Jobs vacancies increased to 1 million in Canada dreamstime xxl 98133538 Pivotal HR Solutions Blog

Nearly one million job vacancies in Canada makes hiring difficult as cost-of-living outstrips low wage increases

Canadian employers are facing significant hiring challenges in 2022. According to Statistics Canada, there were 997,000 positions to be filled by employers across all sectors during the second quarter of 2022. That represents a 4.7% increase from the first quarter and a 42.3% increase from the second quarter of last year (2021). Businesses are having difficulty filling positions, as employees become more selective  where they work in the face of inflation and other factors [1]

For context, in the second quarter of 2016, there were 113 new hires for every 100 job openings. That made it difficult for many citizens to find jobs, as they were competing against a lot of other applicants. This labor surplus had been going on for decades, but it seems the tides have turned. The latest data Ottawa released shows that there are now 44 newly hired workers for every 100 job openings – a record high.


Resignation letter dreamstime xxl 190819210 Pivotal HR Solutions Blog
Growing resignations and retirements, triggered by many factors, including cost of living increases against low wages, contributed to 1 million job vacancies in Canada in 3rd quarter 2022.

Cost of living increasing faster than wages

One of the main reasons behind this trend is that the cost of living is increasing faster than wages. The Consumer Price Index (CPI) increased by 7.5% in the second quarter compared to last year’s second quarter. In comparison, the average hourly wage only increased by 5.3% to $24.05 year-over-year. This gap has made it difficult for many workers to make ends meet, causing them to seek out better-paying jobs.

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CPI and inflation major factor

CPI is a key measure of inflation. It tracks the changes in prices paid by consumers for a fixed basket of goods and services. The cost of living rises when CPI increases. From groceries and rent to gas and tuition, the prices of everyday items have been on the rise in recent years. The Bank of Canada has stated that it wants to keep inflation around the 2% mark, which is the ideal rate for a healthy economy. To do so, they are raising interest rates by 75 basis points. As a result, the cost of borrowing money is also increasing.


The Great Resignation Continues dreamstime l 244444925 Pivotal HR Solutions Blog
The “Great Resignation” continues in both the United States and Canada. The main reason driving the resignation is perceived lack of safety in the workplace, or a preference to work remotely.

Retail and healthcare sectors struggling due to low wage increases

The job sectors that have been hit the hardest are retail trade jobs, whose wages saw a mere 5.7% increase year-over-year. Healthcare and social assistance workers didn’t fare any better, with a 3.6% wage increase to $25.85. These are typically low-paying industries that have been struggling to attract workers even before the pandemic. With the added challenges of the past year, it has become even harder for these businesses to find employees. [2]

In contrast, the average hourly wage for professional, technical and scientific workers saw the most significant increases, with a. 11.3% jump to $37.05. It is likely because these are in-demand professions that require highly skilled workers.

The accommodation and food services industry has been all over the news in recent months, as many restaurants have been forced to close their doors due to the pandemic. The sector is particularly struggling to find workers, with an increase of 12.7% in job vacancies, or 149,600 job positions to be filled. Low wages due partly to tipping culture are one of the main reasons behind this. The average hourly wage in this industry is only $15.20, which is significantly lower than in the other sectors.

The province with the highest number of job vacancies was Ontario, where there are 379,700 open positions, or a 6.6% increase. It is followed by Nova Scotia (6%). Quebec, Manitoba, British Columbia, and Alberta saw increases ranging from 2.4% to 5.6%. New Brunswick went against the trend with a 6.1% decrease in vacancies, resulting in 15,200 open positions.

The Great Resignation

These job market trends coincide with what has been dubbed “The Great Resignation.” Many workers have become disgruntled with their current positions and are quitting in search of better opportunities. That is particularly true for low-wage workers, who are often paid minimum wage or just slightly above it.

The Great Resignation was first coined in the United States during the COVID-19 pandemic. It refers to the mass exodus of workers from their jobs as they seek out better pay and working conditions. The trend has been driven by several factors, including the pandemic, low wages, and job insecurity.

