THE LABOUR MARKET SHORTAGE

The Atlantic Institute for Market Studies (AIMS) released a paper in January of 2009 indicating the seriousness of labor market shortages in the Nova Scotia economy and how to best deal with this upcoming shortage. The report published by the Institute, The Developing Workforce Problem: Confronting Canadian Labor Shortages in the Coming Decades, presents an economic future where by 2026 “one job in every eight within Nova Scotia and Canada will go begging” and by 2021 less than half of the Nova Scotia population will be those in the workforce [1]

In this chapter we apply the findings of this report to the particular conditions found in Kings County, Nova Scotia. We review various solutions recommended in the literature. We particularly focus on a relatively ignored option, that of activating current residents of Kings County who want to be part of the workforce, but who either have not entered it or have given up trying to enter it.

The reasons for the labor market shortages are diverse. The significant drop-offs in birth rates after 1960, policies dealing with access to child care, maternity leave and the increased cost of living and of debt loads for many Canadians has had the effect of reducing the rate of reproduction within the population generally.

Nova Scotia has the largest percentage of people aged 55+ in Canada and approximately 1,000 Nova Scotians turn 65 each month[2]. This significant aging of the population and the continued outmigration of people from rural areas or from the province generally has meant that all but Colchester, Halifax, Hants and Kings Counties have seen a decline in population between the 1996 -2006 censuses[3].

The consequence of this demographic shift and the reduced number of people remaining in Nova Scotia or outside of the Halifax Regional Municipality (HRM) has many implications for housing, health, and transportation. The most significant is the availability of labor to maintain those systems and fill gaps needed in growth industries and services, many of which will be related to the growing number of older adults in the province. This shift could also restrict the ability of government departments and agencies to render timely and effective services, to maintain current services and to introduce or restructure services as required with population change. This is because the number of individuals able to pay municipal fees and taxes is reduced. Retail sales could also flatten as those leaving employment to live on fixed incomes increases and they are likely to have less disposable income[4]. In addition, as age increases so does the rate of disability, which can mean increased demands on an already overloaded healthcare system and a need for more disability-related services.

There are three important shifts that are occurring simultaneously that create the expected labor market shortage, 1) Younger people are taking much longer to complete their education and enter the workforce permanently, 2) Up until very recently, many people had begun ending their careers earlier, and 3) The proportion of the population in the working age ranges is expected to become smaller compared to those in the 65+ age range[5].

The Atlantic Provinces Economic Council (APEC) has suggested that this shortage in the labor force will have the consequence of putting current businesses and government agencies in competition with each other for employees. APEC suggests that the consequence of this will be a need for companies to tailor their pay, work load and benefits to attract and accommodate the individual needs of various sectors of their workforce[6].

More than ever before, individual businesses will need to focus on competitive human resource practices, including the ability to pay premium wages and benefits. However, compensation packages will have to be tailored to individuals or types of individuals. Young graduates may be more responsive to policies that help them pay off their student loans faster. More flexible work hours may be the key for those looking after young or aging family members. Older workers may be attracted by the option of part-time work. 
    -David Chaundy, APEC, 2007, Commentary

Diversification and growth of the economic base in urban Atlantic Canada should be the major priority for businesses and governments alike, with employers willing to offer the wages and salaries that can compete with opportunities anywhere in Canada. To attract younger workers into service sector firms, Atlantic employers will have to make a dedicated effort to increase apprenticeship programs, supply more entry-level positions for new recruits, provide training and advancement programs and offer the flexibility in employment that young people seek.
    -Elizabeth Beale, President, CEO of APEC, 2008

POSSIBLE SOLUTIONS TO THE LABOUR MARKET SHORTAGE                                                                                                             

Research in the area of labor market shortages by AIMS, APEC and the Nova Scotia Departments of Finance and Rural and Economic Development typically present three generic solutions to deal with the expected labor market shortage in Nova Scotia:

1.Increase population through natural growth and attraction of newcomers
2.Increase productivity across all sectors
3.Increase the labor force participation rate by enabling individuals to enter or re-enter the labor force.

1. INCREASE POPULATION THROUGH THE ATTRACTION OF NEWCOMERS AND NATURAL GROWTH

ATTRACTION OF NEWCOMERS                                                                                                               

The Nova Scotia Office of Immigration has several programs geared at addressing the population decline and workforce shortages such as the Nova Scotia Nominee Program that specifically looks to recruit and retain individuals with in demand skills and talents that can contribute to Nova Scotia’s communities[7]. However, as is outlined in the AIMS report, newcomer strategies to address labor shortages are only useful if newcomer a) remain in their new community and b) maintain employment. Retention of newcomers is nowhere near 100% and in fact fewer than 3% of all permanent resident immigrants to Canada remain in Atlantic Canada[8]. As the 3% figure is for all of Atlantic Canada, the AIMS report suggests that the percentage for Nova Scotia would be even less.

