CANADA’S MANUFACTURING LABOUR MARKET:
A Reality Check for Canadian Industry and Government
DECEMBER 2012
CME — CANADA’S MANUFACTURING LABOUR MARKET:
A REALITY CHECK FOR CANADIAN INDUSTRY AND GOVERNMENT
Leadership makes the difference
Introduction and Summary
M
anufacturing is one of Canada’s most important economic sectors
by almost all statistical measurements, including being a leader in
GDP, imports, exports, research and development, and employment.
As a result, manufacturing plays a critical role in the economic success of each
province, as well as the country as a whole.
Today, manufacturers directly employ more than one in every 10 working
Canadians and pay over $1.84 billion every week in salaries. While the business
outlook for Canadian industry is positive for the next three to five years, companies are facing a variety of challenges, both domestically and internationally.
The most pressing challenge for companies is growing business by finding new
customers in new markets, they have a number of major concerns about their
future success. Companies’ ability to meet these challenges lies with a number
of critical factors, especially with their ability to attract and retain the necessary
labour with the right skills to support their innovation, productivity and growth.
However, a key concern businesses are met with is growing labour problems,
which are only expected to worsen over the next five years.
According to the national Management Issues Survey conducted by Canadian
Manufacturers & Exporters (CME) in spring 2012, nearly 50 per cent of companies
state they face labour shortages today across a wide range of occupations,
with most occupational areas appear set to worsen over the next five years.
Occupations such as sales and marketing, skilled production, general management and engineering are deemed to be the most critical for companies’ success over the next five years. However, those areas also are the ones in which
companies are most concerned about labour shortages. These shortages have a
significant impact on manufacturing operations in Canada, including constraining
growth, restricting investment and forgoing production.
Canadian companies require more labour with stronger skill sets across
occupational classifications from both domestic and international sources if they
are to fill the current and expected labour shortages. While Canadian companies,
governments, employers and the education system have taken several steps to
address these challenges, everyone must work more aggressively if Canada is
to prosper, innovate, and take advantage of the economic opportunities over the
next decade.
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CME — CANADA’S MANUFACTURING LABOUR MARKET:
A REALITY CHECK FOR CANADIAN INDUSTRY AND GOVERNMENT
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Summary of CME’s 2012–2013 Management Issues Survey
I
n the spring of 2012, CME, along with partner organizations in the Canadian
Manufacturing Coalition, surveyed Canada’s business community to better
understand current business conditions and the outlook companies forecast
for their businesses over the next three to five years. While asking about these
conditions, the survey provided an opportunity to examine what the priorities were
for business in terms of investment policies and government programs aimed at
growing the economy coast-to-coast.
In total, 649 individual responses formed the results of the Management Issues
Survey (MIS). The data collected is one of the largest recent surveys of manufacturers in Canada and the only one available that provides a clear picture of the
current state of the sector.
The companies responding to the survey represent a broad cross-section of the
manufacturing sector and related service providers with all sizes of companies,
in all regions of Canada. Clear from the results is Canadian companies’ common
view of challenges and solutions. Whether headquartered in Canada or abroad,
whether a small company or a global multinational, whether annual sales exceeded $1 million or $500 million, companies have a united vision on issues and
potential options for addressing them.
Companies are continuing to deal with a myriad of pressures impacting their
operations and business decisions. Their primary concerns and most pressing
challenges are issues they have little influence over, such as the strength of local
and international markets, the continued strength of the Canadian dollar, and the
cost and stable supply of raw materials to make their products.
They are also dealing with pressures which they have a more direct influence
over, such as labour shortages, regulatory burdens, product and process innovations, supply chain management and infrastructure.
Despite these pressures, companies are very optimistic and are anticipating
growth in most aspects of their business, including production volumes, sales,
exports, and profitability. These expectations are directly tied to their confidence
in increasing investment in research and development, in new processes and
more productive machinery and equipment, and in their people over the next
three years. These investments are centered on one priority: satisfying existing
customers and developing new clients at home and abroad.
This customer base is continuing to shift, along with the supply base for
Canadian companies. Showing the deep integration of Canada-US manufacturing, respondents indicated their market for purchasing and sales is heavily
focused on their home province and into the United States. However, this will
begin to shift in the coming years as the US market is expected to remain weak.
Companies are increasingly looking to find new customers in offshore markets
like Europe, China, and Brazil.
