Canada needs new homes built, but construction industry headed for retirement wall

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Survey reveals challenges faced by booming BC construction industry
WATCH: Despite rising wages, the BC construction industry has seen a decrease in workers in recent years. Association president Chris Atchison talks about what’s working and what needs fixing – Apr 16, 2022

A wave of retirements is about to crash down on Canada’s already tight construction jobs market, putting at risk ambitious plans to build more homes over the next decade.

Census data from Statistics Canada released last week showed the proportion of Canadians approaching retirement age has never been higher: nearly one in five workers are primed to call it a career in the next five years as the Baby Boomer generation ages out of the workforce.

But in the construction and skilled trades field, an aging workforce is already carrying a bulk of the labour on its back as the number of new entrants to the industry over the past few decades has failed to offset the looming retirements.

And construction isn’t an industry that lends itself well to delayed retirement.

Click to play video: 'Short supply: Building new homes costs more, taking longer due to supply chain snags'
Short supply: Building new homes costs more, taking longer due to supply chain snags
“I’ve known tough guys over the years … they’ve reached a point where their bodies couldn’t deal with [the work] anymore. A few of them I know, they’re driving an OC Transpo bus now because it was easier than laying tile and being on their knees all day,” says Rahul Kochar, the vice-president of operations at Phoenix Homes in Ottawa.
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Kochar says he has seen the retirement crisis in Canada’s construction industry coming for decades.

His father, Phoenix founder Cuckoo Kochar, was on the board of the Canada Mortgage and Housing Corp. 25 years ago when demographic data was showing the need to act on the generational threat to the industry.

“Clearly there were action items that were required at that time,” Kochar says.

But industry stakeholders say policymakers were too slow to set up talent pipelines through immigration and education channels to address the glut of retirements looming in the coming years.

Now, as the Canadian government looks to double the annual pace of homebuilding and add 3.5 million units to the country’s housing supply over the next decade, experts are worried there won’t be enough people to build the homes and meet the ambitious targets.

'This has been coming for a while'

Labour force figures released Friday from Statistics Canada show the job market is tight across the board, with unemployment at its lowest point on record at 5.2 per cent.

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Following four months of job growth, the construction sector lost 21,000 positions in April, the vast majority of those losses coming in Quebec.

The lost jobs come as the field is desperate for talent.

The construction industry will have to add 15,900 net new jobs between now and 2027, according to a report out in March from BuildForce Canada projecting labour demand in the sector.

Over that time, some 142,850 new workers are expected to be recruited into the industry to help fill demand.

But the next two years will see industry retirements reach their highest levels, BuildForce projects, making the actual gap much larger Some 156,000 workers are expected to retire over the next five years, according to the forecast.

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By 2027, then, the construction industry could be short some 29,000 positions.

“This has been coming for a while. You can see the demographic trends. So it’s something that we’ve been concerned about for several years,” says Kevin Lee, CEO of the Canadian Home Builders’ Association.

Addressing the demographic inevitabilities in the labour market was always going to be a challenge, Lee says, but policymakers “probably could have done more over the past several years” to prepare Canada’s labour force for the talent crunch.

A vibrant labour market doesn’t just affect whether the homes get built, it affects the end price of the build as well, Kochar says.

With the competition for talent so tight in construction, companies have to pay inflated labour costs to get workers on their sites and jobs across the finish line.

“Before when they had a labour pool of 20 people to fill 15 positions, well, the labour rate for them was pretty controlled. But now when they’ve got to fight to steal a guy from another company, they have to pay more. So all those costs get passed on,” Kochar says.

Lee calls the feds’ plans to rapidly scale up the pace of homebuilding in Canada a “stretch goal,” but one that he supports.

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“Labour is going to be a challenge, but now that those markers are in place, now you can start properly looking at all of the other elements to make sure you are going to get the labour in place … as quickly as possible.”

Immigration priorities shifted in recent decades

Despite seeing the demand for skilled trades on the horizon, Lee says a focus on the “knowledge economy” has seen the flow of newcomers in Canada directed more to office jobs than job sites.

“Canada has literally been built by immigrants over the years and that needs to be an important part of the future as well,” he says.

