Distinguishing between real labour shortages and employers who just want cheaper workers can be challenging. One sign of a true labour shortage is when the wages offered for vacant positions rise, with employers being forced to offer more money to attract and keep qualified workers.

Looking at the relationship between job vacancies and wages can give us insight into labour market trends. The job vacancy rate is the number of job vacancies divided by the total labour demand (the number of employed workers plus the number of vacant positions). This chart compares the job vacancy rate of several industries with the change in wages offered for those vacant positions. In a true labour shortage, industries with higher vacancy rates would offer higher wage increases, forming a diagonal line on the chart. Instead, what we see is closer to a circle, indicating no clear relationship between the number of job vacancies and wages.

With increasing overall unemployment and decreasing vacancies, it’s clear that there is not a generalized labour shortage. In industries with high job vacancy rates and below average wage increases, it is likely that there are other dynamics either suppressing wages or inflating vacancies.

For example, in the third quarter of 2023, Canadian hospitals had a job vacancy rate of 7. This means that 7% of hospital jobs across the country were vacant. The fact that wages have not risen in response to this high and persistent job vacancy rate could be attributed to provincial government austerity and unwillingness to improve wages.

On the other hand, there are different dynamics at play in the accommodation and food services industry. The job vacancy rate for accommodation and food services was 6.7 in the third quarter of 2023, but wages only increased by 4% compared to the previous year. The high number of job vacancies in this sector could be due to employers who rely on part-time workers and anticipate high employee turnover.

While a general labour shortage may not exist, specific occupations and regions could still be experiencing shortages. To address this, both employers and governments should improve training access and credential recognition for internationally trained workers or those with work experience from outside of Canada.