In each EconMinute, Business Council of Alberta economist Alicia Planincic seeks to better understand the economic issues that matter to Canadians: from business competitiveness to housing affordability to living standards and our country’s lack of productivity growth. She strives to answer burning questions, tackle misconceptions, and uncover what’s really going on in the Canadian economy.

Two years ago, a lack of workers was a top economic concern and a hot topic of conversation. While some viewed labour shortages as a temporary challenge of an over-heated economy, others said it was more structural. Canada was experiencing a “grey wave” of retirement and sectors with an older workforce would be hit especially hard.

As of the latest data, the job vacancy rate has returned to its pre-COVID level (about 3 percent)—down significantly from its 5.7 percent peak in the spring of 2022. Other information from business surveys and online job postings tells a similar story. It’s easier to find workers and harder to find work.

Open postings aren’t just disappearing in a few big industries either. They’re down across nearly every sector of the economy. Twelve of the 16 industries analyzed now have a job vacancy rate in line with or below their pre-COVID average.

The difference between industries has also shrunk. Those that faced the most difficulty hiring a couple years ago (think back to where you saw all those “help wanted” signs) have seen the biggest decline in vacant postings.

For instance, hospitality—the industry that at one point held the highest job vacancy rate ever recorded—now looks like any other industry. Likewise, vacancies in construction, an industry whose concerns of a shrinking workforce pre-date COVID, have fallen back down to a vacancy rate of 3.6 percent, just a hair above its previous norm.

Only one industry is having a noticeably harder time finding workers, and that is health care. Though the struggle to find staff isn’t as bad as it was two years ago, it’s still a challenge. The job vacancy rate is nearly 50 percent higher than previous norms and is the highest of any industry.

Overall, the collapse in the job vacancy rate does not disprove the theory that labour shortages are a new norm. A weak economy could be masking an underlying issue. After all, the one industry bucking the trend is primarily comprised of public sector jobs that are least affected by the health of the economy. Also worth noting, certain roles within industries may remain harder to fill.

Nonetheless, it’s a good reminder of how much, and how quickly, labour markets can change—from not enough workers to too many. And is also a cautionary tale for policy solutions that seek to intervene.

This post was originally published by the Business Council of Alberta at businesscouncilab.com. 

A majority of Canadians think that Canada is broken after years of stagnant incomes, affordability challenges, rising crime, government failures on basic functions like healthcare and immigration, and a deepening cultural malaise. But decline is a choice, and better public policies are needed to overcome Canada’s many challenges. Kickstart Canada brings together leading voices in academia, think tanks, and business to lay out an optimistic vision for Canada’s future, providing the policy ideas that governments need to ensure a bright future for all Canadians.

Try building anything in Canada today and the roadblocks are immense. The average time to get a building permit for a Vancouver duplex? 325.5 days. The approval process for the Trans Mountain Pipeline took seven years while actual construction of the project took only four years (and that was with COVID disruptions to contend with). It still fares better than Energy East, an exemplary warning of the byzantine complexities and excessive veto points that exist in the current approval processes that can drown even the most experienced actors in never-ending red tape and financial ruin.

This deliberate choice to impede key sources of investment that help feed our accustomed way of life directly contradicts what Ottawa should be aiming to do. Today’s future outlook for major natural resource investments has dropped by $258 billion in the past eight years, while the OECD recently highlighted the above-average regulatory hoops that Canada forces proponents through. At its core, this squandered investment represents lost jobs, smaller paycheques, and fewer chances for people to enter the middle class.

To fix this, Canada’s government must recognize it is part of the problem. We have overengineered our permitting processes, sending a signal to the private sector that we’re not interested in its capital investment or the development of new natural resource and infrastructure projects.

The Canadian government structure is built on the principle of subsidiarity, which dictates that decisions should be made at the closest level of government that can fulfill the decision. For example, garbage pickup is best accomplished at the municipal level, while the federal government is best equipped to handle national defence. This guiding principle, if followed, allows each level of government to accomplish what it is best at and prevents them from tripping over one another in a bureaucratic and jurisdictional battle.

The Trudeau government has failed to abide by this principle. Since 2015, the federal government has been attempting to undermine the Constitution and insert itself into areas of provincial jurisdiction. One of the most prominent is the assault on resource projects, best embodied in the Impact Assessment Act, but also present in recent “greenwashing” oversight legislation. Adding another level of federal oversight to already lengthy and legally intensive processes does nothing but send the signal that already complex and undefined bureaucratic burdens will be redoubled.

A paradigm shift is needed in how we approach project permitting to kickstart Canada’s economy. Adopting a mentality that the project will be approved, not if it will be approved, and working within a strict, time-limited framework to develop reasonable alternatives or mitigating actions can change the way that we understand our public resources. Too many projects are blocked by those who either want to extract concessions or are ideologically opposed, endangering our common future prosperity for their narrow-minded interests.

This problem is so entrenched that it threatens to persist beyond the next election. As things stand, Canada will not attract new investment simply because the government changes. Definitive actions must be taken to show a clear break from past prejudices against development. With a continuing productivity and wealth crisis on our hands, we cannot afford to have the wrong incentives for companies—an untenable state of affairs, as the Bank of Canada has acknowledged in increasingly forceful terms.

The repeal of the Impact Assessment Act (already ruled unconstitutional), is a definitive move that can provide this clear signal. But as Ian Brodie recently pointed out in his Substack, while legislative changes are certainly necessary, they will take a long time to enact—and with the prospect of a hostile Senate, potentially even longer. Changes must be made quickly if we are to restore Canadian prosperity in a timely manner.

A new minister of environment should make it clear on day one that all projects that are not within activities regulated by the federal government will be deferred to the provinces. This would immediately restore Ottawa to its constitutionally-designed role and allow the principle of subsidiarity to be re-established. Deferring to the provinces on such projects will also make it clear to the provinces that, in regards to regulation, they are the masters of their own fates—how attractive they are to new and increasing investment is in their hands.

As I’ve written before, the American approach to this can teach us much. However, we can also avoid mistakes that they have encountered. Creating a stricter statute of limitations to limit frivolous and excessive legal challenges that unnecessarily endanger project decisions can help to restore overall confidence in the permitting process. Working to create a bureaucratically defined, Supreme Court-accepted duty to consult pathway on what is actually required for projects to proceed will clear up uncertainty and legal haze that Ottawa has been happy to allow to stymie approvals. Enacting defined, concrete time limits on bureaucratic decisions will mean that completion timelines can be more bankable.

With these changes and more, Ottawa can help to show provinces how the process of reform can be undertaken. Crucially, fixing the permitting mess we find ourselves in is more than just a problem for Ottawa to solve. The provinces must be allowed to perform their constitutionally dictated roles and must be part of the solution if we are to see meaningful, lasting nationwide reforms. Having restored a more traditional and orderly role for the federal government, the provinces may be more receptive to such overtures.

Encouraging reforms in provinces across the country will help to drive increased investment, jobs, and tax revenue for those that enact them in a market-sensitive manner. This is the most important first step in improving our moribund productivity. By adopting a more neutral position and deferring to the provinces on the changes they want to see and how to execute them, the federal government will assume a role akin to a coach and a model for best practices.

Variance across the effectiveness of provincial permitting regimes at the outset of this new model could be expected depending on the province in question. But with the departure of meddlesome federal intervention, the provinces would be able to experiment and improve their permitting systems as they saw fit. Ottawa’s exit will allow the conversation to turn to how to improve those systems and make them more efficient.