Labour Market Information

1. Labour Market Information A review of BuildForce Canada’slabour market model and background for Construction and Maintenance Looking Forward

2. Introduction • The purpose of this review is to: • review core concepts and the structure of the BuildForce Canada model • answer questions about Construction and Maintenance Looking Forward • help participants see where their interests are identified in the system • explain the tables and figures in the Construction and Maintenance Looking Forward reports and PowerPoint presentations, including: • measures used, methodology and background • findings and interpretations

3. Introduction • The purpose of the BuildForce labour market model is to: • track the state of construction labour markets across Canada • promote awareness and discussion about the state of markets and implications for industry and government initiatives • offer an analytical tool to industry participants (e.g., “what if?” simulations)

4. Introduction • The purpose of Construction and Maintenance Looking Forward is: • to provide annual reports (PDFs and PowerPoint presentations) on the state of construction labour markets in all provinces and territories, as well as 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 labour market information (LMI) committees

5. Introduction • Construction and Maintenance 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 and territory • One set of these assumptions creates one “scenario.” • Each scenario is just one of several possible outcomes.

6. Outline • Core concepts • Model structure • Market adjustments • Rankings and mobility • Frequently asked questions

7. Core concepts • The core formulas are: • Labour force = Employment + Unemployment • Participation rate = Labour force ٪ Population

8. Core concepts • Stocks are measured at one point in time. For example: • employment • labour force • housing stock • population • registrations

9. Core concepts • Flows measure the change in the stocks across a period of time. For example: • investment • housing starts • new apprenticeship registrations • apprenticeship completions • immigration

10. Core concepts • Statistics Canada measures: • The reliability of labour market statistics is restricted by: • smaller markets and limited samples • respondents who self-identify their occupation and industry • employment attributed to region of residence • BuildForce research and LMI committees improve reliability.

11. Model structure • Labour markets in the wider economy Demand Investment in construction of new buildings and structures, renovation and repair work, activity in other industries Construction labour market Supply Population by age, gender, education, qualifications, source (natural increase or immigration), ethnicity and participation

12. Model structure • Labour markets in the wider economy Macroeconomics Labour requirements (demand) Demographics The available workforce (supply)

13. Model structure • Macroeconomics • Non-residential investment • Commercial • Industrial • Engineering • Institutional • Residential investment • High rise • Low rise • Renovations • Business investment • Government • Households • Other International • United States • Canada • Provinces Tracking major projects • Labour requirements (demand) • Trades • Occupations • Managers

14. Model structure • Demographics • Population • Gender • Education • Birth rates • Mortality • Immigration • Age profiles • Participation • Mobility • Labour force • New entrants • Retirements • In-mobility Post-secondary programs • The available workforce (supply) • Trades • Occupations • Managers

15. Model structure • Labour markets in the wider economy Demand – Macroeconomics Employment Construction labour market Unemployment Labour supply Supply – The available workforce

16. Model structure • 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)

17. Model structure • Boilermakers • Bricklayers • Carpenters • Concrete finishers • Construction estimators • Construction managers • Construction millwrights and industrial mechanics • Contractors and supervisors • Crane operators • Drillers and blasters • Electricians (including industrial and power system) • Elevator constructors and mechanics • Floor covering installers • Gasfitters • Glaziers • Heavy equipment operators (except crane) • Heavy-duty equipment mechanics • Industrial instrument technicians and mechanics • Insulators • Ironworkers and structural metal fabricators and fitters • Painters and decorators • Plasterers, drywall Installers and finishers, and lathers • Plumbers • Refrigeration and air conditioning mechanics • Residential and commercial installers and servicers • Residential home builders and renovators • Roofers and shinglers • Sheet metal workers • Steamfitters, pipefitters and sprinkler system installers • Tilesetters • Trades helpers and labourers • Truck drivers • Welders and related machine operators

18. Model structure • Expansion demand is measured for: • Industry: • construction • all other industries • Provinces and five Ontario regions: • Greater Toronto Area • Southwest Ontario • Central Ontario • Northern Ontario • Eastern Ontario

19. Model structure • Expansion demand is driven by construction spending by sectors: • residential • commercial • industrial • institutional • engineering • maintenance

20. Model structure • 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

21. Model structure Building requirements Population by age / retirement • Labour requirements • Employment • Construction • Other industries • Available labour force • Managers • Contractors/supervisors • Trades • Apprentices • Unemployment • Annual • Peak • Natural Mobility Sector Region Industry • Training apprenticeship • Available population Does not identify people by trade and occupation Identifies people by trade and occupation Youth Immigration Aboriginals Women

22. Market adjustments • What happens when conditions change? • The model has three rounds of adjustments: • Unemployment changes • Labour force changes • Immigration, apprenticeship and other institutional systems adjust • The unemployment rate is the first, pivotal point.

23. 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

24. Market adjustments • First round adjustments

25. Market adjustments • Unemployment • There are three different measures: • Seasonal • Cyclical • Natural

26. Market adjustments • Seasonal unemployment patterns in Saskatchewan

27. Market adjustments • Cyclical unemployment rates for Saskatchewan Recession Peak

28. Market adjustments • The normal unemployment rate estimates the annual unemployment rate in balanced markets.

29. Market adjustments • Unemployment rates, heavy equipment operators, Saskatchewan

30. Market adjustments • Second round adjustments Increased participation Other regions Other industries New entrants

31. Market adjustments • Change in the labour force: • New entrants • Mortality • Retirement • Net in-mobility

32. 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

33. Market adjustments • Change in the labour force • Mortality: • the number of persons in the local labour force that pass away during the year based on age-specific mortality rates

34. Market adjustments • Change in the labour force • Retirement: • the 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: • the change in participation rates above the age of 55

35. 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 • >0 implies recruiting outside • <0 implies losses to other industries/regions

36. Market adjustments • Change in construction labour force in Saskatchewan

37. 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.

38. Rankings and mobility • Measures: • Estimated unemployment rate relative to natural unemployment rate • Employment growth • Net in-mobility as a percentage of the labour force • Industry survey

39. Rankings and mobility • Annual weighting of the criteria: • Surveys are only applied for one year. • The weight attached to replacement demand rises in more distant forecast periods. • Comments on tables note the potential impacts of mobility.

40. Rankings and mobility

41. Rankings and mobility Labour requirements (Demand) Available workforce(Supply)

42. Rankings and mobility • Mobility • Differences in market rankings indicate the potential for mobility in the model. • Dimensions to mobility: • across industries • Across provinces

43. Rankings and mobility • Adjacent markets for heavy equipment operators in Saskatchewan in construction Heavy equipment operators, Saskatchewan - Other industries Heavy equipment operators, Saskatchewan - Construction Heavy equipment operators, Manitoba - Construction Heavy equipment operators, Alberta - Construction Heavy equipment operators, Manitoba - Other industries

44. Rankings and mobility • Mobility across adjacent labour markets • A market with unemployment below the natural rate will attract workers from other markets. Natural unemployment rate 1 2 3 4 5

45. Conclusion • Remember, the BuildForce Canada LMI system: • includes the model, reports, PowerPoint presentations, Construction Forecasts website with detailed investment and labour market data (www.constructionforecasts.ca) • depends on industry input to refine reliability and market assessments • is a tool that the industry can use for assessing labour market risks • includes the Construction Map App website, which tracks the location and schedule of selected major resource construction projects across Canada (www.constructionmapapp.ca)

46. For further information, contact: January 2012 BuildForce Canada Tel: 613-569-5552 info@buildforce.ca www.buildforce.ca