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CME — CANADA’S MANUFACTURING LABOUR MARKET:
A REALITY CHECK FOR CANADIAN INDUSTRY AND GOVERNMENT
Leadership makes the difference
Companies responding to the survey noted a primary factor for investment
was proximity to customers and strength of the local market. The challenge for
Canada, then, is: with shifting customer bases, how do we secure the production
at home to satisfy these sales abroad?
Given Canada’s market size and the mobility of capital, Canada must be the absolute best in the world at attracting investment. Canada can, and must, do better
if it is going to take advantage of the optimism expressed by Canadian industry
in the survey. While a number of priorities for action emerged and will need to be
addressed, the top priorities for action by both government and industry have
been identified as the following:
1. Strengthen investment policies through supportive programs and taxation
aimed at productivity and attracting investments in machinery and equipment,
innovation, and R&D.
2. Strengthen the labour market by introducing training tax credits and improving
the education system to be more in line with industry needs domestically while
reforming the immigration system to fill the needs of industry that cannot be
met at home.
3. Strengthen economic integration with the United States by fully implementing
the Perimeter Security and Economic Competitiveness Action Plan and aggressively pursue a reciprocal government procurement agreement.
4. Support market diversification by focusing on trade agreements that work to
eliminate structural and regulatory barriers to trade into priority markets as well
as providing better support mechanisms for companies looking to develop
new markets.
5. Reduce the regulatory burden to support investment by streamlining and
speeding approval processes, reducing compliance costs, and eliminating
duplication between jurisdictions, especially the US.
While the detailed analysis and results of the MIS are available at
www.cme-mec.ca, this study and analysis focuses on labour market issues
identified by respondents to the survey and the impact of labour and skills
issues on manufacturing competitiveness and investment in Canada. In order to
complete the analysis for this report, this study also examines the broader role
that manufacturing plays in Canada’s labour market.
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CME — CANADA’S MANUFACTURING LABOUR MARKET:
A REALITY CHECK FOR CANADIAN INDUSTRY AND GOVERNMENT
Leadership makes the difference
Manufacturing Sector Employment Overview
C
Canada’s manufacturing sector plays a critical
role in the economy by almost all measures. From
an employment standpoint, it may be Canada’s
most important sector. Manufacturing is the third largest
employer in the country with 1.85 million Canadians directly
employed in the sector today1. In fact, one in every 10
working Canadians is directly employed by a manufacturer.
In addition to the direct employment, manufacturers support
hundreds of thousands of jobs in related sectors, such as
construction, transportation services, and finance, insurance
and real estate.
Manufacturing accounts for a significant portion of
employment in each province. As shown in Table 2, the three
provinces with the highest percentage of direct employment
in the manufacturing sector accounts are Quebec (13 per
cent), Ontario (12 per cent) and Manitoba (10.3 per cent)2.
While other provinces the direct employment concentration
in manufacturing is lower, it still represents a significant
proportion of employment.
Table 1: Canadian employment by sector
1
August 2012 — Statistics Canada, Table 282-0007 — Labour force survey estimates (LFS), by North American Industry Classification System, sex and
age group, unadjusted for seasonality.
2
See Statistics Canada, Table 282-0007 — Labour force survey estimates (LFS), by North American Industry Classification System, sex and age group,
unadjusted for seasonality with Provincial breakdown.
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CME — CANADA’S MANUFACTURING LABOUR MARKET:
A REALITY CHECK FOR CANADIAN INDUSTRY AND GOVERNMENT
Leadership makes the difference
Table 2: Manufacturing employment by province
While manufacturing is a major contributor to employment, overall employment in the sector has fallen by roughly
360,100 since 20003. Given that overall manufacturing output
remained relatively stable through this time period (shipments increased by $10 billion between 2000 and 2011),
this is likely the result increased productivity, a loss of over
3,0004 manufacturing establishments since 2006 (the oldest
data available), and the appreciation of the Canadian dollar.
As shown in Table 3, employment in manufacturing
peaked in the last decade in 2002 at nearly 2.4 million
employees. At the same time, the Canadian dollar exchange
was just over $0.63 US. As the recession began in 2008
the dollar had risen by over $0.31 (to $0.94) since 2002 and
manufacturing employment had fallen by 440,000.
