Labour Shortage In Construction Project Adding Extra Pressure To Housing Supply Gap: Experts

The construction industry is short tens of thousands of workers, and experts say a coming wave of retirements could make the problem worse even as Canada is millions of homes behind what’s needed to reach housing affordability this decade.

“That labour shortage is going to remain, and it’s only going to increase,” said Reva Bond, dean of the construction school at the Southern Alberta Institute of Technology.

The job vacancy rate in construction is at a record high with around 80,000 vacancies in the industry, said CIBC deputy chief economist Benjamin Tal in a recent note.

Those vacancies, which push up building costs and impede productivity, come at a time when the residential construction industry is under pressure to meet the demands of a growing population.

The Canada Mortgage and Housing Corporation forecasts a need for 3.5 million more homes by 2030 than the country is currently on track to build.

The number of new homes built, however, has been in decline, from just over 271,000 in 2021 to 260,000 in 2022. And in May this year, the annual pace of housing starts dropped 23 per cent month over month, leading the CMHC’s chief economist to predict that just 210,000 to 220,000 new homes will be built by the end of the year.

There are several factors that CMHC credits for this gap, and labour shortages are one, alongside higher interest rates, rising building costs and zoning problems.

It will be “incredibly challenging” to meet housing demand with a labour shortage in construction putting further strain on housing supply, said CMHC deputy chief economist Aled ab Iorweth.

But industry experts don’t see the labour gap closing any time soon.

“It’s been years in the making,” said Kevin Lee, CEO of the Canadian Home Builders Association.

For more than two decades, Lee said there’s been a shift away from directing younger generations into skilled trades, and toward what he calls the “knowledge economy.” That comes alongside a growing shift on the other end of the labour force, where around a fifth of the industry is set to retire in the coming decade, he said.

“But obviously … the need to build homes has never gone away,” Lee said, adding that there’s also growing demand for workers on the renovation side of residential construction.