1. LABOUR MARKET INFORMATION A review of BuildForce Canada’s labour 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 1.Core concepts 2.Model structure 3.Market adjustments 4.Rankings and mobility 5.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 Demographics Labour requirements (demand) The available workforce (supply)

13. Model structure Macroeconomics International United States Canada Provinces Business investment Government Households Other Non-residential investment Commercial Industrial Engineering Institutional Residential investment High rise Low rise Renovations 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 Supply – The available workforce Construction labour market Employmen t Unemployment Labour supply

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 1.Boilermakers 2.Bricklayers 3.Carpenters 4.Concrete finishers 5.Construction estimators 6.Construction managers 7.Construction millwrights and industrial mechanics 8.Contractors and supervisors 9.Crane operators 10.Drillers and blasters 11.Electricians (including industrial and power system) 12.Elevator constructors and mechanics 13.Floor covering installers 14.Gasfitters 15.Glaziers 16.Heavy equipment operators (except crane) 17.Heavy-duty equipment mechanics 18.Industrial instrument technicians and mechanics 19.Insulators 20.Ironworkers and structural metal fabricators and fitters 21.Painters and decorators 22.Plasterers, drywall Installers and finishers, and lathers 23.Plumbers 24.Refrigeration and air conditioning mechanics 25.Residential and commercial installers and servicers 26.Residential home builders and renovators 27.Roofers and shinglers 28.Sheet metal workers 29.Steamfitters, pipefitters and sprinkler system installers 30.Tilesetters 31.Trades helpers and labourers 32.Truck drivers 33.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 Labour requirements Employment Construction Other industries Available labour force Managers Contractors/supervisors Trades Apprentices Unemployment Annual Peak Natural Mobility Sector Region Industry YouthWomenAboriginalsImmigration Does not identify people by trade and occupation Identifies people by trade and occupation Population by age / retirement Training apprenticeship Available population

22. Market adjustments What happens when conditions change? –The model has three rounds of adjustments: 1.Unemployment changes 2.Labour force changes 3.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: 1.Seasonal 2.Cyclical 3.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 New entrants Increased participation Other regions Other industries

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: 1.Estimated unemployment rate relative to natural unemployment rate 2.Employment growth 3.Net in-mobility as a percentage of the labour force 4.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 1 Qualified workers are available in local markets. Excess supply is apparent. Workers may move to other markets. 2 Qualified workers are available in local markets. 3 Qualified workers in the local market may be limited by short-term increases in demand. Established patterns of recruiting are sufficient. 4 Qualified workers are generally not available in local markets. Recruiting may extend beyond traditional sources and practices. 5 Qualified workers are not available in local markets. Competition is intense.

41. Rankings and mobility Labour requirements (Demand) Labour market rankings 12345 Significant excess of supply over demand Excess of supply over demand Moderate supply pressures Significant supply pressures Supply constraints 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, Alberta - Construction Heavy equipment operators, Saskatchewan - Construction Heavy equipment operators, Manitoba - 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. 1 2 3 4 5 Natural unemployment rate

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)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)www.constructionmapapp.ca

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