3
Throughout this period, many manufacturers that had
previously competed on price, largely as a result of the
Canadian exchange rate in the US, struggled to compete
against domestic and foreign competitors. While the
Canadian dollar has continued to appreciate against
the US dollar since this time, companies have adjusted
their business models to be much more competitive in
a high dollar environment and, as a result, employment
has grown.
Since the first quarter of 2010 when employment dropped
below 1.7 million, manufacturers have created 113,600
jobs across Canada, with significant gains coming in 20125.
Furthermore, there are over 20,000 unfilled manufacturing
jobs across Canada today, as shown in Table 4.
In the first quarter of 2000 total sector employment was 2,173,200 by the second quarter of 2012 total employment stood at 1,813,100. Statistics
Canada. Table 282-0007 — Labour force survey estimates (LFS), by North American Industry Classification System (NAICS), sex and age group,
unadjusted for seasonality, quarterly
4
Statistics Canada, Table 301-0006 — Principal statistics for manufacturing industries, by North American Industry Classification System
5
Statistics Canada. Table 282-0007 — Labour force survey estimates (LFS), by North American Industry Classification System (NAICS), sex and age group,
unadjusted for seasonality, quarterly
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CME — CANADA’S MANUFACTURING LABOUR MARKET:
A REALITY CHECK FOR CANADIAN INDUSTRY AND GOVERNMENT
Leadership makes the difference
2,400,000
$ 1.10
2,200,000
$ 1.00
$ 0.90
2,000,000
$ 0.80
1,800,000
$ 0.70
1,600,000
Q3 2012
Q1 2012
Q3 2011
Q1 2011
Q3 2010
Q1 2010
Q3 2009
Q1 2009
Q3 2008
Q1 2008
Q3 2007
Q1 2007
Q3 2006
Q1 2006
Q3 2005
Q1 2005
Q3 2004
Q1 2004
Q3 2003
Q1 2003
Q3 2002
Q1 2002
Q3 2001
Q1 2001
Q3 2000
dollar
$ 0.60
Q1 2000
1,400,000
jobs
Canadian $ Exchange
Manufacturing Employment
Table 3: Canadian manufacturing employment vs. exchange rate
$ 0.50
Source: Statistics Canada
Table 4: Canadian job vacancies by sector
Manufacturing is not only among the largest employers in Canada, but the wages in manufacturing are also
amongst the highest in any sector. In August 2012, the
mining, oil and gas sector paid the highest average weekly
salary with an average of $1,886. The utilities sector paid
the second highest at $1,595 per week, and professional
and scientific services paid an average of $1,256 a week
ranking third overall. Manufacturing employees are the tenth
highest earners in Canada, earning more than $996 per week
on average.
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CME — CANADA’S MANUFACTURING LABOUR MARKET:
A REALITY CHECK FOR CANADIAN INDUSTRY AND GOVERNMENT
Leadership makes the difference
Table 5: Average weekly salary by sector
$1,900.00
Manufacturing employees
earn $996 per week
$1,700.00
$1,500.00
$1,300.00
$1,100.00
$900.00
$700.00
M
Given the number of people employed in the sector,
and the average weekly salary paid to those workers,
manufacturing has the highest weekly payroll across all
sectors in Canada paying on average over $1.84 billion in
F
ins inan
ur ce
an &
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Ed
uc
at
ion
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an
uf
ac
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rin
g
wa Tran
re sp
ho or
us t &
ing
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re
log stry
gin &
g
ini
ng
,q
u
oil arry
& ing
ga ,
s
Ut
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ies
Pr
of.
&
sc
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rv tifi
ice c
M
s
of an
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pa e
nie nt
Inf
o& s
co c
m ult
pa ur
nie al
s
ad
m
ini P
str ub
at lic
i
Co on
ns
tru
ct
ion
$500.00
Source: Statistics Canada; August 2012
salaries6. The retail sector has the second highest payroll
average with $1.83 billion in salaries and the health and
social assistance sector ranks third with over $1.75 billion in
weekly average salaries.
