, Ian suggested that COVID emergency income supports (like the CRB) and restrictions on Temporary Foreign Workers were worsening this alleged labour shortage. But several phone-in callers highlighted the problem of low wages in the industry, and noted the impossibility of trying to cover housing costs in BC on the basis of typical restaurant wages. One business owner also highlighted how important government income supports were to her own business’s survival – highlighting the hypocrisy of business owners attacking COVID support payments for workers, while benefiting so much from payments to business.

Jim also had a feature interview with Jody Vance for CKNW News Radio on what measures can be taken to improve the quality of work in hospitality and retail services, so that workers hvaea better wages and conditions – and providers can have a more stable workforce.

The Toronto Star has also quoted Jim in recent reports on the supposed labour shortage: including this article on hiring in retail and hospitality, and this report on whether the hiring will lead to sustained improvements in wages and benefits.

Jim also appeared on Shaye Ganam’s province-wide talk show in Alberta (on CHED and CHQR radio stations) to discuss the staffing challenges as Alberta’s hospitality sector re-opens (starts at 24:00 minute mark).


Stand by for more research and commentary on the labour shortage debate, which is sure to heat up as Canada’s economy continues to reopen!

Jim Stanford is Economist and Director of the Centre for Future Work. He divides his time between Sydney, Australia and Vancouver, Canada. Jim is one of Canada’s best-known economic commentators. He served for over 20 years as Economist and Director of Policy with Unifor, Canada’s largest private-sector trade union.