Quebec’s strong economic recovery has come with a serious labour crunch

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Michel Leblanc’s hometown of Montreal has what he calls a “rich economy” problem.

“We had decades where we were looking for jobs for people who could not find good jobs or permanent jobs – that was the problem of a poor economy,” the president and CEO of the Metropolitan Montreal Chamber of Commerce said, as we chatted in his offices in historic Old Montreal earlier this week.

“The problem of a rich economy – and we’re not that rich yet, but we’re getting there – is that there are too many jobs, there is too much demand. … Right now, there is a run for talent,” he said.

“I prefer those sorts of problems.”

Still, it’s a problem. Labour shortages coming out of the pandemic have been bad all over, but they are especially severe in Quebec. They threaten to apply serious brakes to what has been one of the most robust economic rebounds in the country.

Statistics Canada’s May employment report shows that Quebec’s unemployment rate is a puny 4.2 per cent, the lowest in the country – nearly a full percentage point lower than the national rate (which itself is at half-century lows). Montreal’s own rate – 4.8 per cent – is among the lowest for a major Canadian city, well below the usual economic powerhouses of Toronto (6.2 per cent), Vancouver (5.2 per cent) and Calgary (6.6 per cent).

In the first quarter of this year, Quebec reported nearly a quarter-million job vacancies. Its ratio of unemployed people to vacancies dipped to 0.9 – there were more vacancies than people looking for work. That’s a sign of a very, very tight labour market.

It is, in part, a testament to how well Montreal’s and Quebec’s economies are doing. GDP grew 5.6 per cent last year, nearly one percentage point more than the country overall.

Montreal’s substantial knowledge and research base – a function of its long history in the aerospace industry and its large, multilingual academic community – has spawned a flourishing technology sector. The city has become a global hub for video-game development. Biotech, a strength of Montreal’s past that had faded in recent years, may be poised for a resurgence after the city won a heated competition to become the site of Moderna’s new mRNA vaccine plant.

And anyone walking around downtown Montreal on a sunny June day – or walking through its busy airport – can attest to the return of a thriving tourism industry.

But the city and province have other, longer-term issues that are contributing to both the heavy demand for and tight supply of workers in the current economic recovery.

Businesses in Montreal and Quebec have long relied on cheap labour as a competitive advantage – which, Mr. Leblanc argues, has led to a long-term underinvestment in technology and automation. Two decades ago, median household earnings in Montreal were more than one-third less than those of Toronto. By 2020, that gap has narrowed to 19 per cent. Still, Montreal’s wages are by far the lowest among the country’s eight largest cities.

And despite progress in recent years (particularly with women), the province’s labour participation rate – the percentage of its adult population that is in the work force – is still below the national average. A key shortfall is among older workers (55-plus), whose participation rate is 3.5 percentage points lower than that of neighbouring Ontario, and 2.5 percentage points below the national rate. The lower participation rates represent untapped potential of the existing population to help fill the province’s labour gaps.

Another underused source of labour supply in Quebec is its anglophone population, whose epicentre is the Island of Montreal. Nicholas Salter, executive director of the Provincial Employment Roundtable, a government-funded group focused on employment inequities for the province’s anglophones, points to the most recent census data (2016) showing that the province’s anglophone unemployment rate in typically runs about two percentage points higher than the francophone rate.

“There is this untapped labour force potential in Quebec,” Mr. Salter said.

The biggest message from Montreal’s business leaders is that the province has to step up its rate of immigration if it’s serious about addressing its labour shortages. On a per-capita basis, Quebec’s intake of new immigrants last year was less than half of Ontario’s; in raw numbers, that represents about 150,000 more newcomers in Ontario than in Quebec.

“Companies here are pressing me day and night to demand [from government] more immigrants,” Mr. Leblanc said. That includes not just pressing the provincial government to raise its immigration targets, but the federal government to speed up the Temporary Foreign Worker program, which could help address the most serious short-term needs.

“It takes months, as opposed to weeks, before these people can come,” he said. “It’s way too slow.”

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