Table 6: Canadian average weekly payroll by sector
$2,000,000,000
$1,800,000,000
Canadian manufacturers
pay $1.84 billion weekly
in salaries
$1,600,000,000
$1,400,000,000
$1,200,000,000
$1,000,000,000
$800,000,000
$600,000,000
$400,000,000
so
cia
il &
Re
ta
M
an
uf
ac
tu
rin
g
$000
tra
de
l a Hea
ss lth
i
Pr stan and
of.
ce
&
sc
se ien
r ti
Co vice fic
n
Fin
str s
uc
an
tio
ce
n
&
ins
Pu
bli
ur
an
ca
ce
dm
ini
str
at
ion
Ed
uc
at
Inf
ion
o&
ind cu
us ltur
tri al
wa Tran es
re sp
h o
Ot ous rt &
he ing
rs
er
vic
es
Ho
sp
ita
lit
y
Ut
ilit
Fo
ies
re
str
y,
log
M
ini
gin
ng
g
,q
ua
oil rry
& ing
ga ,
s
$200,000,000
6
Source: CME based on Statistics Canada data
Based on August 2012 data from Statistics Canada of 1.85 million manufacturing employees earning an average weekly salary of $996.18
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CME — CANADA’S MANUFACTURING LABOUR MARKET:
A REALITY CHECK FOR CANADIAN INDUSTRY AND GOVERNMENT
Leadership makes the difference
Labour Market Realities for Manufacturers:
Results from the Management Issues Survey
C
The most pressing challenges Canadian companies identified are competition in their primary markets and maintaining
and growing their market share, with 56 per cent of respondents noting this was a top issue, as shown in Table 7. The
continued strength of the Canadian dollar remains a concern
for Canadian companies, with 47 per cent naming this issue
a top priority, ranking as the second most pressing concern.
Attracting and retaining labour ranked as the third largest
challenge with 46 per cent of respondents stating it was a
top concern.
ME’s Management Issues Survey examined a
variety of factors relating to competitiveness,
investment climate, government programs and
policies, and the views of Canada’s manufacturing sector
on these issues. When examining the results relating to
the challenges companies face today along with the most
important factors impacting investment decisions, it is clear
labour market issues are among the most critical facing
Canadian industry.
Table 7: Most pressing challenges companies face
Increased competition in primary markets (maintain market share)
47%
Strength of the Canadian dollar
56%
46%
41%
Attracting or retaining labour
Global economic conditions
36%
Developing new markets
28%
Cost and/or availability of raw materials
24%
Supply chain management and logistics
23%
22%
Bringing new or improved products or services to market
Compliance costs in dealing with regulations and environment
Regulations causing delays in investment,
expansion and/or product approvals domestically
16%
15%
Accessing credit and/or cost of business financing
Expanding production capacity inside Canada
13%
13%
Cost and reliability of energy supply
13%
Regulatory barriers to entering foreign markets
12%
9%
Tariffs and duties on goods and services exports
Expanding production capacity outside Canada
8%
7%
7%
5%
Access to global suppliers under competitive conditions (price, import duties)
Attracting investment and/or new product mandates
Other
Interprovincial trade barriers
0
10
20
30
40
50
60
(per cent)
Source: CME Management Issues Survey — respondents could choose five answers
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CME — CANADA’S MANUFACTURING LABOUR MARKET:
A REALITY CHECK FOR CANADIAN INDUSTRY AND GOVERNMENT
Leadership makes the difference
While many of these issues are outside the control of
companies (such as the strength of the Canadian dollar),
many of the issues and concerns selected are either within
the control of the respondents themselves (supply chain
management), within the control of government (regulatory
barriers), or within the influence and responsibility of
both the companies and the government (attracting and
retaining labour).
A critical element CME aimed to gauge from Canadian
companies was a better understanding of the top factors
considered when making investment decisions. What it
found was companies look at a variety of factors both within
and outside of their control. For example, respondents
clearly stated they are, first and foremost, concerned with
the strength of local and other primary markets. Following
market conditions, labour issues were the next highest
ranked issue. As detailed in Table 8, the availability of labour
at 35 per cent and labour costs with 33 per cent were ranked
second and third, respectively, in terms of company priorities
for making investment decisions.
Table 8: Most important factors in making investment decisions
43%
Strength of local markets
Availability of skilled labour
35%
33%
Labour costs
Government support programs (including SR&ED and other productivity
and commercialization programs)
Proximity to primary markets
26%
24%
23%
Ability to access foreign markets
22%
Access to credit and/or cost of business financing
17%
Overall tax rates (corporate, payroll, etc.)
Parent company decision/policy
15%
Infrastructure
Regulatory environment (including approval processes
for facilities and products)
Access to new technology and research infrastructure
11%
10%
10%
Direct government investment
9%
Supply and cost of energy
7%
Ability to connect with high quality post-secondary institutions
3%
0
10
20
30
40
50
(per cent)
Source: CME Management Issues Survey
Given the importance of labour issues to competitiveness
and investment, the MIS also examined how companies
experienced the labour market’s performance in Canada.
