Canada’s economy lost nearly $13B due to labour shortage, new report shows

Canadian Manufacturers and Exporters' annual labour survey of manufacturers found that almost two thirds have lost or turned down contracts and experienced production delays.

Canada’s economy lost almost $13 billion over the past year due to a nationwide labour and skill shortage in the manufacturing sector, a new report has found.

Canadian Manufacturers and Exporters’ (CME) annual labour survey of 563 manufacturers in 17 industries across the country found that almost two thirds have lost or turned down contracts and experienced production delays due to a lack of workers.

The penalties and loss of sales resulting from these issues totalled $7.2 billion, according to the organization.

As well, 43 per cent of companies have postponed or cancelled capital projects because of the shortages, resulting in another $5.4 billion in lost investment, said the CME.

The pandemic has had lingering effects on the labour market in the industrial sector, the report said — for two years in a row, more than 80 per cent of manufacturers said they are facing labour and skills shortages, up from 60 per cent in 2020 and 39 per cent in 2016.

The sector was dealing with labour issues before the pandemic, said CME president and CEO Dennis Darby, but the difficulties were heightened during the pandemic and haven’t let up.

“As the pandemic eased from a societal point of view, the concerns about labour shortages were just as strong as ever,” he said.

CME chief economist Alan Arcand said in the report that two factors are combining to create the shortage: an aging cohort of baby boomers retiring in waves, and a lack of interest in manufacturing jobs from young Canadians.