Report paints dire picture of consumer costs if labour crunch continues
Canada’s skilled trades shortage is creating major challenges for industries and businesses, including the property and casualty (P&C) insurance industry. Demand remains high for the shrinking pool of skilled trade workers, leading to higher costs and longer delays.
Insurance Bureau of Canada (IBC) has been raising concerns about this labour shortage for years, as it significantly impacts the ability of P&C insurers to help Canadians recover their homes and businesses in a timely manner after a natural catastrophe.
Making the situation worse is the looming retirement of many skilled trade workers. According to BuildForce Canada, which provides labour market information to the construction industry, over the next 15 years, more people are expected to retire from the construction industry than to enter it.
Reversing this labour shortage requires a sharp focus by governments across the country, which largely oversee the funding and policy decisions around investments in skilled trade development programs and immigration that brings skilled workers into the country.
The Canadian government recently announced an expansion of its Express Entry immigration stream to fast-track citizenship applications to fill critical labour gaps in research, transportation, the military, health care and social services. It also hopes the program will attract workers in the skilled trades, including carpenters, plumbers and machinists.
A recent report from The Conference Board of Canada (now Signal49 Research) pointed to shortages in the residential construction sector that are contributing to rising housing and insurance claims costs. Its Building Under Pressure: Skilled Trades Shortages and Rising Construction Costs reports that unless governments take action, labour shortages will worsen, drive up inflation and cost Canadians close to an extra $8 billion annually by 2045.
Key findings in the report include:
Job vacancies among the skilled trades in the residential construction sector have grown at an average rate of 11% per year, and that number is expected to increase to 13% per year between 2026 and 2045.
By 2045, the shortage of skilled trades workers is expected to reach up to 32,000, which would likely cause prices in the sector to increase by 2.3% and add $7.9 billion to the annual cost of residential renovations and repairs.
The rising frequency and severity of natural catastrophes, as well as the increasing demand for housing, are adding to the strain on the labour supply.
Skilled-labour shortages contribute to pressures on insurance claim costs by increasing construction labour costs and lengthening timelines for rebuilds and renovations. These factors go into insurers’ calculations for premiums.
While IBC supports government efforts to build the new housing that Canadians need, the lack of a plan to protect communities from the impacts of wildfires, floods and other natural disasters will further exacerbate skilled labour shortages. Investments in programs to address the labour crunch must be complemented with policy decisions that protect communities that are most vulnerable to severe weather, ensure the continued sustainability of the home insurance market, and reduce the financial and emotional tolls of natural disasters.
Steps to increase the skilled labour force of the future, such as the recent federal announcement regarding expansion of the Express Entry immigration stream are welcome. But they need to be complemented with actions to make Canada the best country in the world when it comes to preparing for, responding to and recovering from natural disasters.
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