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Newsletter. Issue 2010-06. March13, 2010

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The statements, opinions, or views in the articles may not necessarily reflect that of the Goan Voice Canada.

The Changing Canadian Workplace
Don Drummond | SVP & Chief Economist

The landscape of the Canadian workplace has changed dramatically over the past few decades. Regardless of whether or not we, as a nation, are ready for it, macroeconomic and demographic trends and new workplace standards have changed the definition of a ?traditional? career. Employers and workers must face this new paradigm with  a different toolset than that which has been used up to this point. This study will investigate these trends and the challenges that they present. Primary of such trends is the looming retirement of the baby boomer generation. With more than a third of the entire labour force preparing to retire over the next two decades or so, this represents one of the most significant shifts in the workplace seen in the last half century.

Employers will be faced with labour force growth that will slow to a crawl and will, thus, need to find new and innovative ways of utilizing Canada?s current labour pool. To that end, immigrants, aboriginals, women, and older workers must be utilized more efficiently as these groups form an extremely large, yet underrepresented portion of the workforce.

Unfortunately, each group faces its own unique hurdles: immigrants, for example, face significant difficulties with respect to language and credential recognition, while Aboriginals must deal with achieving higher levels of educational attainment in the face of crippling social and cultural stereotypes. Women have not been able to close the earnings gap relative to men or penetrate the top corporate ranks within the organizational structure, while older workers are finding it difficult to secure the work arrangements that help them transition into retirement.

In addition, higher education is an absolute necessity to fill the skill needs of future jobs, but access barriers to post-secondary institutions continue to prevent young Canadians in the lower-income brackets from pursuing it. Education has already come to define the great dividing line between those with wealth and affluence in society from those without and programs designed at alleviating these access barriers are mostly being utilized by wealthier families. Also, they are unable to distinguish those who face legitimate financial difficulties from those who do not.

Over the past quarter century, the gap between the rich and poor has been growing steadily whereby real before-tax earnings have only been growing for the wealthiest Canadians, while those of the middle-income and lower-income brackets have either stayed stagnant or have outright declined. This has resulted in working-aged adults becoming the biggest at-risk population of falling into poverty. Transfer programs such as  Old Age Security and the Canada Child Tax Benefit have been fairly effective at combating poverty among seniors and children, but the two programs designed to help working-aged adults through transitions in employment, the employment insurance (EI) program and the provincial income assistance programs, are fret with problems.

The EI program has very high eligibility requirements and, as a result, a low coverage rate relative to those who are unemployed, while the income assistance programs create significant disincentives to pursue paid employment. The disincentives can be so great that the gain in employment income may be outweighed by the loss of benefits such as subsidized housing and medical care. Lastly, the nature of employment in Canada today is significantly different from that of the past. Traditional industries like manufacturing are giving way to services-based sectors, and full-time, well-paid jobs with benefits and a pension are being replaced by temporary and contract jobs with no benefits. Employer pension plan coverage is declining rapidly and so the burden of saving for retirement has fallen increasingly on the individual. Simultaneously, many Canadians are not saving for themselves and this is threatening the income security of future generations of retirees.

These are the major issues surrounding the Canadian workplace today. Employers must come to terms with this new paradigm as ignoring the trends now could lead to significant consequences in the near future. Though we will unlikely face the labour shortage that many are predicting, there will be costs in adjusting to this paradigm. If faced with heavy competition for a limited supply of labour, for example, employers can push up wages or improve the productivity of the productivity of the existing workforce by providing on-the-job training., investing in more capital, or by making better use of the underutilized portion of the potential workforce. So the challenge is not how to deal with an oncoming labour shortage, but how to minimize the costs related to this kind of adjustment.

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