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The Changing
Canadian Workplace
http://www.td.com/economics/special/ff0310_canlab.pdf
Don Drummond | SVP & Chief
Economist
The landscape of the Canadian workplace has changed
dramatically over the past few decades. Regardless
of whether or not we, as a nation, are ready for it,
macroeconomic and demographic trends and new
workplace standards have changed the definition of a
“traditional” career. Employers and workers must
face this new paradigm with a different
toolset than that which has been used up to this
point. This study will investigate these trends and
the challenges that they present. Primary of such
trends is the looming retirement of the baby boomer
generation. With more than a third of the entire
labour force preparing to retire over the next two
decades or so, this represents one of the most
significant shifts in the workplace seen in the last
half century.
Employers will be faced with labour force growth
that will slow to a crawl and will, thus, need to
find new and innovative ways of utilizing Canada’s
current labour pool. To that end, immigrants,
aboriginals, women, and older workers must be
utilized more efficiently as these groups form an
extremely large, yet underrepresented portion of the
workforce.
Unfortunately, each group faces its own unique
hurdles: immigrants, for example, face significant
difficulties with respect to language and credential
recognition, while Aboriginals must deal with
achieving higher levels of educational attainment in
the face of crippling social and cultural
stereotypes. Women have not been able to close the
earnings gap relative to men or penetrate the top
corporate ranks within the organizational structure,
while older workers are finding it difficult to
secure the work arrangements that help them
transition into retirement.
In addition, higher education is an absolute
necessity to fill the skill needs of future jobs,
but access barriers to post-secondary institutions
continue to prevent young Canadians in the
lower-income brackets from pursuing it. Education
has already come to define the great dividing line
between those with wealth and affluence in society
from those without and programs designed at
alleviating these access barriers are mostly being
utilized by wealthier families. Also, they are
unable to distinguish those who face legitimate
financial difficulties from those who do not.
Over the past quarter century, the gap between the
rich and poor has been growing steadily whereby real
before-tax earnings have only been growing for the
wealthiest Canadians, while those of the
middle-income and lower-income brackets have either
stayed stagnant or have outright declined. This has
resulted in working-aged adults becoming the biggest
at-risk population of falling into poverty. Transfer
programs such as Old Age Security and the
Canada Child Tax Benefit have been fairly effective
at combating poverty among seniors and children, but
the two programs designed to help working-aged
adults through transitions in employment, the
employment insurance (EI) program and the provincial
income assistance programs, are fret with problems.
The EI program has very high eligibility
requirements and, as a result, a low coverage rate
relative to those who are unemployed, while the
income assistance programs create significant
disincentives to pursue paid employment. The
disincentives can be so great that the gain in
employment income may be outweighed by the loss of
benefits such as subsidized housing and medical
care. Lastly, the nature of employment in Canada
today is significantly different from that of the
past. Traditional industries like manufacturing are
giving way to services-based sectors, and full-time,
well-paid jobs with benefits and a pension are being
replaced by temporary and contract jobs with no
benefits. Employer pension plan coverage is
declining rapidly and so the burden of saving for
retirement has fallen increasingly on the
individual. Simultaneously, many Canadians are not
saving for themselves and this is threatening the
income security of future generations of retirees.
These are the major issues surrounding the Canadian
workplace today. Employers must come to terms with
this new paradigm as ignoring the trends now could
lead to significant consequences in the near future.
Though we will unlikely face the labour shortage
that many are predicting, there will be costs in
adjusting to this paradigm. If faced with heavy
competition for a limited supply of labour, for
example, employers can push up wages or improve the
productivity of the productivity of the existing
workforce by providing on-the-job training.,
investing in more capital, or by making better use
of the underutilized portion of the potential
workforce. So the challenge is not how to deal with
an oncoming labour shortage, but how to minimize the
costs related to this kind of adjustment. |
