Construction employment growth to slow down: BuildForce
January 25, 2016 by On-Site Magazine
The non-residential construction sector will require 35,700 more skilled trades workers over the next 10 years, according to the latest labour market analysis released by BuildForce.
In the new Construction and Maintenance Looking Forward forecast scenario, trends that arose in 2015 translate into slower construction employment growth across the 2016‒2025 scenario period. The economic news in 2015 was mostly negative, with slower economic growth expected over the near term. Across Canada, construction weakened as resource prices fell, and project delays and cancellations were common.
Even with slower projected growth, the 2016 forecast scenario continues to identify potential industry challenges related to structural changes and workforce mobility. Construction was one of the leading sources of employment growth in Canada over the last decade before pausing from 2013 to 2015. Over the scenario period, construction is expected to experience more moderate growth, but there is underlying momentum in some provinces and markets that will carry construction employment up over the medium term from 2016 to 2019.
The ebb and flow of conditions will move jobs across markets and provinces, but national employment remains close to current levels by the end of the scenario period.
Across the scenario period, demographic trends add to market challenges, as the construction industry’s age profile grows older with the number of youth entering the industry restricted and retirements increasing. Unemployment is rarely a sufficient source for recruiting, often leaving mobility across regions and markets as the focus for market adjustment.
Even when provincial markets adjust effectively through mobility and interprovincial migration, the industry may still need immigration to fill jobs and replace retiring workers.
The most important features of the 2016 BuildForce scenario are the periods when big engineering projects start or end, or when market cycles rise and fall. These events trigger recruiting beyond local markets. Tracking the timing, magnitude, occupations and trades affected by these changes defines mobility and sets out potential recruiting challenges.
Across the 2016‒2025 scenario, total market requirements for the 34 trades and occupations tracked by BuildForce will grow by 11,400 jobs, with notably different demand profiles for the residential sector, where requirements drop by 24,300 jobs, and the non-residential sector, where requirements rise by 35,700. The distinct patterns in these sectors are a particular focus in the 2016 outlook scenario.
Each year the BuildForce LMI system adds new features to meet industry needs. This year new measures of both supply and demand have been included for each of the residential and non-residential markets. These enhancements create distinct measures of unemployment, workforce mobility and new rankings.
Most provinces begin the scenario with a moderate cyclical upswing from 2016 to 2019, centred in non-residential markets:
- A series of resource-related infrastructure projects start, including pipelines and electrical generation and transmission.
- Gains in commercial and industrial building construction add new non-residential jobs in many provinces.
In Alberta and Newfoundland and Labrador, a down cycle in employment from 2016 to 2019 is driven by lower resource prices, the winding down of current major projects and the delay or cancellation of new proposed investments in oil and gas and mining.
New housing cycles unfold in most provinces on a flat or downward trajectory from 2016 to 2019 with the exception of Ontario and Manitoba, which have distinctly stronger housing growth, as housing starts rise from 2016 to 2018 or 2019.
Overall, in most provinces, construction employment is carried to a new high or peak level in 2018 or 2019 with gains in non-residential construction exceeding losses in residential. After 2019, major industrial and engineering investment decelerates and most new housing markets slow, driven by slower population growth.
Fifteen years of construction expansion has added new housing, industrial and resource capacity across Canada that now requires annual renovation and maintenance work. Steady employment gains in these markets are among the largest contributor of new jobs and, in many markets, employment added here helps to partially offset job losses in new housing and resource projects.
Conditions in the 2016 forecast scenario create 11,000 new jobs related to market expansion, while demand to replace retirements is estimated at 250,000 workers. A portion of these opportunities will be drawn from a small pool of unemployed, but more often, employers will rely on an estimated 221,000 new entrants into the construction workforce
After allowing for interprovincial mobility that would partially fill local gaps, the Canadian construction industry will still require 27,000 new recruits from outside the industry and likely outside of Canada. This overall finding returns attention to the central issue of workforce mobility and immigration. National estimates presented here illustrate how the industry is dependent on a mobile workforce and that any shortfall in interprovincial mobility would ultimately require added international immigration.
This overall finding returns attention to the central issue of workforce mobility and immigration. National estimates presented here illustrate how the industry is dependent on a mobile workforce and that any shortfall in interprovincial mobility would ultimately require added international immigration.
The BuildForce LMI system tracks the non-residential markets separately and shows common themes at work in most provinces:
- Industrial building construction recovers as investments and exports rise, with construction employment growing across the 2016‒2025 scenario, but gains are usually moderate and activity rarely regains peak levels attained in the early 2000s.
- Commercial building construction is on a moderate but steady upward trend, often following general economic growth.
- Institutional building construction was strong over the 2010‒2013 interval mostly due to government stimulus, but projected investment is modest or lower from 2016 to 2025, as government spending is restrained.
- Maintenance work is on a steady rising trend and often provides a large share of new jobs in non-residential employment.
