Where Can We Find Available Workers?

This summer, the tight restrictions on activities that had been put in place during the third wave of COVID-19 were lifted. Although the timing and degree of relaxation varied by province, Canadians were able to travel, go to restaurants, visit museums, and book a hotel room. Although international visitation remained extremely limited, the domestic tourism industry was more or less open.

With that came increasing demand for tourism activities. Canadians travelled. They ate at restaurants and visited friends and relatives after long months of limitations.

With that increasing demand, businesses needed to restaff. In the month before the pandemic struck, just over two million people were employed by Canada’s tourism sector—and February is a low point for tourism sector employment. In July 2019, tourism sector businesses employed 2,215,900 people.

The pandemic hammered the tourism industry and its workers. Over 880,000 individuals lost their jobs in the first two months of the pandemic. Although employment never fell that low again, every time employment began to increase, another wave of COVID-19 necessitated another round of restrictions and further losses of employment.

As they began to restaff, many businesses found that they could not find the workers they needed. The restaurant industry was particularly hard hit. Stories about labour shortages have featured prominently in the media. Our own survey conducted in March found 55.8% of food and beverage businesses expected that an inability to hire staff would negatively affect their business this summer.

The summer proved even more difficult than expected. A survey by Restaurants Canada found that 80% of respondents were having difficulty finding back-of-house staff and 67% were having difficulty filling front-of-house positions. Although labour shortages have been a concern of tourism business owners for years, it is only now becoming such an issue that it is clearly visible to the customer.

In July, there were over 130,000 vacant positions in the accommodation and food services sector. The vacancy rate in that sector was 11.6%. For the second month in a row, there was more than 1 empty position for every 10 employed workers.

But people are taking jobs in tourism—employment in the sector did increase by 184,900 this summer, including 74,900 individuals in the food and beverage services industry. People are filling tourism jobs, just not enough of them to meet the labour needs of employers.

Businesses are desperate for workers. The pushback has been that this is a labour shortage of the sector’s own making, or that the compensation and working conditions simply do not match the needs and wants of enough people to make the jobs attractive.

Many tourism businesses cannot find enough staff. That is true. But a true labour shortage is one where you have three positions but only two people available. In other words, no matter how much money you offer, no matter the conditions of employment, that third position cannot be filled. In fairness, there are regions where this is likely true. A lack of people in their region has long been an issue for operators in rural and remote regions.

But if we look at the current state of the labour market, it is hard to argue that we have a true labour shortage. The question is: what has happened to the people who filled tourism jobs before the pandemic?

In some cases, the workers truly are not there anymore. A good example is the International Experience Canada (IEC) program, commonly known as a working holiday visa. This program, which allowed young people from other countries to come to Canada with an open work permit, filled many jobs in resort towns, particularly ski resorts. The number of permits being granted for this program has fallen precipitously, and it is likely that even fewer individuals than are granted permits are actually arriving in Canada. IEC participants are not a large part of the entire tourism sector’s workforce, but they are a crucial labour source for certain businesses and regions.

At the same time, low numbers of new permanent immigrants have been arriving in Canada, which has slowed the growth of the labour force. The number of monthly arrivals has returned to pre-pandemic levels, but labour force growth was essentially put on hold for over a year. Over the previous year, there was a significant drop in the arrival of permanent residents, which means the labour force did not grow as much as it normally would have. This will have restricted the flow of new workers—some of whom would have worked in tourism—into the labour force.

The other side of the story is one in which unemployment remains elevated. In fact, despite the number of employed workers increasing in August, the number of unemployed people climbed as well, growing by 44,700 compared to July. As of August, there were 461,400 more unemployed individuals than in February 2020, the last month prior to the pandemic. To eliminate seasonal variance in unemployment, we can look at the same month prior to the pandemic. Even by this metric, there were 327,000 more unemployed workers than in August 2019. There are people looking for work, but they are not taking jobs in the tourism sector in the numbers needed to meet customer demand.

The number of individuals who are not actively participating in the labour force has also increased relative to pre-pandemic times. In July, there were 294,900 more individuals not in the labour force than in July 2019. In August, there were 345,600 more individuals not in the labour force than in August 2019.

These are individuals over the age of 15 who are not working and not actively seeking work. Unlike the elevated number of unemployed workers, there may be limited opportunities to draw people from this group back into the active job market.

The number of people over the age of twenty-five who are not in the labour force is elevated, but this is entirely driven by those over the age of 65 and under the age of 25. The number of individuals over the age of 65 who are not in the labour force has increased by 6.7% since February 2020. If these were individuals whom the pandemic pushed into retirement, it will likely be difficult to convince them to rejoin the labour force.

For the age groups between 25 and 65, the number of people not actively engaged in the labour force has actually declined, both since the start of the pandemic and relative to the same month in 2019. This decline suggests that there is limited scope to increase participation rates among these age groups.

The number of people aged 15 to 24 who were not actively engaged in the labour force increased in August by 40,200. This is not unusual and occurs most years as young people start leaving jobs to return to school. What should concern tourism employers is that the number of young people not in the labour force in July was lower than in July 2019, but in August, the number of young people not in the labour force was higher than in August 2019. This suggests that young people who did seek work became discouraged by the job market and either stopped seeking employment or left jobs they had in greater numbers than two years ago.

Ultimately, in the summer of 2021, Canada did not have a labour shortage. Some key labour pools were absent, but unemployment remained elevated as did the number of people outside of the labour force in the key 15- to 24-year-old age range. In August, the tourism sector needed 284,500 more workers to have the same number of employees that it did in 2019. This gap could easily have been covered by the elevated number of unemployed workers alone.

Despite this, the tourism sector cannot find enough employees. Many point to programs such as the Canada Recovery Benefit (CRB) for encouraging people to stay out of the labour market. Our survey of employers found that among those expecting a labour shortage to occur, 70% said that workers choosing employment insurance over work would be a cause.

Whether or not that was true this summer, employment insurance benefits are are now shifting back to pre-pandemic requirements. The Canada Recovery Benefit program is scheduled to wrap up in October.

Tourism demand is highly seasonal, even in industries that rely on locals for the majority of their revenue. Aside from some industries that focus on winter activities, we are entering a slow period for tourism. It is in the spring when significant hiring picks up. What happens in the labour market between then and now will determine how significant a labour shortage the industry faces. Programs such as CRB will probably be gone. But unemployment rates may well have fallen back to pre-pandemic levels. If so, there will be little slack in the labour market for the sector to tap into.

The disruption and uncertainty of the last few months has made it difficult to plan and prepare—in the spring, operators couldn’t be certain whether they would be allowed to open at all. Tourism businesses need to use the coming months to prepare their workforce. Retaining existing staff, or ensuring they are willing to return next year, will be vital. Attracting new staff will also need to be a focus. While we do not have exact numbers, many long-term tourism workers retrained and moved to other industries over the past year and a half. There are simply are not enough experienced workers to go around. Rebuilding the tourism workforce is going to take an investment in time and effort. It will require a willingness to hire and train inexperienced workers, and rebuild our workforce from the ground up.

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