Addressing a long-standing shortage of construction workers will be key to boosting housing supply, experts say, as Canada’s national housing agency continues to forecast housing construction levels that fall short of growing demand.
The growing construction labor shortage was cited by Canada Mortgage and Housing Corp. as one of three factors contributing to longer construction times in a housing supply report last month.
Along with larger projects and rising costs, the agency said workers are retiring faster than they are being replaced. This challenge was compounded by the pandemic, when some construction workers changed careers or retired early rather than returning to the industry when the economy reopened.
“It’s been the monster in the woods for a long time. We knew this was going to happen,” said Jordan Thomson, senior manager of infrastructure advisory at KPMG in Canada.
“However, it has now reached a critical point, as there is a lot of work combined with the reduction of the overall workforce.”
Thomson said the industry faces the dual challenge of replacing workers as they retire while also trying to grow the sector to address Canada’s growing housing need.
Canadian Home Builders Association CEO Kevin Lee estimated that 22 per cent of residential construction workers will retire over the next decade.
While the labor shortage is an ongoing challenge, he said its effects have been somewhat muted over the past year as high borrowing costs have led to a slowdown in demand from potential homebuyers in many markets.
But he said a rebound could create “more tension” in the sector.
“Once people can afford to buy and get moving and the market starts to change, at that point we will see the labor shortage become more and more severe,” Lee said.
Canada could need more than 500,000 additional construction workers on average to build all the housing it will need between now and 2030, according to a report by RBC assistant chief economist Robert Hogue.
The report, titled “The Great Rebuild,” predicts that the pace of housing construction in Canada would need to increase by almost half just to meet future population growth. He offered seven ideas to solve Canada’s housing shortage, the first of which is to aggressively expand the construction sector’s workforce.
Hogue said “all avenues must be pursued to get more people working in the sector,” including prioritizing construction skills among new immigrants, setting “ambitious” targets for enrollment in skilled trade schools and incentivizing workers. from older construction to staying in the workforce longer.
“If not addressed, for example, by bringing more people into the trades and allowing more professional immigrants into our country, this can slow down the process of solving our affordability and housing crisis,” Hogue said in an interview.
“We need to build a lot more.”
The federal budget presented Tuesday acknowledged that a shortage of skilled labor contributes to “entrenched structural barriers” that slow the supply of new housing and increase affordability pressures.
The government said it would encourage more people to pursue careers in skilled trades and remove barriers to the recognition of foreign credentials, particularly for construction workers.
He noted the creation of learning opportunities “to train and recruit the next generation of skilled workers.” The budget included $200.5 million earmarked in 2025-26 for a summer jobs program “including in sectors facing critical labor shortages, such as housing construction.”
While some strategies being developed are long-term oriented, prioritizing immigrants with skilled trade experience could give the sector a quicker boost, said Mary Van Buren, president of the Canadian Construction Association.
He said skilled workers make up about two per cent of new Canadians. While some steps have been taken to rectify that imbalance, she said the points system Canada uses when evaluating immigrant applications still favors those with higher education.
“You can’t create a carpenter, crane operator or project estimator overnight,” Van Buren said.
Finding solutions is vital not only because of the immediate need (the association has 52,000 active job openings) but also to help Canada compete with other countries for skilled workers.
Van Buren noted that Canada is not alone in trying to solve the construction labor shortage.
“The United States, the United Kingdom, Germany, Japan, Italy and France face a similar challenge, and all but Japan rely heavily on immigration,” he said.
Lee said another solution could include a shift to more factory-built housing in the medium to long term.
“We’re going to need to increase productivity and that typically needs to be done through machinery or robotics, automation, that type of thing,” he said.
“So there’s no doubt we’ll need more people, but we’ll also need more factories built to help fill the gap.”
About 86 percent of real estate and construction business leaders say that despite the influx of immigrants, their organizations still lack the skilled talent they need to grow, according to a February survey by KPMG on pre-budget priorities. federal.
Thomson said this underlines the need to do things differently, rather than simply waiting for the workforce to increase. He pointed to the rise of prefabricated homes and modularization, along with the rise of digital tools aimed at improving productivity on construction sites.
“It’s going to take time to get more people online and get them through apprenticeships and all that stuff. To be honest, we don’t have time to do that,” he said.
“What will help get things done faster is the way we build things. We need to explore different ways of building homes and delivering these really complex infrastructure projects with less.”
This report by The Canadian Press was first published April 18, 2024.