NATURAL GROWTH

The rate of natural growth within Nova Scotia has remained low throughout the recent history of the province. In Kings County the percentage of the population between the ages of 0-4, young people who could replace retiring people in a couple of decades, has dropped by 26% between 1996 and 2006[9]. According to a variety of sources this decline in natural growth is expected to continue. The overall perspective appears to be that a strategy that relies on expectations of natural growth will not meet upcoming labor market shortages as a) it will take many years for those born within the next few years to reach working age, b) the age structure of the current population will not allow for a significant enough ‘boom’ of children to be born to replace retiring workers.

OUTMIGRATION

Traditionally outmigration has been a significant trend in the demographics of Nova Scotia. An additional obstacle to increasing immigration and retention of people within the province is the rural character of the province[10]. The lack of multiple urban centers and the types of jobs that exist inurban centers that can accommodate employment for those withpost-secondary education limit the retention of younger adults leaving post-secondary education. Nova Scotia’s history of not retaining immigrants has a significant impact on attracting immigrants now. For immigrants, the lack of opportunities to adapt to their new culture through having pre-established ethnic communities and services such as language training are also challenges. There needs to be recognition as well that the cost of living in rural areas, which have limited retail and public transit opportunities, can be higher than those in urban areas. Due to a need to travel further to access shops and services, daily tasks may take longer and also may be inconvenient for some. These factors may act as a disincentive for some and encourage increased migration to urban centers in other provinces.

2. INCREASE PRODUCTIVITY ACROSS ALL SECTORS

One option that has been successfully implemented in recent history is the introduction of labor saving technology in order to increase productivity and essentially do more with less[11].The approach of increasing productivity, whereby each Nova Scotian is producing more in less time is an attractive prospective in decreasing the impact of labor force shortages. Implications of this option could be a reduced need for additional labor and an increase in earnings per employee as jobs require more responsibilities and skills.

Productivity growth could come from encouraging the growth of higher-paying industries at the expense of low productivity (largely low-wage) industries, improvements in business practices and processes, and increasing the skills and education levels of the workforce. (Mc Niven & Foster, 2009, pg. 11)

However, application of this strategy to Nova Scotia is not clear. Information technology is one way, through improved productivity in current manufacturing and processing methods or as a standalone industry. Regardless, it requires the workforce to have multiple skill sets in a variety of fields. Traditionally these skills have been low in Nova Scotia and as of 2006 roughly 17% of the Nova Scotia population performs at the lowest level of literacy[12]. Increases in productivity reduces dependency on large numbers of entry level workers and typically leads to an outsourcing of low paid, low skilled employment. Given the educational gaps in Kings County this could leave many people without positions and will place others in a situation of underemployment should those low skilled, low paid jobs remain.

Ultimately how to implement such a program is not easily understood and would require in some cases major restructuring of how work is done. It also is largely contingent on the evolution of technology which while assumed is by no means guaranteed.

3. INCREASE THE LABOUR FORCE PARTICIPATION RATE BY ENABLING INDIVIDUALS TO ENTER OR RE-ENTER THE LABOUR FORCE

This strategy is the basis for the current research and has been presented as a possible answer to the coming labor force shortages by a variety of sources as well as by the Department of Labor and Workforce (through the funding of this research project). This strategy entails two approaches 1) encourage those currently in the workforce to remain longer and 2) encourage those who have left to re-enter or get those who have never engaged in the labor market to enter it for the first time. The general focus of this research is on this third strategy and focuses on those who have left the labor market. People with disabilities represent a potential solution to this problem, as they have a low participation rate, 52.6%[13] provincially and 35.2%[14] regionally,. There is also a significant number of people who are not participating in the labor market despite wanting to work. Provincially this figure is approximately 5.5% of the population or 50,240⁽²⁷⁾ people. Those who have decided to leave the labor market have done so for a variety of reasons.

Activating the population that has left the labor market and those who have yet to enter, along with the other strategies outlined above, may be able to put off the arrival of the presumed upcoming labor shortage. However, unlike strategies focusing on immigration, natural increase or youth retention there are a number of benefits to activating those not currently in the labor force. The benefits to activating people not currently in the labour force are:

1) They are already present within our communities. There is no need to entice these individuals to migrate or to provide assistance in helping them settle. They are already living in the small municipalities and rural areas throughout Nova Scotia.

