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The manufacturing labour shortage is the thorn that won’t go away

The skills shortage is creating intense competition among employers and industries as the Canadian economy continues to grow despite consistent predictions of an economic slowdown or recession in 2023. PHOTO courtesy TRUMPF

It’s a new year, supply chain bottlenecks are improving, inflation is (slowly) receding, yet one issue remains a thorn on the side of manufacturers: the shortage of skilled labour.

While job vacancies in manufacturing declined 8.7% to 78,500 in the third quarter of 2022, they remain significantly higher than before the pandemic. In fact, they were more than double their level of 2017. As a result, close to 5% of all manufacturing positions were open in this year’s third quarter, up from under 3% in the same quarter of 2019. Data from the Canadian Manufacturers & Exporters (CME) Fall 2022 Survey of its members revealed that, in the last year alone, labour and skills shortages in the manufacturing sector cost the Canadian economy $13 billion, a consequence of lost sales, penalties for late delivery, and cancelled or delayed capital projects.

As a result, increasing immigration levels and other government action to help Canadian manufacturers get the workers they need is one of several government asks from CME as the national business lobby group launches into 2023.

“CME’s focus for 2023 is ensuring manufacturers are set up for success and that means continuing to press the government on increasing immigration, and developing an industrial strategy so that our sector does not fall behind,” says CME president and CEO Dennis Darby.

CWB Group’s Welding Industry Report 2022 illustrates the depth of the immigrant worker challenge. There are 80,900 welders in Canada and 18% of them are immigrants. Newcomers (those who landed in Canada five years ago or less) peaked at 29% of the immigrant total in 2014 but by 2021, after two years of COVID-induced slowdowns in immigration, declined to just 15%.

The skills shortage is creating intense competition among employers and industries as the Canadian economy continues to grow despite consistent predictions of an economic slowdown or recession in 2023. Canadian employment surged by 104,000, a 0.5% gain, in December. It was the fourth straight monthly gain. Manufacturing employment did fall by 7,800 (-0.4%) in December, the sector’s first decline in three months. Looking at manufacturing’s employment performance over the course of the entire year, however, manufacturers added 13,000 positions in 2022. While that’s down substantially from the 62,200 new hires in 2021, a very strong year for manufacturing, these back-to-back gains pushed the industry’s employment to an average of 1.748 million last year, the highest level since 2012.

With such a tight labour market pay gains remain robust in manufacturing.  

“This indicates that manufacturers continue to face significant challenges finding workers,” comments Alan Arcand, chief economist with CME. “In fact, average hourly earnings in the manufacturing sector rose 1.0% in December, the fifth straight monthly advance. As a result, year-over-year wage growth surged from 6.9% in November to 8.2% in December, more than three times the sector’s historical average of 2.5% and the second-highest rate on record.”

The average CNC operator base salary in Canada is $22.37 per hour, according to the Indeed job board, which translates to $53,706 per year. The average rises to $57,325 for CNC operator jobs in Toronto and to a high of $63,484 in Edmonton. A person working as a CNC programmer in Canada typically earns around 83,300 per year (benefits included). CWB Group’s Welding Industry Report shows that the average wage for welders has been rising since 2017 and now averages $29.01 per hour or $62,200 per year.

The labour shortages and rising wages are not a short-term phenomenon. There could be as many as 2.1 million unfilled jobs in manufacturing overall by 2030, according to a Deloitte study released last fall. Once again, the CWB Group Welding Industry Report is illustrative of the challenge ahead. It anticipates that over the period 2019-2028, the number of job openings for welding jobs will reach 23,200 while the number of job seekers is forecasted to total 25,000.

“As openings and job seekers are projected to be relatively similar over the 2019-2028 period, the labour shortage conditions seen in recent years are expected to continue over the projection period,” the report concludes.

Which means, as the authors of the Deloitte study advise, not only will Canadian job shops need to find ways to recruit more employees, but they will also need to be extra diligent at keeping the employees they do have.

Reposted from https://shopmetaltech.com/job-shops/the-manufacturing-labour-shortage-is-the-thorn-that-wont-go-away-2/

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