Fresh Takes

Labour shortage: Not a problem, but an opportunity

The Quebec government has created a group to find solutions to the scarcity of labour that is supposedly hindering Quebec growth. It is surprising that an interdepartmental task force is needed to resolve a situation that is far from distressing and that many countries fighting double-digit unemployment would consider a nice problem to have.

To resolve a shortage rapidly, all that is required is higher prices. An increase in real wages is good news in itself, and does not call for government intervention. But wages are not rising fast enough, due to the tax burden and to interprovincial trade barriers that reduce worker productivity.

After the price of labour rises, if the shortage is not completely resolved, the adjustment happens through an increase in the labour supply. But here again, administrative obstacles to employment get in the way, like the fact that you need a licence to be a tile setter in Quebec, for example.

It would seem, then, that the “government firefighter” is actually the pyromaniac behind the labour shortage, since it is responsible for the high tax rates and the regulations that disrupt the labour market. One way to reinvigorate this market would be to eliminate positions in the civil service and allow the workers thus liberated to join the companies in need. This could be accompanied by a reduction in fees and levees on economic activity and work, which would allow employers to offer more enticing wages while still remaining profitable. It’s an opportunity to transform a vicious cycle into a virtuous one.

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