2) They represent a population that could be much more rapidly assimilated into the labor force than other populations, e.g., newcomers due to language barriers, and are likely to remain in their communities. These people for numerous reasons such as attachment to family and friends have decided to stay in the rural and small communities throughout Nova Scotia where the currently reside. It is unlikely that they would relocate if they could find employment in their home community.

3) There is already well established provincial and third-party employment service infrastructure in place, particularly in Kings County, that can provide services such as job development, counseling, and training opportunities, to help address barriers to employment. Many of these services are also specialized to work with groups that face specific barriers such as those related to disabilities. The benefit to having this infrastructure already in place when looking to activate persons who have left the labor market is that there is no need to create new services or new organizations. The current service providers already have a wealth of skills, knowledge and experience in addressing employment barriers and transition to employment issues. While there may be a need to re-allocate resources to locating and activating those who have left the labor market, the current employment service infrastructure is able to accommodate them once they decide to make the transition to employment. Ultimately the elimination of barriers or modification of work place practices will allow this latent workforce to enter the labor market. Additionally, a focus on targeting those who have left the labor market represents a socially responsible investment in meeting the upcoming labor market shortage.

While this report has not examined the topic in depth there is also the potential for spin-off effects from focusing attention on those who have left or have yet to enter the labor market. From a broad perspective it provides this population with opportunities for personal development, could increase the overall social capital[16] of small communities through engaging isolated people and groups, or it could help in identifying formerly unnoticed or disregarded barriers to employment. The process of activating those who have withdrawn from the labor market could also help in fostering increased self-sufficiency for those who may be reliant on government income supports within Nova Scotia thereby reducing government spending over the long term.

As the premise for this study indicated persons with disabilities are considered an important population to consider when looking at meet the projected labor market shortage. According to a 2009 report by the Disabled Persons Commission of Nova Scotia, entitled Employment Statistics for Persons with Disabilities in Nova Scotia: A Statistical Report, 2009, as of 2006 there were approximately 49,170 people (aged 15-64) with disabilities in Nova Scotia who were not part of the labor force, representing 5% of the 2006 provincial population. The participation rate for this group has been traditionally low but had increased by 7.4% between 2001 and 2006 indicating increased ability and desire to access the labor market[17]. As of 2006 the unemployment rate for those with and without disabilities was approximately the same at 6% indicating that within each group 6% were actively looking but unable to find work. However a significantly lower number of people with disabilities were actively seeking work 47%, for those with disabilities versus 73% of those without disabilities.[18]. In some cases people with disabilities are not participating in the labor market because their disability precludes them from work; however this is assumed to not be the majority of people. Just over 58% of those with disabilities are only limited in their ability to perform work[19].

Within Kings County it is difficult to assess the exact number of people with disabilities as many who have a disability are reluctant to indentify it or may not identify as a person with a disability. Based on 2006 data[20] from the Kentville Canada Service Centre of the 60,000 residents within the service area, which includes Kings County, there are approximately 17,090 people 15 years of age and over accessing service and supports for persons with disabilities. Of this approximately 10,525 are not in the labor force and are not actively looking for work[21]. This represents a participation rate of 35.2% for this group which is far below the 2006 rate for the province of 52.6%. It is unclear though how many of these individuals would like to be working. Other data supplied by staff at the Kentville Service Canada Centre indicates as of 2009 there were 38,900 people aged 15 years and up within the Annapolis Valley Region who were not part of the labor force. The provincial percentage of those who are not part of the labor force but would like to work for 2009 was 5.5%[22]. Using that percentage and the aggregate number of people within the region not in the labor force approximately 2,139 people would like to be working but are not participating in the labor force within the Annapolis Valley Region.

Often when population and labor force rates are being estimated Kings County is aggregated with Annapolis and Hants counties. Out of these there Kings County has historically had the largest proportion of the population and economic activity. Table 3.1 below takes population figures for the Annapolis Valley Region (Annapolis, Kings and Hants) from the 2009 Demographic Update from the Nova Scotia Department of Finance and breaks them down according to the population distribution of the Counties for the 2006 Census. Kings is by far the largest area and accounts for 49% of the total population of the region.

Table 3.1: 2009 Estimated Population for Annapolis Valley Region
County	2009 NS Department of Finance Population Estimates[23]	Percentage of Economic Area Population[24]
Annapolis	21,670	17.5%
Hants	41,483	33.5%
Kings	60,676	49%
Total	123,830	100%

Kings County is one of only four counties in the province which have experienced population growth during the last census cycle 2001-2006. It has however seen the least amount of growth of the four.