The ability of companies to attract and retain labour in
Canada had changed over the past three years. As Table 9
shows, 42 per cent of Canadian companies said the labour
market has worsened over this time period, while only
13 per cent showed it improved.
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CME — CANADA’S MANUFACTURING LABOUR MARKET:
A REALITY CHECK FOR CANADIAN INDUSTRY AND GOVERNMENT
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Table 9: Labour market conditions (the ability of companies to attract and retain workers)
3%
13%
Worsened
42%
No change
improved
42%
Unsure / not aplicable
Source: CME Management Isuues Survey
Canada. The top five priorities identified by respondents
included labour costs at 54 per cent, upgrading skills with
49 per cent, demographics with 39 per cent, payroll taxes at
26 per cent, and labour shortages at 21 per cent.
In order to better understand labour market issues and
the possible role of all stakeholders to improve labour
competitiveness, the MIS asked companies to rank their
top challenges in creating a world-class labour market in
Table 10: Top challenges to develop a globally competitive labour market
Labour costs
54%
Upgrading skills of current employees
49%
39%
Aging workforce
26%
Payroll taxes
21%
Labour shortages
18%
Pension and other benefit costs
Students Skillsfrom
post-secondary institutions
16%
Union/company relations
14%
Immigration system
14%
Skills of students coming out of high school
14%
Skills certification processes
0
12%
10
20
30
40
50
60
(per cent)
Source: CME Management Isuues Survey
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CME — CANADA’S MANUFACTURING LABOUR MARKET:
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A provincial breakdown of this question shows these
primary concerns are shared across Canada. Respondents
from the provinces of Alberta, British Columbia, Ontario, and
Quebec all stated their primary concern was labour costs,
and noted upgrading skills and the aging workforce were
in the top three issues. New Brunswick, Nova Scotia, and
P.E.I. all share a greater concern for the aging workforce
and population. Manitoba’s primary concern is upgrading
the skills of the current labour force, with the aging population coming in second. Respondents from Newfoundland
selected the aging workforce and labour costs equally.
To better understand these priority issues, the survey
asked for company responses on many of these identified
challenges in building a globally competitive workforce.
The results provided substantial information on several
of the key concerns raised by companies in creating a
world-class competitive workforce, including skills
shortages, employee training and skills development
demographics, and labour mobility.
1. Skill requirements and shortages:
The success of companies is directly tied to the skills
and abilities of their employees and a wide variety
of skill sets are required to successfully run any
operation. While few would argue skilled production
is central to the growth of Canadian industry, many
may be surprised to learn that sales, marketing and
customer service is the occupational segment in
which respondents identified the most important to
the prosperity of their business. Respondents listed
sales, marketing and customer service (29 per cent),
skilled production (25 per cent), and management
and administration (17 per cent) as the top three most
important occupational segments for the growth of their
businesses over the next five years.
To better understand labour needs today in these
occupations and the possible shortages of workers,
companies were asked if they faced labour shortages.
Nearly 50 per cent of companies surveyed indicated they
faced a labour shortage today.
When examining shortages at the provincial level,
Manitoba had the highest percentage of companies
stating they experienced a labour shortage today at
55.7 per cent, followed by Newfoundland and Labrador
at 54.1 per cent, and then Saskatchewan at 51.3 per
cent. Alberta, the province most identified as having
labour shortages, ranked below the national average
with 44.3 per cent.
Table 11: Most important occupations for success and growth over the next five years
29%
25%
16%
17%
9%
5%
Production
support
(IT, maintenance)
General
labour
Scientists,
engineers,
R&D
technicians
Management
and
administration
Skilled production
(welders,
machinists,
operators)
Sales,
marketing
and
customer service
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Table 12: Does your company face immediate labour and/or skills shortages today?
Unsure
No
Yes
Source: CME Management Isuues Survey
Table 13: Companies facing labour shortages today by province
60%
54.1%
46.2%
50%
43.2%
40%
55.7%
51.3%
51.3%
42.0%
40.0%
Canada: 49%
44.3%
43.8%
AB
BC
30%
20%
10%
0%
NL
NS
PEI
NB
PQ
ON
MB
SK
Source: CME Management Isuues Survey
2. Skills requirements and the impact on growth
and competitiveness:
The labour shortages being faced today cover a wide
range of job and skill classifications. As Table 14 shows,
the most pressing area of labour shortages reported is
skilled production, with 50 per cent of companies stating
they experience a shortage. This is concerning, given this
classification of worker is also noted in Table 11 above
as the one of the most important groups for the success
and growth of a companies.
