By Jock Finlayson, ICBA Economics
The availability and cost of qualified workers is a day-to-day concern for many ICBA members as well as for the construction industry generally. As a large and foundational economic sector, construction remains critically dependent on skilled employees. Compared to industries like manufacturing, retail and wholesale trade, and financial services, construction has taken only modest steps toward replacing “labour” with “capital and technology” in the production process.
That is why the supply of, and demand for, workers is a top-of-mind concern for owners and managers in the construction industry. The national organization BuildForce Canada tracks employment trends in the construction and maintenance sector and publishes labour market forecasts for the industry in B.C., Alberta, and other provinces. Here in B.C., the government produces rolling ten-year Labour Market Outlook reports, with the most recent version released late last year. It includes a fair amount of industry- and occupation-specific detail.
In this post, I summarize the government’s latest projections for construction labour supply/demand in British Columbia. The key conclusion is that the government has almost certainly under-estimated the number of “job vacancies” that will emerge in the construction industry over the rest of the 2020s and into the early 2030s.
The Overall Picture
At a macro-level, the government forecasts about 1 million job openings in B.C. over the decade ending in 2033. Approximately two-thirds of these will arise because of retirements and other factors leading to “workforce exits”. The rest will reflect greater demand for labour in various sectors, stemming from ongoing population and economic growth. There is wide variation among industries and occupational groups in the proportions of projected job openings due to retirements/workforce exits, on the one hand, and economic/industry growth, on the other.
The largest source of “new” labour supply in the next decade will be young people entering the labour market (47%), followed closely by international in-migration (46%). The remaining additional labour supply is assumed to come from net interprovincial migration to B.C. from other parts of Canada.
Eye on Construction
The 2023 B.C. Labour Market Outlook provides reasonably detailed forecasts for construction over the next decade. For the industry as a whole, almost 67,000 job openings are projected between 2023 and 2033. Of these, 54,300 reflect retirements/workforce exits, while 12,400 are due to expansion of the industry.
In other words, construction is a sector where the bulk of job vacancies reflect retirements rather than industry growth. Accommodation/food services, transportation and warehousing, manufacturing, financial services, and public administration exhibit a similar pattern, with most vacancies occurring when current employees retire.
Total construction employment in B.C. has bounced around in the last few years, peaking at 262,400 in February 2020, dropping sharply in the early phase of the pandemic, rebounding over 2022 and early 2023, and then dipping as both residential and non-residential construction activity slowed amid a slumping economy, higher interest rates, and the winding down of a handful of large B.C. capital projects. By early 2024, the industry had 227,000 employees, roughly 35,000 less than four years earlier.
Table 1 breaks down the employment outlook for the major segments of the B.C. construction industry – residential building, non-residential building, heavy and civil engineering construction, and speciality trade contractors (the largest sub-sector). The table presents data on average 2023 employment levels, the annual job growth rate to 2033, the number of vacancies due to industry growth and the replacement of retiring workers, and the total number of job openings between 2023 and 2033.
Table 2 shows projected job openings for the main construction occupations.
Compared to many other industries, job growth in the B.C. construction sector is expected to be quite muted, according to the government’s forecast, averaging just 0.5% per year in the next decade, equating to an additional 12,400 construction jobs by 2033. This subdued outlook impacts the more detailed projections in Tables 1 and 2.
ICBA Economics believes a few developments that aren’t captured in the 2023 Labour Market Outlook will boost construction labour demand beyond the levels anticipated in the report.
Policy focus on housing supply:
The past several months have seen an unprecedented flurry of government announcements and new initiatives intended to accelerate the development of new housing in Canada and B.C. This comes against the backdrop of a severe housing shortage/affordability crisis that has emerged as the hottest political issue in the province (and the country). Housing took centre stage in the 2024 federal budget, garnering more ink in the Minister of Finance’s budget speech than any other topic and featuring an avalanche of promises and commitments from the national government. Closer to home, the B.C. government has also made housing its top political priority, earmarking large sums to money to develop additional rental and non-market housing, cracking down on short-term rentals, and cajoling cities and towns to do more to speed the construction of additional dwelling units. Coupled with above-trend population growth fueled by record immigration, this suggests that residential construction activity in B.C. will move to a new, higher “equilibrium” level in the coming years, thereby increasing the demand for workers in this part of the industry. The 2023 B.C. Labour Market Outlook forecasts that the residential construction sector will add only 5,500 (net) new workers by 2033. It is not hard to imagine that the actual increase could by 2-3 times greater. A bigger residential construction industry, in turn, would have a knock-on impact on the demand for some specialty trade contractors, further boosting total employment in the broader construction sector.
Construction spending tied to the “green” economy:
The NDP government has legislated very aggressive targets to slash domestic greenhouse gas emissions by 2030 and to shift overall energy use away from fossil fuels toward carbon-free energy sources – particularly electricity. The federal government is following a similar path.
The province recently announced that B.C. Hydro’s capital budget will jump by 50%, resulting in $36 billion of investment by the Crown Corporation in new power generation and transmission assets and infrastructure over the next decade. Earlier this year, B.C. Hydro issued a “call for power” to add 3,000 GWH of new clean, renewable electricity, with the government describing this as “just the beginning.” Also linked to its evolving climate policy, British Columbia is likely to see an uptick in construction work to develop the nascent hydrogen industry, to fortify and “climate proof” physical infrastructure, and to build out electric vehicle charging infrastructure.
Other energy and mining development opportunities:
B.C. has room to advance other significant LNG projects, on top of LNG Canada (phase one), Woodfibre LNG, and the Tilbury LNG project. These opportunities include a potential phase two for LNG Canada, the (already approved) Cedar LNG project, and a number of others. The province is also well-positioned to benefit from the expected surge in global demand for “critical minerals” needed to support the low-carbon transition. The International Energy Agency says the world will need to increase the production of critical minerals (including copper, nickel, cobalt, lithium, etc.) by at least six times by 2040. For its part, the B.C. government, acknowledging that “there is no path to net zero that doesn’t start with a mine,” has pledged to support new mine development by reforming permitting regimes, fast-tracking critical mineral projects, revising the carbon pricing regime for existing and new operating mines, and fostering partnerships with First Nations.
Conclusion
The 2023 B.C. Labour Outlook Report doesn’t adequately account for the trends noted above. As a result, it under-estimates the future growth of the province’s construction workforce. The 2023 report posits that the industry’s current 225,000 plus workforce will expand by just 12,400 in the next ten years. This figure represents less than 20% of the 66,600 job openings the government anticipates in the industry between 2023 and 2033, with more than four-fifths of these vacancies attributable to retirements/workforce exits.
ICBA believes construction-related labour demand will be considerably stronger than the government assumes, and that the size of B.C.’s construction workforce is likely to expand by 25,000-40,000 (instead of 12,400) to 2033.
Looking ahead, ICBA Economics will continue to monitor trends in construction employment, capital spending, and energy and other industrial development activity to assist in preparing up-to-date forecasts for construction labour demand.