Table 3.2: Population Characteristics for Counties that have experienced net growth 1996-2006[25]
	Kings	Colchester	Halifax	Hants	Nova Scotia
Population Growth 1996-2006 (%)	1.4	1.5	8.7	4.3	0.5
Migration Net (2006-2007)[26]	386	190	2,500	289	-1,731

In its demographic update for Nova Scotia the Department of Finance provides figures related to international, interprovincial and intraprovincial immigration and emigration. Outside of the HRM the Annapolis Valley area (Annapolis, Hants and Kings’ Counties) has the largest share of all immigration and emigration at the international and intraprovincial level compared to all other regions. At the interprovincial level it has the largest percentage of immigration, but the North Shore Economic Region (Antigonish County, Colchester County, Cumberland County, Guysborough County, and Pictou County) has the highest percentage of emigration. However, overall the rate of movement in and out of the Annapolis Valley area results in a net loss of 494 persons. Due to the differences in population growth amongst the three counties in the Annapolis Valley Area the assumption is that the majority of losses are from Annapolis County and gains are due to growth in Kings and Hants counties which demonstrated growth in the last census cycle. The Annapolis Valley Economic Region – has the largest percentage of all immigration and emigration at the international, and intraprovincial level compared to all other regions except the Halifax Regional Municipality.

Table 1.3.3: Annapolis Valley Economic Region (Annapolis, Kings & Hants)Immigration / Emigration Estimates 2008-2009 [27]
Immigration / Migration	Immigration (% / #)	Emigration (% / #)	Net (% / #)
International	7.2% / 260	10.2% / 98	162
Inter-provincial	14.2%/ 2,673	14.3% / 3,144	-471
Intra-provincial	23.7 % / 3,312	22.8% / 3,497	-185
Total	6,245	6,739	-494

Despite Kings County seeing population growth of 1.4% between censuses there are other factors to consider when estimating the stability of the population. Migration into and out of the Annapolis Valley region impacts the overall population and while Kings is currently seeing positive population growth there is the need to acknowledge the flows of people into and out of the area searching for work or a better quality of life. Attention needs to be paid to ensuring that the current population has the least incentives possible to search for better opportunities outside of Kings County.

The service and knowledge industry is a fast growing sector of the economy throughout the Atlantic region; however the industry tends to locate around urban centers[28]. Figure 4.1 below is adapted from the Canadian Occupational Projection System figure for Nova Scotia overall. The Canadian Occupational Projection System developed by Human Resources and Skills Development Canada develops projections of future labor demand and labor supply by broad skill level and by occupation[29]. The tables below indicate the top five industries that are expected to grow and decline up to 2014.

Obtaining information on labor market and general economic forecasts was difficult. Ultimately the information gathered was speculative and general in nature. In conversation with representatives from Service Canada (Labor Market Research), Department of Rural and Economic Development and the Kings Regional Development Authority the message was relatively consistent.

The labor market will shrink across the province due to an increase in older adults leaving the labor market, outmigration of youth for education and job opportunities and an inability to provide opportunity to retain newcomers and international and interprovincial students. Locally there will likely be increasing dependence on international workers to fill gaps in labour in the agricultural sector. In 2010 approximately 1,000 local jobs were filled by international workers in the agricultural sector[30].

At all levels of government the goal is to move to a more value added economy, where goods produced and processed in Nova Scotia can be exported and ready to use at their destination markets. In the case of Kings County the expectation is that value-added measures will be primarily applied to the agricultural sector with some work being done with natural resources such as wood products. Currently productivity (the ratio of output to the amount of input per work hour) is perceived as being low in Nova Scotia and in Kings County. Consequently the push at the provincial and regional level is to increase productivity through increased use of technology. This in turn means a need to increase worker skills through training and education and to ensure that those skills are both job specific and transferable across industries. The local Department of Rural and Economic Development and the Kings Regional Development Agency (Kings RDA) expressed different foci for growing the economy. The Department of Rural and Economic Development perceives the growth of green business practices and green jobs generally as a pillar in developing a strong economy and the global marketability of Nova Scotian goods and services[31]. At the regional level the Kings RDA focuses on increasing the value and potential of the knowledge economy within the region such as creative professional and producer services. The Finance, Insurance and Real Estate (FIRE) industries are already established but increased growth is being encouraged. Other knowledge economy sectors areas such as Aerospace are also being considered. One of the reasons that the Kings RDA is focusing on Knowledge Economy jobs as opposed to other sectors is that currently low paying jobs such as those in the service industry and to an extent those in production and processing are difficult to fill. Therefore there appears to be reluctance within the local labor force to take jobs that have lower pay scale and are not largely dependent on training or skills development.

