A higher percentage of Canadians between 15 and 64 are working now than before the pandemic — so why is there a labour shortage?

Clogged airports, shuttered hospital emergency wards, understaffed restaurants, main street storefronts lined with help wanted" signs.

Canada's shortage of qualified workers is ubiquitous: there are more than one million vacancies across the country - outnumbering unemployed workers for the first time since tracking began in 2015, according to a new report by BMO.

Though a higher percentage of individuals between 15 and 64 are working today compared to 2019, changing demographics and an aging population mean more workers than ever are at retirement age, leaving a smaller pool of working-age Canadians and massive gaps in the labour market.

We have more people exiting the labour market due to aging out than people entering the labour market due to coming of age. So, we have the smallest working-age cohort since the 1960s," explained Armine Yalnizyan, an economist and Atkinson Fellow on the Future of Workers.

With thousands more baby boomers set to retire within the next few years, economists warn Canada's labour shortages woes have just begun and could last for decades - potentially ravaging some skilled trade sectors where few younger workers are replacing those leaving the workforce.

We're losing workers," said Robert Kavcic, senior economist at BMO and co-author of the report. And we don't have good skills overlap, with many people retiring from the skilled trades but not many individuals from the millennial cohort who have those skills to replace them.

Anybody who's trying to find an electrician, plumber or a carpenter knows supply in that segment of the labour market is dwindling, and fast," he said, adding the health care sector is also significantly impacted by a lack of qualified workers.

Though economists have anticipated this labour shortage due to an aging baby-boomer cohort for decades, the pandemic exacerbated the issue, said Kavcic, with the hot labour market leading to increased demand and an extraordinarily tight" labour market.

Currently, the national unemployment rate is 4.9 per cent, the lowest since 1970.

While there's been much talk about the Great Resignation" throughout the pandemic and its potential impact on the labour market, the unemployment numbers prove that phenomenon did not play out, said Tricia Williams, director of research, evaluation and knowledge mobilization at the Future Skills Centre.

The Great Resignation' has been more of a U.S. story than a Canadian story," she said, noting the Canadian market saw workers switching jobs during the pandemic, but not entirely exiting the workforce.

The labour-force participation rate - a measure of those either working or seeking work - between those 15 and 64 was at 80 per cent for the second quarter of 2022, up from 79.2 per cent in 2019.

However, overall labour force participation among those 15 and older is on the decline, sitting at 65.6 per cent - down from 66.1 per cent in 2019 and a peak of 67.6 per cent in 2003.

It is critical to note that this ongoing slow decline is almost entirely a function of underlying demographics - that is a rapidly rising share of the population in retirement age groups - and less to do with people exiting the labour force for other reasons," the BMO report states.

While the federal government has some measures in place to mitigate the effects of an aging workforce - including gradually raising the eligibility age of Old Age Security and the Guaranteed Income Supplements from 65 to 67 starting in 2023 - Williams doesn't believe it will be enough.

That will be a temporary, short-term fix in terms of getting a few extra workers out of the baby boomer generation for a certain number of years," she said.

Williams said bridging the mismatch of skills between those retiring and younger workers entering the labour force is key, adding the government must do more to invest in the skilled trades and support immigrants so they can participate in the workforce with the skills and qualifications they have.

We've all heard the anecdotes about a doctor driving a taxicab. It's not just bad for that individual person, but that's also bad for Canada," she said.

But the tight labour market also offers employers and employees the opportunity to reimagine the future of work, said Yalnizyan. She believes employers, particularly those in sectors where shortages are most pronounced, should do more to bring individuals from marginalized communities into the mainstream of economic opportunity."

We absolutely could hire more people who have disabilities, are low-income residents or Indigenous peoples" who traditionally have been sidelined, she said. Instead, the only thing we're talking about is opening the floodgates for temporary foreign workers."

The labour shortage will also give workers more bargaining power than they've seen in half a century, she said, adding the relatively small working-age cohort will likely last for decades.

Those workers will both have the responsibility of supporting those who are too young, too old or too sick, through their work. But it also gives them the right to ask for better."

Joshua Chong is a Toronto-based staff reporter for the Star. Reach Joshua via email: jchong@torstar.ca