Worker Shortage Needs Immediate Attention

By Peter Lindfield, published in the Telegraph-Journal 4th September 2012

Discussions about the challenge of attracting and retaining workers in New Brunswick inevitably brings hand-wringing, teeth-gnashing and renewed calls to do something to solve the problems of too few workers and too much competition from outside the province. Many recognize that it could be even worse. That the province has not experienced an even greater out-migration of workers and newly-minted university graduates is testimony to the strong ties that bind many New Brunswickers to their communities.

The workforce shortage challenge is not restricted to New Brunswick. National economic data have the effect of masking regional changes, but beneath the surface they can have striking consequences. In regions across Canada, wage disparities have worsened over time, continuing a longstanding trend. At the same time as the Maritimes has been lagging, Canada’s most prosperous provinces – Alberta, Saskatchewan – have been growing even faster than the economy as a whole if GDP per capita is used as a measuring tool for economic vigor.

The wage gap frequently is identified as the chief reason for the rush to the west. In fact, the compensation disparity can be profound, depending on the industry. Workers in construction, information technologies and financial services are paid substantially more in other parts of Canada. New Brunswick university graduates can earn as much as 50 per cent more in a similar position in Ontario, Alberta, British Columbia or now Newfoundland. This wage boost represents a way to pay student debt that cannot be found in much of New Brunswick. Total compensation, including such fringe benefits as bonuses, profit- or gain-sharing, health plans, pension plans and commissions, frequently are more substantial as well.

There are other reasons beyond the compensation formula that create recruitment disadvantages for many New Brunswick firms. The province is home to a more limited number of large or multinational companies than Alberta, Ontario or Massachusetts. In New Brunswick, many of its employment opportunities are provided by small firms. Small companies, including startups and early stage firms, experience greater business failure rates than established firms and small company managers often lack experience. For small companies, uncertainty is a recruiting obstacle, especially when hiring experienced personnel. And career paths are more easily defined in centers that feature a high concentration of similar firms in an industry.

There are no easy answers for New Brunswick companies, large or small. Increasing immigration flows to the province is a temporary solution at best since the wage gap with the West as a force of attraction will apply equally to all workers. For similar reasons, the provincial government should not subsidize the relocation of workers to New Brunswick. Even if that subsidy represented a workable solution, which it does not, the problem is for the private sector rather than government to sort out. We need to refrain from viewing the New Brunswick government as a panacea dispenser.

New Brunswick’s largest firms have a better grip on the challenge but even they are not immune to losing workers to other regions. These firms know that they simply cannot compete with compensation packages in Alberta, Ontario or many parts of the U.S. Global competition is producing increasingly more sophisticated and qualified challengers to the status quo. The most competitive of New Brunswick’s firms have adapted to changing global realities by altering their business models. Others throw up obstacles to competition and continue to live in the past.

The retirement of many members of the baby boom generation over the next ten years is placing enormous pressures on companies to hire and hold on to their people. The most competitive New Brunswick firms have recognized that when recruiting workers they need to have a viable value proposition that resonates with those workers. By providing a supportive environment that promotes the merits of apprenticeship, structural innovation, continuous learning and opportunities to grow, New Brunswick firms can be the differentiators to big wages.

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Filed under Labor force management, New Brunswick

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