According to the Kings RDA the business community has expressed concerns related to a lack of serviced industrial land[32] and transportation infrastructure to easily accommodate new investment, employment support for labor re-training and literacy enhancement, plant closures, and farm labor shortages[33]. Table 6.1 below indicates the general trend of industry growth within Kings County as expressed by staff at the Kings RDA.

Table 6.2 below indicates the breakdown of industries within Kings County as of 2006 by the number of employees that each business employs. In Kings County by far the most employers are within the Small category employing anywhere from 1 to 49 employees. The current table is not up to date and does not reflect the closure of processing facilities such as Maple Leaf in 2007 and Eastern Protein in 2009; however it does provide a general picture of the largest industries in Kings County. Chart 6.1 highlights the top ten industry sectors by number of employers.

Table: 6.2: Number of Employees per Business by Industry Kings County (2006)[35]
Industry	Total	Small (0-49 Employees)	Medium (50-99 Employees)	Large (100+ Employees)
All Industries	3,161	3,085	37	39
Agriculture, forestry, fishing and hunting	390	382	7	-
Mining, quarrying, and oil and gas extraction	8	8	-	-
Utilities	5	5	-	-
Construction	397	392	-	-
Manufacturing	92	80	-	12
Wholesale trade	124	121	-	-
Retail trade	422	407	6	9
Transportation and warehousing	152	147	-	-
Information and cultural industries	26	26	-	-
Finance and insurance	163	162	-	-
Real estate, rental and leasing	235	235	-	-
Professional, scientific and technical services	242	239	-	-
Management of companies and enterprises	90	90	-	-
Administrative and support, waste management and remediation services	100	98	-	-
Educational services	31	28	-	-
Health care and social assistance	221	215	-	5
Arts, entertainment and recreation	42	41	-	-
Accommodation and food services	140	132	5	-
Other services (except public administration)	271	270	-	-
Public Administration	10	7	-	-

Based on the Canadian Occupational Projection System (COPS) managed by Human Resources and Skills Development Canada (HRSDC) – two of the five sectors expected to continue to decline between 2009 and 2014 are the largest employers in Kings County, Construction at 15% and Agriculture, Forestry, Fishing and Hunting at 15%. The COPS does specify that forestry, logging and support services will be the sector to see the decline. It is unclear to what extent this sector makes up of that 15%, the expectation is that it would be low due to the focus of agriculture in the area.

In the not too distant future Nova Scotia will be facing a labor market shortage; there will be more jobs than people to fill those jobs. The reasons for this shortage are varied and are based on many long standing trends in Nova Scotia such as a growing seniors population and outmigration from rural areas to urban centers in Nova Scotia and further abroad. Agencies that specialize in economic issues have suggested three key ways to meet the labor market shortage 1) Increase natural growth, 2) increase productivity and 3) increase the labor force participation rate by getting individuals to enter or re-enter the labor force. The third option has a benefits that the first two do not a) the population is already present, it does not have to be born or immigrate, b) it can fill gaps quicker than the first two as there is no need to wait for the population to reach working age, learn a new language or become settled in a community, c) there is already service infrastructure both at the provincial and regional level in place to assist this population with a transition to work.

Getting those who want to work but are not in the labor force to work may require long range support dependant on the disability or challenge that may be acting as a barrier to employment. It may be an issue of physical disability or of skill level. The three industry sectors in Kings County that have the most employers are Retail Trade, Construction and Agriculture, Forestry, Fishing and Hunting all of which support low skilled jobs directly or in spin-off businesses such as processing, this means that those who would receive support in entering the labor market will be able to access jobs that may be able to easily accommodate any challenges they may face. The Retail, Construction and Agricultural sectors are also the sectors that are having difficulty hiring and retaining employees so the opportunity to design partnerships between employment services and business is present.

In addressing local labor shortages, both current and future, activating populations already present but not in the labor force in Kings County is a feasible solution. The central piece in the equation is finding ways to a) engage those who want to work but are not in the labor force, and b) address the barriers that have caused them to withdraw from the labor force. By engaging this local population not in the labor force and finding ways to address employment barriers and quickly mobilize local human capital Kings County can proactively address the labor force shortage and additionally raise the quality of life for many Kings County residents.