Far be it for us to rain on le mini-boom that Quebec’s economy has been enjoying — Mother Nature has done quite enough of that this summer — but a deepening labor shortage risks putting the brakes on the state’s long-awaited growth before it reaches a healthful cruising speed.
Four years of below-average population growth is going to do that. Without measures to improve the supply and quality of labor, Quebec risks choking off a mini-boom that’s helping it catch up to its wealthier Canadian cousins.
There were cheers all around when Statistics Canada reported that Quebec’s unemployment rate dropped to 5.8 percent in July, the lowest level recorded by the national agency because it started compiling comparable data in 1976. The employment rate among Quebeckers between the ages of 25 and 54 hit a jaw-dropping 84.2 percent in the first seven weeks of 2017, compared with 81.6 percent in Ontario and 82.3 percent for all of Canada. Many economists think Quebec is at or near full employment, given the construction of the state’s job market.
The symptoms of an economic renaissance are particularly evident in the Montreal area, which has been responsible for 85 percent of recent job creation in the state. The condominium cranes and omnipresent (if bothersome for commuters) infrastructure projects indicate a city in the throes of an extreme makeover. Swarms of tourists and tech-industry-employed millennials round off the rosy picture.
Behind these impressive sights, however, lie some worrying trends. A declining working-age population, a trend among Quebeckers to retire earlier than other Canadians and greater barriers to employment faced by new immigrants danger forcing organizations to put local growth plans on ice or pursue expansion beyond the province.
“It’s apparent that the dialogue has changed in Quebec,” noted Jean-Guy Côté, associate director of the Institut du Québec think tank. “We are no longer talking about job creation. We are talking about a labor shortage.”
The main reason is in the state’s demographics. Quebec’s population has increased more slowly than the rest of Canada’s since the 1970s, and the state has seen its share of the Canadian population slide to 23.2 percent in 2016 from 28.9 percent in 1966. The amount of Quebeckers in their prime working years (ages 15 to 64) has actually been decreasing since 2014.
“Declining demographics in the state are exerting additional downward pressure on the unemployment rate. This is a structural rather than a situational factor, and it won’t change in coming years,” Desjardins economist Hélène Bégin concluded in a recent note.
A contracting public sector really took some pressure off a tightening labour market in the three years through the end of 2016 since the provincial government worked to get its financial house in order. But since the government started loosening the purse strings, public-sector employment has surged while private-sector job development has stalled. Entirely 66,000 of the 124,000 jobs created in the state in the 12 months ending in July were in the public sector.
Private-sector companies cite a shortage of labor as the biggest challenge they now face, according to surveys commissioned by the Conseil du patronat du Québec companies’ group. It has called for more government aid for coaching and job-placement services.
Longer-term steps are also needed. Of the 15 major North American metropolitan areas included in a current Institut du Québec study, Montreal placed 14th at the percentage of the population with a bachelor’s degree or higher. Toronto came 10th. Montreal was dead when it came to integrating new immigrants into the workforce.
Mr. Côté and others urge easier and quicker recognition of diplomas earned outside Canada. Meanwhile, the provincial government recently started implementing new immigrant-selection standards which are better aligned with labour-market needs. (Unlike other states, Quebec selects its own immigrants under a 40-year-old federal-provincial agreement.)
However, Quebeckers on average retire a year before — in 62 — than Canadians as a whole, the provincial authorities noted this year since it started consultations on the future of the Quebec Pension Plan. In 2014, just 25 percent of men between the ages of 65 and 69 were in the workforce in Quebec, compared with 32.4 percent of men in that age group across Canada and 36 percent in america. Only 16 percent of Quebec women in that age group were still in the job market, compared with over 20 percent of Canadian women and 27 percent of American women.
Quebeckers can start collecting QPP pensions at age 60, and the government is considering raising the minimum eligibility age. That is tough politically. But with no and other steps, le mini-boom may soon go le bust.