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Canada’s three-month string of job losses raises some tough questions.

The latest employment figures, reported by Statistics Canada last week, show the country has lost a total of 114,000 jobs since May.

Imagine that, an economy losing jobs in the midst of a skills shortage crisis.

Does this mean an abrupt end to the remarkable job creation record of the economic recovery, with 3.4 million jobs created in the two years ending in May?

And will this apparent weakness in the labor market halt recent impressive wage gains?

The answer to both questions is probably no.

A loss of 114,000 jobs out of a Canadian workforce of 19.5 million is only a modest setback.

That suggests the Bank of Canada is on track for minimal job losses as it cools an overheated economy to bring inflation down to 3% next year from 7.6% currently.

And a close look at the employment numbers shows that we are losing workers, not jobs.

The big quit continues, with an estimated one million Canadians still on the sidelines awaiting improvements in working conditions before returning to the workforce. Their absence puts upward pressure on inflation.

Add to that a more recent phenomenon that can be called the Great Retreat. Hundreds of thousands of older Canadians who postponed retirement during the pandemic now feel free to leave the workforce.

A particularly worrying example of this is the loss of 34,000 healthcare jobs since May, even as nurses continue to report having to work overtime.

These are not job cuts but above-average retirement rates. Retirees are among the most skilled workers the healthcare system cannot afford to lose. But they are exhausted and feel they can retire now that the pandemic has subsided.

And the wave of retirements in the healthcare sector is about to become more evident across the economy.

In last week’s StatCan report for August, there were 307,000 Canadians that month who had retired at some point this year. This represents an increase of almost 32% compared to the same period a year earlier and an increase of 12.5% ​​compared to 2019, the last pre-pandemic or normal year.

It turns out that inflationary pressures are caused by pent-up pensions as well as pent-up spending. And these inflation-causing labor shortages are expected to get worse before they get better.

In the key pandemic years of 2020 and 2021, more than 650,000 Canadians entered the age group of 65 and older ready to retire, an increase of 9.7%.

And that largely explains the continued, often acute, shortages of skilled labor in trades and professions, rather than the job losses resulting from the economic downturn.

There are exceptions.

The loss of 28,000 construction workers in August due to rising interest rates would not surprise Torontonians who have seen so many real estate projects stalled or abandoned in recent months as the cost borrowing skyrocketed.

And a financial sector bracing for increased loan and credit card delinquencies due to those same interest rate hikes has reduced employment levels.

But the growth of high-tech jobs in Toronto, which is becoming one of North America’s top tech hubs, is more indicative of the continued health of the Canadian economy.

In the Ontario cities of Ottawa, Toronto and Waterloo, tech jobs now make up about as large a share of the total workforce as Silicon Valley’s 11%, and eclipsing less than 4% from New York.

And wage gains across the economy continue at an almost unprecedented pace. They have “exploded over the past four months,” Bank of Nova Scotia economist Derek Holt said in a client note when StatCan released its latest jobs numbers Sept. 9.

These wage gains last summer varied between 8.5% and nearly 12% on an annualized basis.

Similarly, labor disputes – strikes and lockouts – have cost an estimated 1.5 million person-days lost so far this year. That’s almost double the work lost from this source in all of 2021. Which means that deteriorating labour-management relations also figures into the labor shortage crisis.

Meanwhile, in the white-collar workforce, recent surveys show that most employers are planning above-average salary increases of 3.8% next year, with some increasing their salary budgets by as much as 20%.

Larger salary budgets are needed to retain employees when workers are scarce and to improve promotion practices and rewards for high performers.

Likewise, outsized wage increases are highly unusual ahead of a long-awaited recession in 2023.

They are characteristic of a labor force that suffers from a shortage of workers, not jobs. Labor shortages are holding back economic growth and keeping Canada’s productivity growth rates at notoriously low levels.

Solutions include accelerating immigrants’ access to employment; experimenting with four-day work weeks and other hybrids; attract retirees to the labor market; and close the gender pay gap.

Rarely have the stakes been higher when it comes to rethinking the nature of work and workplaces.

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