24% of Canadian workers changed jobs

In Canada, the Great Resignation led to a staggering 24% of Canadian workers changing jobs recently. According to the survey by ADP Canada Co., poor compensation was the number one reason cited for leaving a job, with 88% of respondents citing this as a factor. This factor was followed by job flexibility. With remote work becoming the new norm, many workers are seeking positions that will allow them to work from home or have a more flexible schedule. [3]

The Great Resignation is having a significant impact on businesses across Canada. Employers have no choice but to offer higher wages and better working conditions to attract and retain employees. This is likely to lead to inflationary pressures as businesses pass on the increased costs to consumers.

“Talented employees know what they’re worth. If your company isn’t offering a competitive salary, you won’t be able to attract the top talent that your company wants. There are only so many top employees out there. If your company isn’t willing to offer these stellar candidates what they’re worth, then your competition will,” says MatcHR, a remote recruiting company.

An Aging population

Another factor contributing to the high number of job vacancies is the aging population. As baby boomers retire, more positions are opening up that need to be filled. This statement is especially true in the healthcare and education sectors, where there is a growing demand for workers.

Nathan Janzen, a senior economist at the Royal Bank of Canada, explains:

“The aging population is certainly one driving factor for high job vacancies,” Janzen said. In August, the number of Canadians who retired jumped almost 50 percent, from August 2021, according to recent data from Statistics Canada.” [4]

These baby boomers either reached the golden age of 65 or decided to retire early due to burnout from working during the pandemic. Poor salaries and working conditions also led many to retire early. As early as 55, some workers decide to leave their jobs behind and enjoy their golden years.

This is significantly impacting businesses, as they are losing experienced workers with a wealth of knowledge and skills. It can be difficult to find replacements for these workers, as many millennials are not interested in these types of positions. Those who are interested often don’t have the same experience or qualifications. They are also demanding higher salaries and better working conditions.

Generous public sector pensions encourage early retirement

In sectors like health care and education, generous public sector pensions are often inciting workers to retire early. It puts even more pressure on businesses, as they have to find replacement workers at a time when there is already a shortage of qualified candidates. If you’ve seen temporary closures of schools or hospitals in your community, this is likely due to the difficulty in finding enough staff to fill these positions.

Due to the labor surplus experienced by Canada for the past decades, most marginalized groups that could ideally replace this retirement wave were not given the opportunity to enter these professions. Immigrants, low-income workers, native people, and disabled workers were all but locked out of many of these positions. They now don’t have the necessary experience or qualifications to enter these professions.

It’s all starting to change, however, as businesses are beginning to realize that they need to tap into this underutilized workforce. By doing so, they will not only be able to fill these vacant positions, but they will also be able to create a more diverse and inclusive workplace.

Avery Shenfield, managing director, and chief economist at CIBC Capital Markets discusses how this pertains to the healthcare industry, where workers quit in waves during the pandemic.

“Employers can’t simply rehire people who left the profession because it’s been two years. Those workers have moved on, and it takes time to train or attract people back to the industry,” Shenfield said. “Major layoffs over a long period of time have a long-term impact.”

Increased demand for goods and services

Finally, the high number of job vacancies is also due to the increased demand for goods and services. The pandemic and its two years of lockdowns have led to pent-up demand for many products and services. Canadians have a solid savings rate and are now ready to spend.

This increased demand puts pressure on businesses to ramp up production and delivery. They need more workers to meet this demand but struggle to find qualified candidates. Even Canadians with less money are joining the party, thanks to the government’s stimulus programs.

“We lose sight of how much stimulus there was, not just wage subsidies, but the government poured in over $100 billion into subsidies for employers to hire and retain staff,” says Mikal Skuterud, professor of economics at the University of Waterloo. “The number of job seekers before the pandemic hasn’t changed that much, but the demand for goods and services has.” [5]

In other words, the high number of job vacancies is due to a perfect storm of factors. Skuterud doesn’t expect the situation to last forever, but businesses will have to adapt in the meantime. With the Bank of Canada expected to raise interest rates later this year, many spenders will have less money to spend. This could lead to a slowdown in the economy and a decrease in job vacancies.

Are you having difficulty finding the right employees for your job vacancies?

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[1] HR Reporter>>

[2] CIC News

[3] Financial Post>>.

[4] The Star>>

[5] The Star, Business>>

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