Kochar says newcomers he’s met in the industry have not found their way to Canada through visa programs that prioritized skilled labour.

“I cannot think of a time in the last 20 years when I’ve ever met somebody on a site that said that they came here as an immigrant under a specific channel focused on skilled trades,” he says.

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Click to play video: 'Canada had fastest population growth among G7 countries between 2016 and 2021'
Canada had fastest population growth among G7 countries between 2016 and 2021

A separate BuildForce Canada report prepared in October 2020 stated that immigration contributions to the construction industry have been on the decline for “decades.”

Citing 2016 census figures, the report pegged immigrants as representing nearly 22 per cent of the Canadian population but only 19 per cent of the construction industry.

The report pointed to federal immigration policy that emphasized high education levels as a cause of the discrepancy. Careers that rely on professional qualifications or on-the-job experience are valued less highly than university-equivalent educations, it pointed out.

While immigration levels soared between 2006 and 2018, the number of newcomers with skilled trades degrees coming into Canada dipped two per cent while the number of immigrants with college-level or higher educations grew 72 per cent, per the report.

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Global News asked Housing Minister Ahmed Hussen whether the current Liberal government, which came into power in 2015, waited too long to address looming gaps in the homebuilding workforce.

Hussen’s press secretary Arevig Afarian told Global News in an email Friday that the feds focused on housing needs with the National Housing Strategy in 2017 and targeted $10.14 billion in spending in its 2022 budget to address demands in the market.

Afarian added that the government plans to address labour gaps tied to Canada’s aging population largely through immigration targets, noting the largest immigration year on record was tied to the more than 400,000 newcomers who landed in the country in 2021.

“Through the 2022 immigration levels plan, we aim to welcome a record number of 431,645 permanent residents in 2022 to address an aging demographic and fill key labour shortages in high-demand sectors, such as construction,” the statement read.

Lee says while the feds “probably could have done more on the immigrant front” in recent years there’s “no time like the present” to prioritize attracting skilled labour.

Stigma behind trades a barrier to recruitment

The other end of the talent pipeline is Canada’s own homegrown talent. But training a new generation of tradespeople has lagged as well.

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Shaun Barr, the chair of the Construction, Trades and Building Systems at Algonquin College, says builders are pounding on his door every day with job postings, desperate to funnel new talent into the workforce.

“They’re starving for talent,” he tells Global News.

But Barr says Algonquin doesn’t have the capacity to produce new grads that quickly. Most of its trades programs have been waitlisted and at capacity in recent years, he says.

One of the major constraints facing colleges in Ontario is a lack of physical space, he says. Another is a dearth of instructors — companies aren’t letting go of talent they need on the job site, leaving no one available to teach the next generation of builders.

Barr says that even if the college had all the capacity in the world, there is an overall lack of demand for trades among young generations that’s contributing to the labour shortage. The same societal focus on the knowledge economy that has dried up immigration flows to the sector has given the industry a bad rap among youth in recent decades.

“One of the biggest challenges is the parental unit and the stigma behind the trades. That is the hurdle we need to bust through,” he says.

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Trades rife with opportunity

Barr recalls seeing pamphlets distributed at high schools that directed students with averages above 65 per cent towards university and college and only promoted trades to youth who struggled academically.

Those perceptions, that the trades aren’t a path for bright minds, don’t match with reality, Barr says. Math is heavily involved in the day-to-day operations of the trades such as plumbing, automotive and construction, he notes, and it’s been “frustrating for a long time” to see popular conceptions of the field discourage students from pursuing it.

It’s also not in line with the opportunity in the field. The fervent demand for skilled labour is seeing full classes of his students graduate with offers in hand for well-paying jobs following years of paid apprenticeships with the school.

“If you look in our parking lot where the apprentices park, they’re all driving $60,000 half-ton (trucks),” he says with a laugh.

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“I think we’ve frankly done a bit of a disservice to the skilled trades and skilled jobs over the past couple of decades,” Lee adds.

“Going into the skilled trades was a second choice or even a last choice as opposed to a first choice. I think on the positive side, the momentum is really swinging. It’s very much recognized that there are huge career opportunities.”

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