Significant shortages are also reported in general
labour (29 per cent) and scientists and engineers
(26 per cent). Over the next five years, these labour
shortages are expected to grow in all categories, with
the largest growth coming in management (an increase
from 18 to 36 per cent) and with scientists and engineers
(an increase from nine to 35 per cent).
The economic consequences of these labour
shortages are significant for Canada. Based on
responses to the MIS, 34 per cent of companies stated
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CME — CANADA’S MANUFACTURING LABOUR MARKET:
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companies are expected to significantly increase
their investment in automation to improve labour
productivity (35 per cent today increasing to 46 per cent
in five years).
More worrisome, however, is that the biggest
expected changes in operations as a result of labour
shortages are an increase in moving production and
investment to other jurisdictions (up 22 per cent to 31 per
cent of respondents) over the next five years.
labour shortages are already constraining their growth
in Canada today. As shown in Table 15, while companies
are investing heavily in operational efficiencies and
automation to overcome labour shortages (55 per
cent and 35 per cent, respectively), these actions are
insufficient. As a result, companies are reporting they
are dealing with a shortage of labour by increasing
wages (61 per cent today, 63 per cent in 5 years time).
Over the next five years, based on these results,
(per cent)
Table 14: Occupations with labour shortages
60
50
50%
55%
Today
40
29%
30
Next five years
36%
35%
33%
28%
26%
23%
18%
20
17%
22%
10
0
3%
2%
Skilled
production
(welders,
machinists,
operators)
General
labour
Scientists,
engineers,
R&D
technicians
Sales,
marketing
and
customer
service
Management
and
administration
Production
support
(IT,
maintenance)
Other
Source: CME Management Isuues Survey
(per cent)
Table 15: Operation impacts of labour shortages
80
70
60
61%
Today
63%
Next five years
55%
47%
50
40
46%
35%
34%
36%
31%
30
18%
20
10%
10
0
13%
9%
3%
Increasing
labour costs
Increasing
focus
on operational
efficiency
Increasing
nvestmen
in automation
Constraining
business
growth
Closing or
foregoing
production
Moving production
Moving
and investment production and
to other
investment to other
countries provinces/ territories
2%
3%
Other
Source: CME Management Isuues Survey
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Leadership makes the difference
3. Sourcing of labour:
To address the challenges faced by skill and labour
shortages, companies have adopted several
strategies including internal employee training and
development programs (74 per cent), use of overtime
(65 per cent), and outsourcing of activities and/or
roles (52 per cent).
When these efforts are insufficient, companies are
looking at a variety of options to fill gaps. Primarily
companies are looking internally first with 63 per cent
of respondents stating they rely on internal promotion
as a first source of labour and then backfilling the
more junior vacant position with new hires. However,
this underlines how critically important employee
development and training programs are for company
growth. When sourcing new labour from outside
the company, 55 per cent of respondents use
recommendations from current workers, while 51
per cent look to employment agencies and head-hunters.
Only 43 per cent of companies use Internet services to
source labour; which appears lows however given the
mass use of the Internet today.
It is clear from where companies are sourcing
labour that their priority is to develop and grow the
domestic labour pool. Immigration is ranked as
the second least popular methods companies use
today. However, there are significant challenges with
this approach, including the reality that changing
Canadian demographics are shrinking the labour pool
and fewer youth are looking to enter industry and
skilled trades in general. As such, immigration will
be a significant source for both skilled and unskilled
labour if the Canadian economy is to significantly grow
going forward.
Table 16: Strategies to address labour challenges
71%
Internal employee training and development programs
64%
Use of overtime
49%
Outsourcing of activities and/or roles
39%
Focused recruiting on particular occupations
30%
External training and certification programs
25%
Hiring foreign workers
11%
Job sharing
0
10
20
30
40
50
60
70
Source: CME Management Isuues Survey
80
(per cent)
Table 17: How does your company source labour?
Consortia and partnerships with other businesses
6%
9%
Immigration
Programs to attract workers in the same industry
16%
24%
Partnerships with local colleges and universities
43%
Internet services (such as iCME.ca, Workopolis, etc.)
