Job Vacancies vs. Unemployment

Progressive economists have advocated expansionary fiscal and monetary policies to boost demand and create jobs, given the high rate of unemployment. By contrast, employers and conservative commentators complain of unfilled vacancies and labour shortages, emphasizing policies to increase labour supply and labour mobility.

Today’s new Statistics Canada survey of job vacancies sheds fresh light on this debate. The finding that “there were 3.3 unemployed people in Canada for every job vacancy” confirms that the main problem is a lack of jobs, not alleged disincentives to work or barriers to labour mobility. In other words, policymakers should focus on the demand side rather than on the supply side.

In Alberta and Saskatchewan, provinces supposedly plagued by labour shortages, there were three unemployed workers for every two vacancies. Even in mining, oil and gas – the sector with by far the highest rate of job vacancy – unemployment exceeded vacancies. These figures debunk the view that the solution is simply to prod workers to move west.

UPDATE (January 25): Quoted in The Globe and Mail, Toronto Star, Montreal Gazette and other newspapers. The Victoria Times Colonist had my favourite headline.

9 comments

  • And the numbers are an upper estimate of job vacancies in that they indicate only that employers are seeking workers. That would include those seeking new workers at below the prevailing wage.

  • FWIW, I would agree that these results indicate that more jobs are needed. However, doesn’t the pattern of numbers across industrial sectors suggest that there is something to the point that employers are trying to make? For instance, the survey says that there are ten people who would like to be employed in educational services for every vacancy. Surely this hints at oversupply; that is, there are more people trained or experienced for work in this sector that there are opportunities. But how many people contemplating a career in this sector are aware of this situation? To the extent that predictions are possible we need more and better information that individuals can use in deciding career directions.

  • Couple of points to guide a reaction to this new figure.

    1. What is a typical measure of a tight labour market? Well traditionally a measure of above 3.0 for vacancies to Unemployment is used. So Our three month moving average of v= 248k and U= 818.4K gives us a v-u ratio of 0.3. (not sure why they published the U-V ratio)

    http://andolfatto.blogspot.com/2012/01/regional-dispersion-in-us-vacancy-and.html

    Looking at the US for a guidepost on current and historical perspective (see link) leaves us to believe that our labour markets are very very far from being tight- which many in the right and neo con base claim is a huge problem, so much so that they convinced Stat Can that it should implement the new vacancy survey that is upcoming.

    It is clear that in order to be a tight labour market you need to have a 3.0 or above V-U ratio. Potentially that is why they released the measure as a U-V ratio rather than the V-U. lol confused yet?

    2. Adding onto Andrew’s comment on potential bias, we also have to consider that this estimate is only a portion of the unemployed and vacancies, as it excludes a huge part of the market, called the public sector. Which as we know, most likely has a much lower vacancy rate than what this survey uses as a population. Hence we must qualify this estimate as being biased towards the higher side of vacancies.

    Bill’s point is relevant, however, we need to have the estimated measures by occupation and not by sector to make it effective in planning purposes. But that is not possible as the Census long form was well replaced! And we now have no estimates of detailed occupations that would be needed for such estimates.

    Paul

    Okay am I in trouble for making this comment- nothing negative here- move along. Potentially another legal threat in my mailbox from Statcan for commenting on this site?

  • I just want to say how ecstatic I am that StatCan is finally producing another vacancies series. There are issues with it, sure. But given what there’s been to work with for the last several years, this is awesome!

  • I know there are shortages of doctors and nurses and other such professionals, but for the average person looking for a less skilled job there is defiinitely a shortage of work.

    I am looking for an entry level Clerical/Receptionist position. A large percentage of employers are requiring applicants have a university degree. They are able to hire lots of overqualified people desperately looking for work and willing to take these jobs.

  • To Deb,
    They also want you to do the work of three people.
    Several years ago I saw one ad for a clerical job that required that the candidate be able to translate in both official languages. Typist and Bilingual Translator, all for less than $12 dollars an hour. Bilingual Translators are pretty rare, and certainly should be paid more than this company was willing to pay.

  • Outstanding blog post, Erin!

  • I just applied to a job 2 days ago in Vancouver.
    They sent me an email stating over 600 people had applied for it in less than 2 days. It was for an artist/graphic design position.

    I had another interview months ago, for an Art Director position, and I was told 200 people applied for it.

    Both of these jobs were not low skill jobs. I have over 17 years experience. Something is going on.
    2 things aren’t helping.
    I recently had another interview with a gaming company, and they outsource their production to Pakistan! For hi-tech programming for their games. Our jobs are already going to other countries.
    And number 2, when the government manipulates the labor market, by constantly immigrating more and more people into our country, it doesn’t help anything.

  • Francis Fuller

    To add to Shangey G’s comment, I recently applied for a very low end job in Ottawa which the company had marketed in a very negative way as a low end and unrewarding grunt position and was advised that they had had over 150 applicants.


    Paul Tulloch – can you contact me please. firstname-dot-lastname-that symbol-gmail-dot-com

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