Labour Market Information:A Review of the CSC

Labour Market Model and Background

for Construction Looking Forward

January 2012

Introduction

The purpose of this review To review core concepts and the structure of the

CSC model

To answer questions about Construction Looking Forward

Introduction

The purpose of this review To help participants see where their interests are

identified in the system To explain the tables and figures in the

Construction Looking Forward reports and PowerPoint presentations:

• measures used, methodology and background

• findings and interpretations

Introduction

The purpose of the CSC labour market model

To track the state of construction labour markets across Canada

To promote awareness and discussion about the state of markets and implications for industry and government initiatives

To offer an analytical tool to industry participants (e.g., “what if?” simulations)

Introduction

The purpose of Construction Looking Forward

Annual reports and PowerPoint presentations on the state of construction labour markets in all provinces and five Ontario regions

The reports are based on:

• A current macroeconomic and demographic scenario

• A current inventory of major construction projects

• The views and input of provincial LMI committees

Introduction

Construction Looking Forward is driven by a scenario-based analysis

Each forecast is based on several important assumptions. For example:

• global commodity prices

• lists of very large construction projects in each province

One set of these assumptions creates one “scenario.”

Each scenario is just one of several possible outcomes.

Outline

1. Core concepts

2. Model structure

3. Market adjustments

4. Rankings and mobility

5. Frequently asked questions

Core Concepts

The core formulas

Labour force = Employment

Unemployment

Participation rate = Labour force

Population

Core Concepts

Stocks are measured at one point in time

Examples:

• Employment

• Labour force

• Housing stock

• Population

• Registrations

Core Concepts

Flows measure the change in the stocks across a period of time

Examples:

• Investment

• Housing starts

• New apprenticeship registrations

• Apprenticeship completions

• Immigration

Core Concepts

Statistics Canada measures The reliability of labour market statistics is

restricted by:

• smaller markets and limited samples

• respondents who self-identify occupation and industry

• employment attributed to region of residence

CSC research and LMI committees improve reliability

Model Structure

DemandInvestment in construction of new buildings and

structures, renovation and repair work, activity in other industries

Labour markets in the wider economy

Construction labour market

SupplyPopulation by age, gender, education,

qualifications, source (natural increase or immigration), ethnicity and participation

0

0

Model Structure

Labour requirements(Demand)

Labour markets in the wider economy

Macroeconomics

Demographics The available workforce(Supply)

Model Structure

• Business investment

• Government• Households• Other

Macroeconomics

International

• United States

• Canada

• Provinces

Non-residential investment• Commercial• Industrial• Engineering• InstitutionalResidential• High rise• Low rise• RenovationsTracking major

projects

Labour requirements• Trades• Occupations• Managers

(Demand)

0

Model Structure

• Age profiles• Participation• Mobility

Demographics

• Population

• Gender

• Education

• Birth rates

• Mortality

• Immigration

• Labour force• New entrants• Retirements• In-mobility

Post-secondary programs

The available workforce

• Trades

• Occupations

• Managers

(Supply)

0

Model Structure

Demand – Macroeconomics

Labour markets in the wider economy

Constructionlabour market

Supply – The available workforce

Employment

Unemployment

Labour supply

0

0

Model Structure

Sources of labour requirements There are two distinct sources of labour

requirements (demand) in the model:

• replacement demand related to retirement and mortality

• expansion demand related to growth in construction activity

Replacement and expansion demand are measured for 33 trades and occupations (see next slide)

Model Structure

1. Boilermakers2. Bricklayers3. Carpenters4. Concrete finishers5. Construction estimators6. Construction managers7. Construction millwrights and

industrial mechanics8. Contractors and supervisors9. Crane operators10. Drillers and blasters11. Electricians (including industrial and

power system)12. Elevator constructors and

mechanics13. Floor covering installers14. Gasfitters15. Glaziers 16. Heavy equipment operators (except

crane)17. Heavy-duty equipment mechanics18. Industrial instrument technicians

and mechanics

19. Insulators20. Ironworkers and structural metal

fabricators and fitters21. Painters and decorators22. Plasterers, drywall Installers and

finishers, and lathers23. Plumbers24. Refrigeration and air conditioning

mechanics25. Residential and commercial

installers and servicers26. Residential home builders and

renovators27. Roofers and shinglers28. Sheet metal workers29. Steamfitters, pipefitters and

sprinkler system installers 30. Tilesetters31. Trades Helpers and labourers32. Truck drivers33. Welders and related machine

operators

Model Structure

Expansion demand Expansion demand is measured for:

• Industry:o constructiono all other industries

• Provinces and five Ontario regions:o Greater Toronto Areao Southwest Ontarioo Central Ontarioo Northern Ontarioo Eastern Ontario

Model Structure

Expansion demand Expansion demand is driven by construction

spending by sectors:

• residential

• commercial

• industrial

• institutional

• engineering

• maintenance

Model Structure

Expansion demand Expansion demand is driven by construction

spending by sectors:

• the macroeconomic model forecasts spending

• employment is reported for residential and non-residential totals

• specialized analysis tracks project detail

Model Structure

Building requirements

Population by age/

retirement

Labour requirementsEmploymentConstruction

Other Industries Available labour force• Managers• Contractors/supervisors• Trades• Apprentices

Trainingapprenticeship

Unemployment• Annual• Peak• Natural

Mobility

Sector Region Industry

Available population

Immigration Aboriginals Women Youth

Identifies people by trade and occupation

Does not identify people by trade and occupation

Market Adjustments

What happens when conditions change?

The model has three rounds of adjustments:1. Unemployment changes2. Labour force changes3. Immigration, apprenticeship and other

institutional systems adjust

The unemployment rate is the first, pivotal point.