51%
Employment agencies and/or headhunters
55%
Recommendations from current workers
63%
Internal promotion
0
Source: CME Management Isuues Survey
10
20
30
40
50
60
70
(per cent)
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4. Training and skills development:
Companies have clearly identified employee training as
critical in terms of addressing labour shortages as well
as building a globally competitive workforce. As noted
earlier, companies primarily rely on internal promotion as
a source of filling labour gaps. As such, it is not surprising
companies are investing heavily in employee training
across the country. In fact, 56 per cent of respondents
are spending between one and five per cent of their total
revenues on employee training today, while nine per cent
are spending more than six per cent. Only 35 per cent of
companies are spending less than one per cent of total
revenues on training.
Companies provide a wide range of employee
training today either in-house or with the support of third
parties. Over 95 per cent of companies currently provide
orientation for new employees, health and safety training,
and training in technical skills. However, companies
are reporting that despite the need for training in these
areas, training will decrease over the next three years.
In fact, fewer than 70 per cent of companies are stating
they will offer training in these areas in three years time.
In most areas of training inquired on, companies are
stating less training will be offered in three years than is
offered now. This includes areas seen as critical to the
success of companies such as technical training and
customer service and sales. The one area of training
where CME sees an increase is in language training,
which will increase from 62 per cent today to 69 per cent
in the next three years. This likely reflects an expectation
that companies will need to source more labour through
immigration and from countries where English or French
are not the first language.
Given the importance of training for corporate
success both today and growth in the future, it is critical
to understand the measures that would encourage
companies to provide more training to their employees.
When asking companies to select three possible options
to encourage more training, two answers stood out as
a the highest priorities; training tax credits with 63 per
cent of respondents and direct funds to support training
from 59 per cent of companies. Given the importance
of internal promotion, the upcoming challenges
facing companies due to aging management, and the
impending decline of training provided by companies,
it is no surprise companies would be motivated to
provide more training if offered these motivational
supports. The third most often selected option was
a reduction in payroll taxes which was selected by
35 per cent of respondents.
Table 18: Per cent of revenue spend on employee training
6%
3%
More than 10%
6%–10%
35%
56%
1%–5%
Less than 1%
Source: CME Management Isuues Survey
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Table 19: Type of employee training provided
62%
Language
Essential skills (literacy, math)
75%
71%
76%
75%
77%
74%
78%
73%
78%
71%
78%
70%
80%
70%
Communication
LEAN
Management
Teamwork
Business development
Customer service
Other
Computer skills
87%
61%
Technical skills
96%
67%
Health and safety
96%
69%
Orientation
Source: CME Management Isuues Survey
Currently Provided
Next three years
69%
65%
62%
0
20
40
97%
69%
60
80
100
(per cent)
Table 20: Which incentives would encourage increased training:
Training tax credits
63%
Funds to support training
59%
Lower payroll and taxes
35%
In-house training programs
26%
Better partnerships with the education system
22%
17%
Programs targeting industry needs
Government training programs
14%
Online training programs
14%
11%
Increased collaboration with other firms
Better information on training
8%
0
Source: CME Management Isuues Survey
10
20
30
40
50
60
70
80
(per cent)
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5. Demographics:
As noted in Table 10, companies see Canadian
demographics as a major threat to their ability to create a
globally competitive workforce, ranking the issue as the
third highest priority with 39 per cent. Most concerningly,
as shown in Table 21, two of the occupational segments
identified as the most important for the success
and growth of businesses over the next five years
in Canada as a whole are also where the impact of
the aging workforce is expected to be felt the most:
skilled production (38 per cent) and management and
administration (31 per cent).
Across the country, the impact of demographics
varies significantly, with the eastern provinces ranking
demographics as more important to their future competitiveness than the rest of the country, as shown in Table 22.
Not surprisingly, the provinces with the highest
median ages are also those in which companies are
most concerned with the impact of demographics on
their operations. Canada’s eastern provinces, along
with Quebec and BC, have a higher median age than
Canada as a whole, and a considerably higher median
age than the prairie provinces.
There is also a direct relationship in most provinces
between the median age of the population and the
labour market participation rate. While Canada’s overall
labour market participation rate is nearly 70 per cent,
Canada’s eastern provinces (except P.E.I.) along
with Quebec and BC, have the lowest labour force
participation rates across Canada.
