Canadian companies warned of worker shortage

By Irene Marushko, Reuters, Thursday 7 December 2000, 4:29 pm Eastern Time

OTTAWA, Dec 7 (Reuters)—A shortage of skilled labor could curb growth rates at booming Canadian firms, according to a government report released on Thursday.

Statistics Canada, in its quarterly report on industrial capacity utilization, said firms could face production constraints because they could not find workers.

For some time, rates of capacity use have been very high and recent reports have indicated that a growing number of firms may be facing production constraints, the report said.

But analysts said the figures for capacity utilization -- breaking a trend of seven quarterly increases -- had eased concern about inflation spiking up.

It eased a bit because demand slowed and investment activity picked up, said Craig Wright, deputy chief economist at the Royal Bank of Canada. It doesn't raise any concerns about inflation.

StatsCan said capacity use eased to 86.9 percent in the third quarter from a revised 87 percent in the second quarter.

Capacity use measures actual industrial output compared to its potential output, and the Bank of Canada closely watches spare capacity in the economy to determine whether to raise interest rates should inflation start to rise.

StatsCan highlighted its own recent report in which eight percent of business owners were concerned about available skilled labor, and it also quoted from a central bank study which noted growing signs that shortages of skilled labor are posing capacity constraints on companies.

GLOBAL RACE FOR TALENT

It fits in with what we're hearing with the global race for talent, Judith MacBride-King, director of human resources management research at the Conference Board of Canada economic think-tank, told Reuters.

We need to do a better job of getting out there and recruiting globally, she said. The board conducted an extensive survey of businesses in the spring of 2000 that raised the alarm about a sparse skilled workforce.

The highest demand was demonstrated in high-end professions in the engineering and information-technology sectors and in trades in the steel and mining industries, as well as middle management positions and nursing, she said.

StatsCan said third-quarter declines were widespread and were seen in manufacturing and non-manufacturing industries.

But it also said the electrical and electronics group of industries operated flat-out at 103.4 percent in the third quarter, up 2.9 percent from the April-June period.

An operating level over 100 percent indicates that producers have surpassed their level of output considered a maximum under their usual operating practices, StatsCan said.

Much of Canada's economic boom has been driven by the high-technology industry, whose leaders have complained about a lack of skilled people to hire to fuel the industry's 30 percent-plus annual growth rate.

Wright said the labor shortage was a growing concern across Canada.

The unemployment rate is bouncing around 25-year lows, he said. I think it is a strain on businesses.

MacBride-King said the shortage was caused by economics and demographics, with Canada's aging population growing at a pace faster than the group of youngsters able to replace it.

Many skilled workers have left for higher wages and better professional opportunities in the United States.