Market Adjustments

Unemployment is an essential feature of the labour market

Acts as a cushion to absorb shocks A social cost across the cycle Creates benefits in a balanced market

Market Adjustments

First round adjustments

0

200

400

600

800

1,000

1,200

1,400

Year 1 Year 2

Labour Force Employment

Unemployment Unemployment

Market Adjustments

Unemployment

There are three different measures:1. Seasonal 2. Cyclical3. Natural

Market Adjustments

Jan-01

Jul-0

1

Jan-02

Jul-0

2

Jan-03

Jul-0

3

Jan-04

Jul-0

4

Jan-05

Jul-0

5

Jan-06

Jul-0

6

Jan-07

Jul-0

7

Jan-08

Jul-0

8

Jan-09

Jul-0

9

Jan-10

Jul-1

00.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

Seasonal unemployment patternsin Saskatchewan

Market Adjustments

Aug-76

Aug-77

Aug-78

Aug-79

Aug-80

Aug-81

Aug-82

Aug-83

Aug-84

Aug-85

Aug-86

Aug-87

Aug-88

Aug-89

Aug-90

Aug-91

Aug-92

Aug-93

Aug-94

Aug-95

Aug-96

Aug-97

Aug-98

Aug-99

Aug-00

Aug-01

Aug-02

Aug-03

Aug-04

Aug-05

Aug-06

Aug-07

Aug-08

Aug-09

Aug-10

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

Cyclical unemployment ratesfor Saskatchewan

Trend

Market Adjustments

The normal unemployment rate estimates the annual unemployment rate in balanced markets.

Market Adjustments

Unemployment Rates, Heavy Equipment Operators, Saskatchewan

0

2

4

6

8

10

12

14

16

18

2001 2002 2003 2004 2005 2006 2007

Unemployment Rate at Peak

Unemployment Rate, Annual Average

Unemployment, Natural RateSource: Statistics Canada and Construction Sector Council

0

200

400

600

800

1,000

1,200

1,400

1,600

Year 1 Year 2

Labour Force Employment

Market Adjustments

Second round adjustments

New entrants

Increased participation

Otherregions

Otherindustries

Increasedlabour force

Unemployment

Unemployment

Market Adjustments

Change in the labour force New entrants Mortality Retirement Net in-mobility

Market Adjustments

Change in the labour force New entrants

• number of residents 30 years of age and younger entering the labour force for the first time

Determined by:

• change in population (age 30 years and younger)

• construction share of the workforce

• labour market conditions

Market Adjustments

Change in the labour force Mortality

• number of persons in the local labour force that pass away during the year based on age-specific mortality rates

Market Adjustments

Change in the labour force Retirement

• number of persons permanently leaving the labour force; persons that take a pension and move to another trade or take contract work are not included

Determined by:

• change in participation rates above the age of 55

Market Adjustments

Change in the labour force Net in-mobility

• recruiting required by the construction industry from other industries, other trades or occupations outside construction and/or outside other provinces or countries to meet labour requirements

Determined by:

• residual labour requirements

o>0 implies recruiting outsideo<0 implies losses to other

industries/regions

Market Adjustments

Change in construction labour force in Saskatchewan

-5,000

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

4,000

5,000

6,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Numb

er o

f wor

kers

Net in-mobility New entrants Retirements and mortality Total change in labour force

Total change in labour force n = New entrants n + Net in-

mobility n - Retirements and mortality n

Rankings and Mobility

Rankings on a scale of 1 (weak) through 5 (strong) summarize the market conditions

Regional rankings are a weighted average of four measures (see next slide)

Differences in market rankings signal the potential for mobility

Rankings and Mobility

Measures1. Estimated unemployment rate relative to natural

unemployment rate

2. Employment growth

3. Net in-mobility as a percentage of the labour force

4. Industry survey

Rankings and Mobility

Annual weighting of the criteria Surveys only applied for one year Weight attached to replacement demand rises in

more distant forecast periods Comments on tables note the potential impacts

of mobility

Rankings and Mobility

Labour market rankings

1 Qualified workers are available in the local markets. Excess supply is apparent. Workers may move to other markets.

2 Qualified workers are available in local or adjacent markets.

3Qualified workers in the local market may be limited by short-term increases in demand. Established patterns of recruiting are sufficient.

4Qualified workers are generally not available in local and adjacent markets. Recruiting may extend beyond traditional sources and practices.

5 Qualified workers are not available in local or adjacent markets. Competition is intense.

Rankings and Mobility

Labour requirements(Demand)

Labour market rankings

1 2 3 4 5

Significant excess of

supply over demand

Excess of supply over

demand

Moderate supply

pressures

Significant supply

pressures

Supply constraints

Available workforce

(Supply)

Rankings and Mobility

Mobility Differences in market rankings indicate the

potential for mobility in the model Dimensions to mobility:

• across industries

• across regions

Rankings and Mobility

Adjacent markets, heavy equipment operators in Saskatchewan in construction

Heavy equipment operatorsSaskatchewanConstruction

Heavy equipment operatorsSaskatchewanOther industries

Heavy equipment operatorsManitobaConstruction

Heavy equipment operatorsAlbertaConstruction

Heavy equipment operatorsManitobaOther industries

0

2

4

6

8

10

12

14

16

1 2 3 4 5

Market

Un

em

plo

ym

en

t ra

te

Rankings and Mobility

Mobility across adjacent labour markets

Market with unemployment below the natural rate will attract workers from other markets

Conclusions

Remember – the CSC LMI system: Includes the model, reports, PowerPoint

presentations and website Depends on industry input to refine reliability and

market assessments Is a tool that the industry can use for assessing

labour market risks

Thank you

For further information contact:

Construction Sector Council

(613) 569-5552

info@csc-ca.org