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Still have lead time to address looming crisis - Frank Pullia- 04/04

In the February issue I wrote about the economic impact of an aging workforce in northwestern Ontario and the resulting implications for our economy.
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In the February issue I wrote about the economic impact of an aging workforce in northwestern Ontario and the resulting implications for our economy. The article highlighted the results of a report commissioned by the North Superior Training Board and the Northwest Training and Adjustment Board (through FedNor funding) to look at these trends and identify in a proactive way the impact of the aging workforce on the northwestern Ontario economy and labour needs. The report is titled “The Effect of an Aging Workforce on Future Skill Shortages in Northwestern Ontario.”

The results showed that, all other things being equal, retirements over the next five years will lead to a net job loss of 1,495 employees and a loss in regional output of 1.4 percent. This represents a loss to northwestern Ontario’s economy of approximately $93.3 million. The report also suggested that while boosting the replacement rate for retirees is one tangible way to reduce the economic contraction, the best way to offset the potential economic decline depicted here is through overall employment growth and job creation. The question remains; will this region have the right mix of skill sets required by a changing economy?

Other than in health care, over the past 20 years the economy of northwestern Ontario has not suffered by any long-term labour or skill shortages. While certain tradespeople may be in demand for short periods of time, these temporary shortages have not been shown to have had a significant negative effect on economic growth in the region. This is because economic growth in the region has been very slow over this period and high rates of technological change have had a negative effect on overall employment. This situation could change in the near future.

As has been shown in all of the Environmental Scans produced by the two training boards in the region over the past three years, the population of the region is aging faster than that of the province as a whole. The lack of economic growth in the past 20 years has meant that there have been very few new employees hired in the major industries of the region. This has resulted in a workforce that is aging faster than that of the province as a whole, and this situation will have major implications for our region in years to come.

Over the next eight to 13 years many sectors of the regional workforce will be severely affected by large numbers of retirements. A certain number of these retirees will not need to be replaced due to technological change or for other reasons. Despite this, the fact that, over the past 20 years, the region has been experiencing high rates of youth out-migration and has been unable to attract large numbers of immigrants, suggests that the region could be facing fairly high labour and skill shortages in some sectors.

These shortages would exist in 2011 (we have some lead time of five to seven years to do something about it) and become more pronounced in 2016. The shortages would affect certain sectors of the economy more than others. The sectors most likely to be affected are the health sector, the education sector, and the pulp and paper industry. The greatest likelihood of future skill shortages caused by an aging workforce will be among registered nurses, teachers, university professors, and certain trades. Among the trades most likely to be affected by an aging workforce are electricians, millwrights and other trades specific to the pulp and paper industry. In conclusion, these skill shortages, unless dealt with, could be a barrier to future economic growth in the region. Future articles will look at potential solutions to the complex issue of skill shortages.

The report can be viewed on line at www.nstb.on.ca and www.ntab.on.ca

Frank Pullia is the Principal of Pullia Accounting & Consulting and the Co-Chair of Business on the North Superior Training Board. He can be reached by e-mail to frank@frankpullia.com.




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