Construction segment demand to continue through 2027

Canada’s construction and maintenance industry rebounded strongly in 2021 and is expected to continue growing through 2027, says BuildForce Canada. In its national forecast, 2022–2027 Construction and Maintenance Looking Forward, the industry organization explains that strong near-term demand and sustained activity in several key sectors present considerable opportunity, but may also present a challenge on the labour front.

Construction investment rebounded strongly in 2021 as Canada’s economy recovered from the effects of the COVID-19 pandemic. Total year-over-year construction investment increased by approximately 11 per cent in 2021, as both the residential and non-residential sectors saw gains. Investment is projected to remain at or near current high levels through 2023 before declining gradually over the remainder of the forecast period.

Last year’s rise in construction activity lifted employment to approximately 1.1 million workers, a seven per cent increase over 2020, and a gain of one per cent beyond pre-pandemic figures recorded in 2019. The surge in activity is expected to boost employment further, with a peak happening this year.

“The good news story is that construction has rebounded well from the effects of the COVID-19 pandemic, thanks to a strong housing market and public-sector infrastructure investments,” says BuildForce Canada executive director Bill Ferreira. “The challenge before the industry, however, is how to manage its labour force. Retirements are expected to reach their highest levels over the next two years.”

He says that more than 150,000 workers are expected to leave the industry, with many of those being baby boomers. “This represents a significant loss of skills and experience — skills that take time to develop and that are not typically easily replaced by new workers entering the labour force,” states Ferreira.

Residential construction activity recorded significant increases in 2021, with housing starts increasing by 21 per cent year-over-year. BuildForce Canada expects demand in most provinces to recede from this peak in 2022 or 2023.

There appears to be some evidence that Canada is not keeping up with demand for new homes, though in the face of rising interest rates, declines are expected in the rate of new-home construction throughout the forecast period. This in turn should produce corresponding declines in overall employment. By the end of the forecast period, residential-sector employment is expected to have declined by 24,900 workers in comparison to its 2021 starting point.

Non-residential demands are expected to remain strong over the forecast period, however, driven by increases in spending across the public and private sectors. The largest gains are expected over the near term, peaking in 2024. Employment by 2027 is expected to be five per cent higher than 2021, an increase of 26,300 workers.

Construction activity in all four Atlantic provinces is expected to peak between 2022 and 2024 before receding through the end of the forecast period.

Ontario’s construction market is expected to see labour market challenges throughout the forecast period as sectoral unemployment returns to historically low levels. The pace of residential activity is expected to moderate, but a growing inventory of major infrastructure projects and a projected recovery in commercial building construction is expected to create growth across the forecast period and throughout the province’s discrete regions.

Manitoba’s construction market is set to continue its recovery in 2022, as new infrastructure investments help to offset the winding down of construction activity at Manitoba Hydro’s Keeyask dam project. Although construction demands are expected to moderate, they are expected to remain above 2021 levels by the end of the forecast period.

Saskatchewan appears poised for another extended period of construction expansion. Residential construction is expected to grow through 2022, while public- and private-sector non-residential spending plans will be sustained through 2027.

The outlook for Alberta sees heavy-industrial maintenance work and public-sector spending driving employment growth in the near term, while projected increases in oil and gas investment should help to raise non-residential employment later in the forecast period. These should offset expected residential employment declines.

British Columbia’s residential and non-residential demands are poised to rise this year and be largely sustained across the forecast period. The increases will be driven by strong demand in the public sector, as well as a recovery in new housing and renovation work, and commercial building construction.

“Normally, interprovincial mobility would be one solution the industry can deploy to compensate for peak periods of demand,” says Ferreira. “But given that peak demands will be seen across the country at almost exactly the same time, that option appears less viable in the short term. Employee-incurred costs when looking for work outside their home market also creates a strong disincentive to interregional mobility.”

The development of skilled tradespersons in the construction industry takes years, and often requires participation in a provincial apprenticeship program. By 2027, overall hiring requirements in the industry are expected to near 172,000 due to the retirement of approximately 13 per cent of the current labour force and growth in worker demand.

Based on historical trends, Canada’s construction industry is expected to draw an estimated 143,000 first-time entrants aged 30 and younger from the local population, leaving the industry with a possible recruitment gap. When coupled with demand growth, the industry may be short as many as 29,000 workers by 2027.

The pandemic has complicated the training and certification of new workers. The latest Registered Apprentice Information Systems data shows declines in new registrations of at least 20 per cent in nearly every province. Such impacts are likely to reduce the near-term numbers of new certified workers.

“The pandemic undoubtedly caused challenges in the labour force, and its effects will be felt for years to come,” says Ferreira. “The good news, though, is that the number of workers aged 25 or younger in construction grew by 4.7 per cent in 2021. This suggests that the industry’s targeted recruiting efforts are bearing fruit.”

The report outlines how the construction industry remains focused on building a more diverse and inclusive labour force. To that end, efforts are ongoing to enhance the recruitment of individuals from groups traditionally underrepresented in the province’s construction labour force, such as women, Indigenous people, and newcomers to Canada.

In 2021, there were approximately 190,000 women employed in Canada’s construction industry, of which 27 per cent worked directly in on-site construction. However, of the 1 million tradespeople employed in the industry, women made up only five per cent of the on-site construction workforce.

Also underrepresented on construction sites is the Indigenous population. In 2021, approximately 63,700 Indigenous people were employed in Canada’s construction sector, or nine per cent of all Indigenous people in the workforce. As the Indigenous population is the fastest growing in Canada and Indigenous workers seem predisposed to the pursuit of careers within the sector, the report suggests there may be scope to further increase the recruitment of Indigenous people into the construction workforce.

The construction industry may also leverage new Canadians over the coming decade to meet anticipated labour market requirements. Canada is expected to welcome an average of more than 237,000 new international migrants each year between 2022 and 2027. This will make new Canadians a growing segment of the overall labour force. The national construction labour force is comprised of approximately 20 per cent new Canadians, which is lower than the 26 per cent overall share of new Canadians in the total labour force.

www.buildforce.ca