Job Vacancies vs. Unemployment

January 24, 2012

0-minute read

Progressive economists have advocated expansionary fiscal and monetary policies to boost demand and create jobs, given the high rate of unemployment. By contrast, employers and conservative commentators complain of unfilled vacancies and labour shortages, emphasizing policies to increase labour supply and labour mobility.

Today’s new Statistics Canada survey of job vacancies sheds fresh light on this debate. The finding that “there were 3.3 unemployed people in Canada for every job vacancy” confirms that the main problem is a lack of jobs, not alleged disincentives to work or barriers to labour mobility. In other words, policymakers should focus on the demand side rather than on the supply side.

In Alberta and Saskatchewan, provinces supposedly plagued by labour shortages, there were three unemployed workers for every two vacancies. Even in mining, oil and gas – the sector with by far the highest rate of job vacancy – unemployment exceeded vacancies. These figures debunk the view that the solution is simply to prod workers to move west.

Erin Weir is an economist with the United Steelworkers union and a CCPA research associate.

UPDATE (January 25): Quoted in The Globe and Mail, Toronto Star, Montreal Gazette and other newspapers. The Victoria Times Colonist had my favourite headline.

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