- The timing of engineering and civil projects is varied and irregular and these changes drive most of the volatility in non-residential employment:
- Resource projects in Alberta and Newfoundland and Labrador are on a downward trend to 2018, as lower resource prices prompt project delays or cancellations.
- Resource infrastructure projects, including electricity generation and transmission, pipelines and LNG (liquefied natural gas) plants, are continuing and adding to employment opportunities.
- Sustaining capital and industrial maintenance work are a growing source of construction jobs.
BuildForce tracks current and proposed major projects and, with a few exceptions, the list of identified projects declines after 2020 with a corresponding drop in employment. Assumed start and end dates for major projects are a critical part of the scenarios for each province, as they often define periods of ramping up or shutting down employment in key trades.
The 2016 BuildForce LMI system tracks changes in the supply side of the non-residential market from 2016 to 2025:
- The labour force is estimated to rise by 30,000 workers.
- An estimated 132,000 workers are lost to retirement and must be replaced.
- An estimated 127,000 new entrants from Canada’s younger population are expected to be drawn into the workforce.
To meet overall labour requirements the industry will need to recruit another 35,000 workers from other industries or from outside Canada. These broad national trends across the coming decade signal potential market challenges.
The national workforce that is available now and expected to be trained and recruited may not be enough to meet combined replacement (retirement) and market expansion requirements. In most markets and during most years, construction workers would probably find an opportunity for work in the industry, with most opportunities likely coming from replacing older workers who are retiring.
Much would depend on the portability of their experience, skills and qualifications across construction markets and provinces and their willingness to move to find work. Even with this expected mobility, construction will need to recruit internationally.
Workforce mobility ‒ the most repeated theme in the provincial highlights ‒ along with an aging workforce and the need for continued investment in training remain key themes emerging from the 2016 forecast scenario, even as overall labour requirements shift lower.
The BuildForce LMI system is designed to signal the flow and timing of provincial labour requirements for trades and occupations across the 2016–2025 scenario.
In many cases during peak periods, mobility across construction sectors or provinces is required to meet industry needs. A key driver to mobility is the magnitude and timing of major projects. While the BuildForce LMI system tracks these projects and seeks industry input on assumptions, plans constantly change, leaving uncertainty across the scenario period.
Conclusions offered here point to examples of different types of mobility and related industry challenges. Major projects and interprovincial mobility Interprovincial mobility, driven by major project activity, has been integrated into workforce planning in many construction markets, but under recent economic events, mobility patterns have changed.
One of the largest markets for mobility has been the Alberta oil sands, where regular arrangements for interprovincial workers, including fly-in, fly-out work patterns, are well established.
In the shadow of lower oil prices, new investment and labour demands have declined significantly with many proposed projects delayed or cancelled. The biggest impact of the decline in activity has been to the fly-in, fly-out workforce.
Although new investment has declined, there remains evidence of recruiting challenges in other markets where, over the last several years, there has been a significant expansion of existing oil sands capacity and a growing commitment to sustaining investment and maintenance work.
Requirements for this work continue to rise across the scenario period and rely heavily on a mobile, specialized workforce to meet peak demands. The challenge is that sustaining and maintenance work will not be sufficient to offset the decline in new investment, so that displaced workers will need to move to other jobs.
There is also the increased risk that older workers may consider retirement as an option. Markets where there are emerging job opportunities and increased need for interprovincial mobility include the pipeline and marine terminal work in New Brunswick, utilities work in Manitoba and the proposed LNG projects in British Columbia.
Mobility Across Sectors
The new supply-side details for trades and occupations working in residential versus non-residential highlight the potential for mobility across these sectors or across market segments within a sector.
At various times across the scenario period there are divergent paths for residential employment (often falling) and non-residential commercial building activity (often rising) resulting in the potential for mobility across sectors depending on the portability of skills and experience.
Similarly, in residential, there is increased potential for some workers to move from new construction to renovation work, as new housing declines in most provinces while renovation work remains on a steady grow path across the scenario period.
Other Industry Mobility
When assessing market conditions it is important to recognize the competition for construction trades by other non-construction industries and the opportunities available there.
As such, the BuildForce system tracks demands outside construction for the 34 trades and occupations. Findings here highlight increasing competition by other industries to also replace an aging workforce and this may signal an important loss of skilled construction workers.
The demands for skilled trades in the manufacturing industry, for example, warrant attention in most provinces. Expanding industries, such as the shipbuilding industry in Nova Scotia and British Columbia, also create emerging demands for construction trades.
These broad national trends across the coming decade indicate a key workforce management challenge – that the current available national workforce and the new entrants expected to be recruited and trained may not be sufficient to meet combined replacement (retirement) and market expansion requirements.
Each year, as domestic population growth slows, the role of international immigration emerges as an important solution to meeting workforce requirements.
In most provinces, total hiring requirements (often dominated by retirements) may not be met locally and out-of-province recruiting is essential. With most provinces facing these same limitations, it can be concluded that – even if the full potential of inter-provincial mobility is realized – the industry will likely still need to turn to international immigration to meet long-term needs.