Table 21: Which occupational segment will the aging workforce have the greatest impact on your
operations over the next five years?
38%
31%
15%
7%
8%
1%
Production support
(IT, maintenance)
Scientists,
engineers,
R&D technicians
Source: CME Management Isuues Survey
Sales, marketing
and customer service
General
labour
Management and
administration
Skilled production
(welders,
machinists,
operators)
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Table 22: Importance of demographics on the workforce by province
70%
65%
60%
49%
55%
51%
50%
44%
41%
40%
Canada: 39%
43%
40%
36%
35%
30%
20%
10%
0%
NL
PEI
NS
NB
PQ
ON
MB
SK
AB
BC
Source: CME Management Isuues Survey
Table 23: Median age by province
50
45
44
44
43
44
42
40
40
42
Canada: 40
38
38
36
35
30
25
NL
PEI
NS
Source: CME Management Isuues Survey
NB
PQ
ON
MB
SK
AB
BC
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Table 24: Canadian labour force participation rates
70%
65%
60%
68%
64%
63%
60%
65%
67%
74%
69%
69%
75%
Canada: 66.8%
65%
55%
50%
45%
40%
NL
PEI
Source: CME Management Isuues Survey
NS
NB
PQ
ON
6. Labour mobility:
Labour mobility is often cited as a major problem in
Canada, both in terms of the movement of workers
domestically between provinces as well as bringing
foreign workers into the country. As companies
become more globally focused, and as labour shortages
continue to increase, the ability of companies to
source labour from a variety of locations will be critical
to their continued success and growth. In the survey,
CME specifically asked for feedback on the level
of restrictions on labour mobility that companies are
facing, as well as which occupational segments are
most affected.
MB
SK
AB
BC
Despite significant attention to these issues over the
past number of years by governments, businesses and
labour groups, domestic labour mobility in a number of
critical professions remains problematic. Companies
report significant challenges with the mobility of
domestically trained workers in almost all classifications
of workers between provinces. While internationally
trained workers show less mobility challenges, this
is likely due to the reality that companies have a
higher percentage of domestically trained labour than
internationally trained. The occupational segment of
scientists, engineers and R&D technicians faces more
labour mobility challenges than other occupations across
the internationally trained worker classifications.
Table 25: Restrictions on labour mobility
(per cent)
100
82%
80
Internationally
trained
Domestically
trained
45%
29%
30%
28%
26%
17%
20
0
82%
71%
60
40
90%
82%
81%
Skilled production
Management
Scientists,
Production support
(welders, machinists, engineers,
and
(IT, maintenance)
operators)
administration
R&D technicians
General
labour
12% 10%
Sales, marketing
and customer
service
Other
Source: CME Management Isuues Survey
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Summary Analysis and Conclusions:
T
he functioning of Canada’s labour market is a clear and present priority
for Canadian manufacturers. Without an effectively functioning labour
market, Canadian companies will struggle to compete, innovate and grow
domestically and internationally. While companies are reporting significant labour
shortages today, it is expected to get much worse as Canadian demographics
continue to shift, resulting in fewer people in the workforce.
Canadian companies have taken on a variety of tactics to overcome labour and
skills shortages including increasing training, using the immigration system, the
use of overtime, outsourcing some activities, and investing in new machinery and
equipment to automate production and improve productivity wherever possible.
However, they are concerned about their ability to maintain and grow their
operations in Canada.
While companies must do more to improve their own situations, governments
at all levels clearly play a central role in the creation of a globally competitive
workforce, including supporting the development of the domestic labour pool and
increasing the supply of foreign workers. Governments, too, have been active in
attempting to address these concerns, introducing a variety of measures aimed at
improving Canada’s labour market performance.
However, given the results of this survey and the ongoing concerns of Canadian
manufacturers, governments, industry and academia must work together to
address these issues so Canadian industry can continue to grow and play a
central role in Canada’s economy.
About CME
Canadian Manufacturers & Exporters (CME) is Canada’s largest
industry and trade association representing businesses in all sectors of
manufacturing and exporting activity across Canada. Our mandate is to
promote the competitiveness of Canadian manufacturers and the success
of Canada’s goods and services exporters in markets around the world.
Connect with CME
Twitter: @cme_mec, @mfgjobscanada
YouTube: www.youtube.com/manufacturingTV
LinkedIn: Canadian Manufacturers & Exporters
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