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In June, 23% of frontline health care worker jobs at Royal Inland Hospital in Kamloops were vacant.

At Kelowna General Hospital that rate was 11%.

Those are some of the most recent indications of the number of unfilled jobs in the region. While such high ratios may be specific to the health care industry and those particular institutions, they are not that far off from the bigger picture where, by  last fall, 7.8% of jobs in the Thompson-Okanagan region were unfilled.

That equalled about 21,000 job vacancies as of Jan. 1, 2022.

READ MORE: More than 21,000 jobs unfilled in Thompson-Okanagan

The latest Statistics Canada job numbers for the region show 19,980 job vacancies at the end of March, an improvement of almost 1,200 jobs.

“For sure, the labour market tightness we’ve seen has peaked,” Mikal Skuterud, professor of economics at the University of Waterloo, told iNFOnews.ca. “We’re past that point now.”

While the worst of the shortages may be over, that doesn’t mean employers are out of the woods yet.

Aging is one key cause of worker shortages but there are other factors, especially during COVID when employers were propped up by $100 million in government support.

“When you start a business, you’re taking a risk,” Skuterud said. “It really is kind of perverse to think the government should support you in running a business with razor-thin profit margins when the only way you can get by is to keep paying workers low wages. That’s just crazy.”

Yet, that’s exactly what happened.

Other than during the first two or three months of the pandemic in 2020, business failures actually declined in Canada during COVID, at a time when much of the economy shut down.

“It’s very unusual in an economic crisis for business failures to go down,” Skuterud said. “We will see those business failures increase.”

From a labour supply perspective, that’s perhaps not a bad thing.

It means that people working for companies that really are not competitive and, therefore maybe should not exist, can be freed up to work for businesses that are producing products and services in demand.

While the competitive market may work for business, there are also huge shortages in professional fields, such as health care and the construction sector.

That has much to do with the aging population and is something that started before COVID and has been known about for decades.

Members of the Baby Boomer generation, born between 1946 and 1965, are all more than 55 years old now and into the prime retirement age.

That means the pace of retirements is accelerating.

For example, in July 2018, about 250,000 Canadians retired. In July 2022 that number was close to 300,000. But, that change is happening at a pace that Skuterud describe as “glacial.”

There has been no great shift towards workers retiring younger and, while there is some anecdotal evidence that some older workers retired during COVID because they didn’t want to take the risk of being in the workplace, it’s only anecdotal, he said.

In fact, the opposite may be true.

Looking again at July numbers from Statistics Canada, there were about 285,000 retirements in 2019. That dropped to 246,500 in 2020 and fell again to 233,400 last year before jumping up to nearly 300,000 this year, now that COVID is over.

The average retirement age in Canada in July 2018 was 63.8 years old. That climbed to 64.4 by July 2020.

“Month to month, in the labour force survey, we are seeing more exits from the labour force – primarily through retirements – than entries,” Skuterud said. “That’s an underlying trend that will continue. Month to month the numbers aren’t huge. But, the cumulative total over a year or a few of years, is a large number.”

So, what are the solutions?

One, as mentioned above, is that businesses will fail, freeing up those workers.

“There will be business failures but there are always business failures,” Skuterud said.

The market will sort out winners and losers.

“We have competitive markets which means, when there’s scarce jobs, workers need to compete for those jobs,” he said. “We expect unemployed workers to do that – to improve their resumes and go out there and knock on doors and work really hard to get a job. When there are labour shortages, we should be expecting the exact same thing of businesses and, if they can’t cut it, if they can’t survive on the lower wages that they’re paying and they can’t attract workers, well, that’s part of a competitive economy.”

That means they need to offer things like higher wages, better benefits and more flexible hours.

With the high rate of inflation these days, it’s actually the higher paid, unionized jobs that have seen the lowest wage increases, due to the fact that they have to wait until contracts expire before renegotiating.

“When I hear people talk about the world’s going to fall apart when those baby boomers retire, it’s just complete nonsense,” Skuterud said. “The markets will adjust. We will pay more for some things, undoubtedly, especially those things older people really want to consume. The prices of those things is going to go up but the world is not going to collapse.

“If older people continue to consume some good or service and they were also important producers of that good or service and they’re no longer going to produce it, what happens? They’re going to start bidding and the price of that thing is going to go up. What's that going to do? It’s going to pull producers into the market.”

Those producers will need workers so they will up the ante to attract those workers but the work will get done.

“I just don’t worry as much as most people seem to,” Skuterud said. “I think there’s a lot of good that can come out of a labour shortage. To some extent, it’s something we should be celebrating.”

One of the biggest impacts of the labour shortage will be technological innovation.

“How do employers deal with labour shortages?” he asked. “One is they try to attract new workers by making those jobs more attractive. The other thing is that they look for labour saving technological improvements.”

Technological changes tend to happen during economic crises. Some of it does make lower skilled workers redundant but much of it improves the quality of life for more highly skilled workers who need to create and maintain that technology.

So, does this mean that the scarcity of labour is over, a recession will be avoided and good times are on the horizon?

On the plus side, the recent jump in interest rates has had the desired effect of slowing the astronomic rate of inflation.

Canada’s inflation rate dropped to 7.6% in July, down from the 40-year high of 8.1% in June.

READ MORE: Canada's inflation rate slows to 7.6% in July as gas prices fall

“I’m feeling increasingly optimistic that there may be a soft landing,” Skuterud said.

He’s not an economist who likes to make predictions so he won’t speculate on how soft that landing will be or when the labour market will be closer to being in balance.

“There are no historical precedents,” Skuterud said. “We just don’t know. It’s a very strange labour market in a lot of ways. We’re talking about a recession in the midst of the tightest labour market we’ve ever seen. We’re seeing some really smart economists in the U.S. with diametrically opposed views of where we’re going to be in a year from now.”

What he does know for sure is, it’s not going to be where we are now.

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